Dairy backlash
While dairy farmers throughout the district have been reeling from the shock slashing of prices they’ll be paid for milk by large processors Murray Goulburn and Fonterra the backlash will be felt across the community. Suppliers to farmers are bracing for difficult times, not only with a probable drop in demand but with farmers’ inability to pay for essential inputs such as feed and fertiliser.
Farm machinery suppliers are also expecting flow-on effects that will spread to all corners of the local economy including retail and commercial enterprises.
A stock feed supplier in the area said he’d already had one farmer offer his cows as payment for an outstanding bill. The dry spring and below average hay harvest has added another overlay pushing the cost of good cereal hay, including GST, to well past the $300 a tonne mark.
Graham Rowe of Vin Rowe Farm Machinery at Warragul said buying new machinery was now “off the agenda” for a number of farmers that had planned purchases.
And he said he’d said he’d heard of orders at some other dealers being cancelled in the past couple of weeks since the milk price announcements.
We were optimistic from inquiries at Farm World in April but things have changed since then, Mr Rowe said.
Murray Goulburn dropped farm gate prices by about 17 per cent from $5.60 per kilogram milk solids to $4.75 but said it would hold May and June payments at $5.47 and require suppliers to repay the difference between $4.75 and $5.47 for the next three years.
Fonterra dropped its price to $5 per kilogram milk solids.
Baw Baw shire chief executive Helen Anstis expects the shire’s economy to take a direct hit of $52 million as a result and the secondary impact would be much greater and affect other businesses from trades people, rural suppliers and the wider business community.
She said there were 286 dairy farms in the shire milking an average of 300 cows each.
Committee for Gippsland chief executive officer Mary Aldred said the effects would be felt region-wide.
Dairying in Gippsland contributes about $3 billion annually to the economy and the milk price cuts would hit people “very hard”.
“Business plans based on prices indicated to farmers are now having to be substantially re-written late in the financial year”.
“Other areas of the regional economy will also suffer by farmers having less to spend”.
Local hardware stores, shops, restaurants and almost the full range of businesses will feel the effects, Ms Aldred stated.
Member for Narracan Gary Blackwood used the floor of State Parliament last week to call on Murray Goulburn and Fonterra to reverse their decisions to cut the milk price retrospectively.
“The impact of poor financial management and bad governance should not be passed to those least able to cope with a massive reduction in their incomes, farmers that are already struggling with drought”.
State government announcements of increased support over the next 12 months are welcome but ongoing monitoring of the situation will be critical, Mr Blackwood said.
A State government appointed task force to assess needs last week helped secure an $11.4 million support package including a $5.2 million industry contribution, $2.8 million from Dairy Australia and $1 million from Murray Goulburn.
Deputy Prime Minister and Agriculture and Water Resources Minister Barnaby Joyce announced almost $580 million in Federal government support for farmers including $555 million in dairy recovery concessional loans.
Dairy Australia described the price cuts as an “unprecedented shock to the dairy sector” and GippsDairy regional manager Allan Cameron said farmers and their families needed to understand the options they have, the tactics they can use and the decisions they need to make.
Australian Dairy Farmers Limited chief executive Ben Stapley said the organisation would continue to press for exceptional circumstances recovery grants to be made available but said dairy farmers were not asking for a bailout.