Fairgo Dairy a raging success
Five years ago Shane Knuth from KAP led a campaign to get fairer prices for Queensland dairy farmers. As a result of this, the labour government funded the Fairgo Dairy project for QDO. The aim of this project was broadly around solving the problems of the dairy supply chain by specifically focusing on consumers and the retail sector given the negative impacts of $1/L milk on the dairy supply chain.
QDO utilised the funding to do a range of things. Most importantly, we ran a concerted consumer focused marketing campaign to destroy $1/L. This was an extremely successful campaign which started in late 2018 and gained tremendous consumer support and gained the attention of major media outlets Australia wide. In addition, retailers and politicians were acutely aware of what we were doing and became actively involved.
As a direct result of our campaign, $1/L milk ended in February 2019 thanks to Woolworths deciding that the time was right to lift their price to $1.10/L. A domino affect followed and all retailers matched Woolworths and milk processors were then able to lift their brand prices as well.
Fast forward three and half years to today and the retail milk price for retail brands is now $1.50-$1.60 a litre. $1/L is now buried in the past and will never return. Over the next year, further retail price increases will occur and a price of $1.70-$1.80 is expected to be the norm later this year or early next. The future is now much brighter for dairy farmers and processors around Australia.
None of this would have happened if Shane Knuth didn’t fight for a fair price for Queensland dairy farmers and if Minister Mark Furner didn’t fund the Fairgo Dairy project. All dairy farmers should be very grateful to Shane and Mark so thank you on their behalf.
Eric Danzi, co-CEO eastAUSmilk
A new Era for QLD and NSW Dairy Farmers
1 December 2021 was a significant day for dairy farmers in Queensland and NSW.
On that day, Queensland Dairyfarmers Organisation and NSW based Dairy Connect came together to form a single dairy farmer organisation representing Queensland and NSW under the united badge of eastAUSmilk.
These two industry advocacy bodies represented their members (and the dairy industry generally) over many years of public service.
Each organisation took leadership roles across a broad spectrum of policy issues, ranging from the introduction of the Dairy Mandatory Code of Conduct through to the demise of $1/L milk.
Yet like most Industry bodies, it was proving difficult to arrest the decline of dairy farms with the resulting decrease in milk production. This has become even more evident over the past decade and has been an ongoing trend since deregulation of the dairy industry in 2000.
By joining together, our two bodies could represent a greater number of dairy farmers before government and stakeholders, as well as providing an enhanced service to our dairy members.
Under the chairmanship of Matt Trace and ably supported by his Board, each representing one of the 6 District Councils, eastAUSmilk has proudly continued the strong traditions of its august past but always looking to the future.
The Board recently farewelled Gary Wenzel and he was thanked for his support of eastAUSmilk.
As with farming succession, the Board is pleased to welcome 6th generation Kerry Valley dairy farmer Kay Tommerup to the Board. Her family's dairy farm can proudly trace its history to 1874.
More information about Kay may be found at www.tommerupsdairyfarm.com.au
With an eye on the future of eastAUSmilk and dairying in Queensland and NSW, the 2022 AGM will be held on 30 August at the Lismore Turf Club. The Board and members are looking forward to visiting the Northern Rivers. Formal notification and further information will be sent to members shortly.
If you wish to become a member of our vibrant industry association, please visit www.eastausmilk.org.au where you can learn more about eastAUSmilk and become a part of our future direction.
Shaughn Morgan, co-CEO eastAUSmilk
The Future of Australian Dairy
In 2011, supermarkets decided to reduce the price of fresh milk to $1/L litre. This resulted in devaluing nutritious milk and undermining dairy farmers.
This changed in 2018 when the supermarkets, led by Woolworths, acknowledged that $1/L milk was having a negative effect upon dairy farmers and the farmgate price they were paid.
$1/L milk was at an end and the price was increased but after so many years it was still devalued.
Over these same years, the dairy industry has seen a continued reduction of dairy farms throughout Australia. In Queensland for instance there were over 3000 dairy farms in 1980, twenty years later it was approximately 600 dairy farms while today it is under 300 dairy farms.
In terms of milk production, this has also been impacted. Australia is currently producing approximately 8 billion litres compared to 12 billion litres a few years ago.
The farm gate prices that have been announced over the past months (while strong, open and transparent) are only keeping pace with the increase in input costs (for instance fertiliser, diesel and energy) that the dairy value chain, from farmers, processors to supermarkets, pay every day.
The pressure being placed on dairy farmers continues to be immense, both economically and emotionally.
More recently, farmers have experienced floods, droughts, bushfires and other natural disasters all in close proximity.
Now, on our doorstep is Foot and Mouth Disease. If it was to reach Australian shores, the immediate impact on livestock (including dairy) would be worse than disastrous.
Export sales would stop, movement of cattle would cease and (depending on the outbreak) cows would be culled and euthanised.
Decades of genetics lost in a matter of weeks. Monetary compensation would not offset these losses.
It is little wonder that dairy farmers are concerned every day about such an outbreak and the impact it would have upon their farm and the communities that support them.
Discussion has ranged from increased biosecurity measures at ports of arrival, availability of vaccinations (both here and overseas) as well as restricting travel to tourist destinations where FMD is rife.
Regardless of the issues that Aussie dairy farmers will face over the coming months, they will continue to remain resilient and strong in the face of such adversity.
While more will need to be done to ensure a long term sustainable Australian dairy industry, supermarket customers will still be able to buy Aussie produced fresh milk and dairy products from the supermarket dairy cabinet.
Shaughn Morgan, co-CEO eastAUSmilk
More Action Needed to Halt Risk of FMD
Australian livestock farmers and the industries and communities that underpin them are facing an economic and social crisis that will cripple their livestock farms should foot and mouth disease reach Australia.
The economic consequences would be devastating for livestock producers. It is estimated that our red meat exports would be immediately hit with losses valued at $15 billion and it would take years to return to markets that will be lost.
The impact on farmers and their families will be crippling. Farmers have been through devastating droughts, floods and bushfires over the past years and for many, the effects of a FMD outbreak would see them leave the industry in even greater numbers than in recent years.
This would result in a further reduction in fresh milk production, which is already falling throughout Australia.
Supermarket customers will see an immediate reduction in the availability of Australian dairy and meat products on the supermarket shelves and prices will be higher.
FMD in cows is a painful disease that causes blisters in their mouths and results in cows being euthanised. The UK outbreak in 2001 resulted in 6 million animals being killed. The impact on our industry will be far greater.
Overall, the financial impact of an uncontrolled outbreak in Australia would be approximately $80 billion over 10 years.
With FMD on Australia’s doorstep, over the past months the federal and state governments, in conjunction with peak agricultural bodies, have been discussing ways to enhance our biosecurity to prevent FMD from reaching our shores.
Campaigns have been undertaken to educate overseas travellers, particularly to tourist hotspots with FMD such as Bali.
However, this is not enough. Paying compensation to affected farmers would never replace the true value of their cows. They need to ensure that their farms are FMD safe.
It is not inevitable that FMD will arrive in Australia. Those who express this view are wrong and it must not be accepted.
Instead, much more must be done to prevent FMD from reaching our shores.
The Government must immediately reconsider imposing travel restrictions to areas that are close to Australia and which are FMD infected. This may only be needed for a short period of time but it will enable those nations to vaccinate their cows and thus control the outbreaks.
The announcement by the Federal Government to introduce 'sanitation foot mats' for incoming travellers from infected countries at all airports is welcomed but other shoes being carried by passengers must be inspected and disinfected as necessary. This is a further extension but is an inexpensive and effective solution.
We introduced harsh restrictions to halt COVID over the past years, we must do likewise to stop FMD and to protect our livestock industries. The risk is too great – more needs to be done now.
We will regret it if we do not do so.
Shaughn Morgan, co-CEO eastAUSmilk
Retail milk prices going up, but retailers and Dairy Farmers slow to move
Farmgate milk prices moved up significantly on 1 July with farmers receiving between an extra 15 and 20c/L. This was long overdue and reflects the increase in cost of production rather than giving farmers a significant profit. In future years, the price will need to continue to increase to allow farmers to make a reasonable profit or milk production will continue to decline.
At the retail level, prices started to move soon after 1 July as expected. Pauls moved very quickly to $4.00/L in both Coles and Woolworths stores and Norco also moved quickly to $4.10/L. These increases were as expected and in line with increases in farmgate prices.
However, no other retail milk prices have moved. Dairy Farmers are still at $3.55 in both Coles and Woolworths. Woolworths milk is still only $2.60 as is Coles milk. Farmers Owned is still only $3.20, which is lower than the $3.40 it was earlier in the year.
It would be expected that Dairy Farmers will lift to around $4/L but it is unclear when. Dairy Farmers owner Bega would be losing significant money selling at $3.55/L given the cost of purchasing milk off farmers has increased so significantly on 1 July.
Surely Coles and Woolworths will lift the price of their milk to at least $3.00/L but more likely $3.20/L in the coming weeks. This is not only in line with increases in farmgate prices in Queensland, but very similar increases in farmgate prices Australia wide. There is no justification for retailers leaving prices at $2.60 which is clearly a level at which retailers would be losing money. It is unclear whether retailers are in fact the ones taking this loss at present or whether the processors that package their milk are being forced to take a loss until retail prices move.
What is the impact of those brands, including Coles and Woolworths, not lifting their prices? These brands would be taking market share off those brands that have lifted prices. This is extremely bad for those negatively affected brands. Whether this is a conscious decision or not, those brands that haven’t lifted prices need to do so immediately to ensure that the dairy industry, both farmers and processors, can make a profit and remain viable.
Eric Danzi, Co-CEO eastAUSmilk
Has the dust settled on the milk supply contracts?
There has been a real frenzy of activity across Australia in the past month with all processors attempting to secure milk. Milk production is down across Australia and all processors are short of milk. There have been daily announcements re milk price increases, and this may continue in early July.
In Queensland, the last price increase announcement was by Bega (and DFMC) on 1 July although many are unaware of this. Of the 3 major processors Bega (and DFMC), Lactalis and Norco it would appear that Bega (and DFMC) are now on average paying the most for milk at over 88c/L. Lactalis is around 1c behind and Norco probably 2-3c behind on average.
However, averages mean very little and as I have mentioned continuously over the past few months every farmer coming off contract need to get income estimates with the same realistic assumptions off all processors to see who is paying the most for their farm.
There are still likely to be some farmers who change process during July. Some will exercise their 14-day cooling off period as processors continue to change prices. And some farmers will utilise the ability to supply uncontracted for 30 days before making a final decision.
So, as it stands now, how many farmers will change processor in Queensland this year? At least 10 farms will and probably closer to 15. This probably only represents about 10% of all farmers in southern Queensland who are off contract and can move processor. Although this is not insignificant, it is a disappointing outcome since many other farmers would be able to get a higher price by changing processors but for whatever reason have chosen not to do so.
If you haven’t checked your price with other processors, please do so today. Even if you have signed a contract, if it was within the last 14 days you can get out of that contract to sign with someone else paying a higher price, so it is not too late.
Eric Danzi, Co-CEO eastAUSmilk
Installing a water chiller and solar pays off for dairy
A dairy in the Darling Downs region, milking 280 cows, has implemented a photovoltaic (PV) system with load shifting through chilling water management opportunity based on the energy audit report the farm received through the Energy Savers Plus Program Extension. Through the program the business site received a dairy shed energy audit carried out by AgVet Energy and a further assessment carried out by Websters Group followed by an electrical site analysis performed by Solar Energy & Battery Storage Solutions (SEBSS) all engaged by eastAUSmilk.
The goal of the business was to reduce electricity costs by firstly lowering supply from the grid and secondly, with the reduced grid supply, transitioning from the demand tariff to a consumption tariff such as Tariff 20.
Implementing the solar system along with water chilling allows for increased solar utilisation by the business as large portions of the business’ energy use occurs outside of daylight hours with milking. Excess solar energy is used during the day to chill water and then the cold water is used through a plate cooler to reduce the temperature of milk before it reaches the vat offsetting energy use by the refrigeration system.
Monitoring the farm energy use from July to October 2021 an average PV energy utilisation of 67% was achieved.
The total load was 319 kWh/day with an average 210 kWh/day being supplied by the grid. With a grid supply charge of 29.46 c/kWh and a 109 kWh being offset by PV the system conservatively achieves an annual electricity bill saving of more than $11,700.
Additionally, on average 53.92kWh were exported daily at a feed in rate of 6.581 c/kWh the PV system is generating export income of over $1,200.
The total expenditure invested by the business was about $76,000. With over $12,900 in annual savings from reduced grid supply and income generated from solar PV export the calculated payback period of this investment is 5.9 years with a return on investment of 17%.
Implementing the 30kW PV system the grid supply has been under 272 kWh/day. Four consecutive months of this reduced grid supply makes the business eligible for a consumption only Tariff such as T20. This will provide the business further annual savings reducing the payback period and increasing the returning on investment.
Solar Energy & Battery Storage Solutions can provide a comprehensive electrical data analysis for your business, Paul Reynolds on 0414 636 099.
Torie Harrison – eastAUSmilk Project Officer
Thanks Gary and Torie
In the past two weeks eastAUSmilk has farewelled board member Gary Wenzel and staff member Torie Harrison. Gary was on the board for 2 ½ years and Torie left last week after more than 4 years with eastAUSmilk and QDO.
Gary has been a very considered and knowledgeable board member and relied on this when making decisions rather than be swayed by politics. Gary has a depth of experience in dairy farming, RDE, transport and water, given his various roles in the industry historically. Gary has always been focused on grass roots dairy farmers given his extensive networks in the industry.
Quite an unassuming dairy farmer Gary is, but he and his wife Karen run an impressive operation. Without any fanfare, they achieve very good milk production per cow in a low-cost way for their TMR system in often very trying conditions. I hope the conditions aren’t so wet in the coming months and the price increases to a sustainable level.
Torie is returning to work on her family’s dairy farm in Kilcoy. It has been a pleasure to work with Torie over the past 4 years. Torie has always had a strong knowledge of dairy farming and a real passion for the dairy industry. She has been very focussed on engaging with dairy farmers and helping them as much as she can.
Over the past 4 years Torie would have learnt a lot and built very strong networks within the dairy industry. This will help her immensely on the dairy farm and I am sure she will use this knowledge and networks to move the dairy farm forward over the coming years.
Best of luck to both Gary and Torie in the future. I’m sure you won’t lose contact with eastAUSmilk.
We will always be grateful for all you have done for dairy farmers and eastAUSmilk. Thankyou both.
Eric Danzi – eastAUSmilk Co-CEO
Dairy farmers get quotes from everyone now
There is a frenzy of activity across Queensland as all milk processors try to secure milk for 1 July. Every processor across Australia is desperately short of milk and scrambling to secure any milk they can.
Prices have been moving up gradually over the past month. It started with a small increase of 5c/L, then 9, followed by 11, 12 and now 13c/L increase. On average, Lactalis appears to be leading the way now with a price of around 85c/L. Norco appears to be around 1c/L behind and Bega around 2c/L behind in SEQ. Surprisingly to most, Maleny Dairy and Farmers Owned appear to behind all 3 major processors when historically they have been above.
So what will happen next? I would expect to see significant increases from processors over the next few weeks leading up to 1 July. It is likely that the price will get to 90c/L. Why? Because it costs at least 90c/L, probably more like 95c/L, to buy milk in Victoria and transport it to Queensland. So if the market works and competition drives the price as it should then the price should be at least 90c/L.
So what farmers do to drive competition and push the price up to where it should be? If you are coming off contract in the next year speak to every processor who may be interested in buying your milk.
There are a lot of farmers very active in speaking to multiple processors. Some of those farmers would be considered extremely loyal and untouchable by other processors. But no one should be untouchable. Any farmers who is loyal and does not speak to all processors and just expects to get a price rise get what they deserve and that is to be exploited.
Dairy farmers the market is finally working and massively in your favour. Get on the phone and speak to all processors, myself and anyone else who can help you put the price up to a level that you deserve and makes your farming operation profitable.
Eric Danzi – eastAUSmilk Co-CEO
Dairy farmers need 90c/L to continue dairying
All major milk processors released their new milk contracts on 1 June. All processors announce significant increases in prices as expected with increases between 9 and 12c/L except farmers owned that has announced only a 5 c/L increase. All processors now pay between 80 and 85c/L on average.
Of the 3 major processors, Norco announced a potential 12 c/L increase which will see an average perhaps around 84 c/L. Lactalis announced a 9c/L with an expected average price around 81-82 c/L. DFMC who supply Bega announced a 10.5c/L increase that will see them average around 83c/L in southern Queensland. DFMC is expected to average around 81c/L in North Queensland in north Queensland.
Are farmers excited by the price increases? No. Will this be enough to stop exodus of farmers from the industry? No. The cost increases from fertiliser, chemicals, fuel and purchased feed over the past year are likely to more than swallow up the price increases. And the ongoing wet and muddy conditions will continue to hamper production and milk quality.
There are likely to be further increases during June and there needs to be. To get farmers excited and profitable again prices need to average at least 90c/L. anything less than this will see the exodus from the industry continue.
Farmers have time before they need to sign so do not sign anything yet. Get quotes from all processes to see who pays you the most since there will be significant variations between processors for individual farmers. Make it clear to processors that you need more to stay in the industry.
There is no spare milk in Australia to send to Queensland, so processors need Queensland milk. Processors need to demand money in the retail sector to remain profitable and pay farmers 90c/L or the spiral of falling milk supply will continue.
Eric Danzi – eastAUSmilk Co-CEO
Federal Labor Government – a new beginning or continuing decline?
With a newly installed Federal Government comes newly appointed Ministers who will be briefed by their policy advisors. The public service and departmental heads will provide briefings as to how their policies can be implemented. With it, industry bodies will seek meetings to put their member's views forward and ensure their positions are given appropriate consideration.
During the election, agricultural policy was announced in the broad brush but as always, the 'devil is in the detail'.
Labor have announced changes to the agricultural visa scheme. They intend a renewed focus towards to the Pacific to increase farm labour.
Promises have been made to increase biosecurity funding to help prevent Lumpy Skin & Foot and Mouth diseases breaching our borders, with the continuing outbreaks in Indonesia. Diseases which threaten livestock industries.
These holistic issues are of most immediate concern to farmers, especially within dairy and we welcome these commitments.
However, other immediate matters also need to be considered and addressed.
Dairy Australia's latest situation and outlook report highlights the increasing input costs that dairy farmers are facing. Fertiliser, fodder, fuel and grain prices doubled in price over the past 12 months, placing undue pressure on dairy farmers to continue to survive within the dairy industry. Dairy farmers on the Atherton Tablelands, for instance, are facing some of the highest fodder costs with an average of $350 a tonne for pasture hay.
These harsh imposts are contributing to the decline in the number of dairy farmers across the dairy States, especially where the farm-gate price being received is not equal to their costs of production. Hence the real need for supermarkets to increase the price of home-brand milk to a minimum of $2/L. In turn, processors must guarantee to pass these gains back to the farmers in their milk price.
The Labor election commitment to convene a dairy symposium is a positive and proactive step.
It will enable the dairy industry to consider ways in which to stop the decline of dairy farms and provide solutions to ensure a future for generation of dairy farmers to come.
The symposium will enable dairy representatives, from dairy farmers to supermarkets, to address a vast and complex number of issues which were identified in numerous recent parliamentary and ACCC reports. These include the dairy mandatory code, input costs, 'truth in labelling', market failure to name but a few of the issues.
The symposium may not be the panacea, but it will help crystallise the ongoing issues and the way in which we need to find a collaborative solution. Otherwise, the dairy industry we know today, which itself requires strong positive change, will be very different to the industry that will or will not exist in the future.
Shaughn Morgan – eastAUSmilk Co-CEO
Consider all milk contracts before signing
Milk processors are required to release their new milk contracts by 1 June. There has been a lot of discussion regarding these announcements and an expectation of a significant increase in milk prices given the increase in production costs, shortage of milk and ability for retail milk price to increase in response to cost increases.
Dairy farmers are in a very strong bargaining position and should utilise this to gain the maximum increase in milk price. This is a fork in the road moment for a lot of dairy farmers deciding whether they should stay in the industry or not. So no time is more critical to gain the highest price possible.
I urge all dairy farmers not to be rushed and explore your options with all processors before signing a contract. Given the milk shortages and cost increase, farmers should expect at least an additional 10c/L. Do not consider signing any contract with less than a 10c/L increase and without exploring all options.
The prices when announced are a weighted average only so you should request an income estimate for your individual milk supply. Be honest and realistic when providing the volume and milk quality parameters for the estimate so it can be as accurate as possible for you to consider.
Please let all your dairy farmer friends know of what they should expect and ensure they also shop around before signing a contract. Also be aware that if you sign a contract that you regret, you have a 14 day cooling off period where you can terminate your contract.
The ACCC has updated its guidance on some key elements of the Dairy Code. The updates provide more detail on the ACCC’s interpretation of the code’s ‘single document’ requirement, arrangements for cooperatives and collective bargaining groups, what constitutes a ‘material breach’, loyalty payments and other bonuses, and the requirement to publish dispute reports.
Eric Danzi – eastAUSmilk Co-CEO
Dairy symposium pre-election commitment hits the mark
The pre-election commitment by both the Coalition and Labor to support the convening of a second dairy symposium, to be held after the federal election, is to be applauded.
The dairy industry, as has been highlighted by the ACCC in its 2018 report, is experiencing market failure brought on by the dominance of the supermarkets and the inability of dairy farmers to be able to negotiate a strong and fair farm gate price with their processors.
There are ample reasons for a symposium to be convened after the federal election. While the Mandatory Dairy Code, which originated from the first dairy symposium in 2016, has gone part way to restoring trust and transparency, there remains work to do.
In recent months dairy industry organisations have advocated for increases in the dairy cabinet prices that supermarkets are currently charging their customers. Ensuring a better return on milk sales to the dairy processors puts them in a better position to pass down price increases to dairy farmers, thus enabling them to remain on their dairy farms.
Currently, the number of dairy farms is continuing to decrease, and the amount of milk being produced around the country is reducing.
Agriculture over the past years has been subjected to drought, bushfires and now on-going floods. This is in combination with high input costs. For example, the prices of fertiliser and diesel have more than doubled over the past 12 months, and this is adversely impacting upon the capacity of dairy farms to survive into the future.
Bringing together the players within the dairy value chain so as to address the ongoing issues, find solutions and stop the exodus of dairy farmers from the land is critical to the future of Australian agriculture and in fact to Australia's own food security and resilience.
That is why the election commitment by the Coalition and Labor to hold a dairy symposium provides a platform to restore faith and future growth for the dairy industry.
Shaughn Morgan – eastAUSmilk Co-CEO
Breaking down the benefits of solar on farm
A dairy in the Burnett region, milking 160 cows, has implemented a photovoltaic (PV) system and management opportunity based on the energy audit report the farm received through the Energy Savers Plus Program Extension. Through the program the business site received a dairy shed energy audit carried out by AgVet Energy and an electrical site analysis performed by Solar Energy & Battery Storage Solutions (SEBSS) both engaged by eastAUSmilk.
The goal of the business is to reduce electricity costs by implementing a PV System and making maximum use of the energy generated by the system.
Prior to implementation, the main energy use areas: shed, dairy, pump, homestead, and effluent pump were all operating off a separate NMI account, each had a daily service fee and meter charges.
To maximize the benefits of a 30 kW PV system and reduce grid charges three NMIs were merged. Thanks to data provided by SEBSS performance monitoring of the Solar PV system, I was able to evaluate the savings and outcomes achieved from the farms investment.
Monitoring the farm energy use from July to October 2021 the load was 156 kWh/day with an average 90 kWh/day being supplied by the grid. With 66 kWh being supplied by PV the system conservatively achieves a grid annual saving of more than $5,000 in addition to exporting excess PV energy of more than $2,000 annually.
The total dairy load is expected to rise as the business increases irrigation through the summer months. Provided that irrigation occurs during sunlight hours to make the most of the PV output, the savings will be higher.
The PV system is generating average 153 kWh/day or 56 MWh annually. The average daily utilisation of the PV yield is 43% from July to October. With the feed in rate received of 6.583 c/kWh the annual generated income from exported PV energy is around $2,094.
With the increase of solar utilisation expected due to irrigation through summer the income generated through solar export will be reduced; however, this means the total business savings provided by the system will be higher as the export rate of 6.583 c/kWh is far less than the grid supply rate of 22.5 c/kWh. There is potential to achieve a higher PV utilisation through further consolidation of NMIs such as merging the effluent pump into the NMI of the Dairy. The effluent pump has a load of 20 – 30 kWh/day which would increase the utilisation factor to 59%. This would reduce export earnings by $574 but increase grid savings by $2,000.
The total expenditure invested by the business was $46,000. With over $7,000 in annual savings from reduced grid supply and income generated from solar PV export the calculated payback period of this investment is 6.28 years with a return on investment of 15.9%.
Shifting loads to using more PV, when possible, can save the dairy more than $10,000 per year. The Return on Investment will improve to better than 33% with a Pay Back Period of under 3 years.
Solar Energy & Battery Storage Solutions can provide a comprehensive electrical data analysis for your business, Paul Reynolds on 0414 636 099.
Torie Harrison – eastAUSmilk Project Officer
Farmers need at least a 10c/L increase on 1 July
There have been massive increases in costs in the dairy industry over the past year as there have been across the broader economy. Large increases in the cost of fertiliser, fuel, chemicals and labour has had a substantial effect on the cost of producing milk both for farmers and processors. On top of this, many dairy farmers (and processors) have been very badly affected by flooding and continual wet weather putting further pressure on profitability.
So what does all this mean? From a farmer perspective, it means that for the majority of farmers cost have probably gone up by between 10 and 15c/L.
There continues to be farmer exodus from the industry on a weekly basis and there are no signs of this slowing down without a major shift in price. Production across Australia is down by 3% so far this financial year and processors are desperately short of milk.
Dairy farmers are not whinging for more money knowing that they will still continue to produce milk. Dairy farmers on mass are waiting to see what price increases will be offered before deciding whether to continue producing milk. There are plenty of attractive options for dairy farmers now besides just continuing to produce milk for little or no margin. The returns from beef are extremely strong and there is the opportunity to grow and sell crops rather than feed them to cows. Options to sell or lease farms are also attractive.
It is very positive to see some processors paying additional money to farmers in May and June this year in light of the substantial financial pressures on farmers. However, a 5c/L increase on 1 July would not even come close to what is required.
The bottom line is that if farmers don’t receive at least another 10c/L, it is very likely that the shortage of milk will increase. And it is much harder and more expensive to attract farmers back into the industry then keep them there by offering an attractive price to stay.
Eric Danzi - Co CEO, eastAUSmilk
Farmer engagement to set eastAUSmilk priorities
This year the dairy exhibitors put in a tremendous effort to prepare the cattle and attend the show. They battled with both the wet weather conditions and the staff shortage issues stemming from Covid-19 at home on their farms. It was an amazing to see them band together and put on an exception dairy display and particularly special this year as Sydney Royal Agricultural Show celebrated 200 years of the show.
Watching the dairy judging and walking through the shed the quality in the animals presented was exceptional. The judges gave praise to the exhibitors and all breeds were complimented on their various traits when the Supreme Champion was named. The ultimate award went to the Jersey breed.
EastAUSmilk Project Officer, Torie Harrison, and I attended the show which for many was their first introduction to eastAUSmilk. The engagement with farmers was very positive, we were able to make important inroads into the understanding and awareness of the what the organisation does and how this is vital to the long-term future of the dairy farmer and their industry.
It was a great opportunity to meet the farmers we are representing, to gather feedback on the organisations current work and hear from the grassroots what priorities eastAUSmilk should focus on for the year ahead.
It was a pleasure to be hosted by Max Wake and family of Benleigh Brown Swiss. Max is the longest serving dairy shed captain at the Sydney Royal Agricultural Show. Over lunch with Max in the Cafeteria he shared some of the history of the show. Max has attended the show every year since 1966. Although Max was only able to attend the show for 1 day in 1973 as he had just returned from his honeymoon.
Before heading home, we travelled to the South Coast with Ruth Kydd, the board representative for the region, engaging with more farmers in the region.
The continuous wet weather has put a huge strain on the dairying business and people in them. Loss of production and compromised animal health with lameness and milk quality issues is common. Most farms are also 6 to 8 weeks behind in planting Winter pasture and crops with a significantly smaller area being planted as it is just too wet to access some parts.
We hosted a dinner in both Shoalhaven and Jamberoo which were well attended. It was an important event for us to consult with more grassroots farmers but more important particularly at this time for farmers to come together to ensure the social and mental resilience of the industry.
Special thanks to Tim Cochrane for organising our visit to the South Coast. EastAUSmilk will be engaging with farmers in all areas of NSW in the coming weeks.
Lynelle Rogers – eastAUSmilk Executive Officer
Dairy Levy Poll – Lets all take notice
With the results in from the Dairy Levy Poll the farmers who pay the levy couldn’t have made their thoughts any clearer. An overwhelming majority of those who cast their votes backed the no change option. This was some 71% of voters who participated. A convincing result such as this can only occur when the alternative options provided are not to the liking of the voters. Possibly more disappointing is the option recommended by LPAC to farmers of an increase of 20% to the levy only received 15% of valid voter support. This raises the question was LPAC listening to the levy payers and is it the right mechanism to decide levy options in the future?
Some will no doubt say it’s not a judgment on the performance of LPAC who selected the options or Dairy Australia who receives and spends the levy funds, but rather a sign of tough times in the industry. I think this would be a naïve and unproductive approach. Farmers have not seen value in their levy and that’s why they have not backed an increase. As farmers are aware the only way to deal with a problem or as we often call it “a stuff up” is to acknowledge the error and deal with it head on. That’s what industry needs to do right now. Let’s put on the listening ears and take direction from the most important people in the industry, the levy paying Dairy Farmers.
What eastAUSmilk will be taking from this result is not the opportunity to tear down individuals or organisations who seem to have lost their way as farmer representatives in recent years and through the entire levy poll process, but rather a much-needed circuit breaker to wipe the slate clean and get it right from now on.
There are two vital questions for all industry bodies not just Dairy Australia to answer very soon. Is LPAC the best way to set future levy options and have the levy funds been spent in the best interests of the farmers who pay the levy?
Matthew Trace President eastAUSmilk
Automation Saved Labour, Water & Energy for Solid Set Irrigation
A Jaggan dairy has implemented an irrigation energy management opportunity from the energy audit report they received through the Energy Savers Plus Program Extension. Through the program the business received a dairy shed energy audit, carried out by AgVet Energy, as well as an irrigation energy audit, completed by The Energy Guys, both engaged by QDO.
The farm aims to increase their homegrown feed and have been increasing their irrigatable area with implementing sections of solid set irrigation systems.
With more and more sections of solid set irrigation systems to manage the business chose to invest in automation.
eastAUSmilk Project Officer, Jade Chan, and I visited the site and conducted a performance test on the irrigation to evaluate the actual energy savings and outcomes achieved since implementing a recommendation from the energy audit.
Installing an automation system to their solid set irrigation has resulted in labour-saving benefits.
When irrigating manually the irrigations would be run for twice in five-hour intervals (per station) which meant a late-night run into the paddocks to switch over the stations. To apply the 287ML per year there are 16 cycles of the 17 stations per year. With each cycle taking 9 nights the business was irrigating 144 nights per year.
Labour required to open and shut valves on the irrigator is estimated to be 15 mins costing the business approximately $2,880 per year. The new automation system uses a controller to manage irrigation scheduling with minimal time required to switch over sections.
The automation has also increased the water efficiency of business as previously there was approximately a 10% over application of irrigation. The improvements have allowed the irrigation to be applied across three-hour intervals instead of two five-hour intervals. Reducing the excessive application of irrigation water, saving 14ML.
Reducing the hours of irrigation also results in a lower energy use saving the business 4,861kWh annually.
With smaller application rates soil moisture remains at optimum for longer, smaller amounts are applied which reduces excess irrigation water applied and will improve pasture production.
The farm also upgraded the sprinklers on a section of the irrigations to improve their water use efficiency.
The pre-existing sprinklers were replaced with NaanDanJain 5035 sprinklers which improved the irrigation’s distribution of uniformity (Du). The new sprinklers were able to achieve 79.91% in comparison to the 58.4% achieved by the old sprinklers. This also increased the average application rate to 9.7mm/hr from 4.4mm/hr. Improving the irrigation efficiency of their solid set will also improve levels of production by increasing effective irrigatable area.
The total expenditure for the business to implement the upgrades was over $47,000. Valuing the increased pasture production at $5,000, plus the labour saving of $2,880 and $2,166 for electricity savings the calculated payback period of this investment is 4.7 years with a return on investment of 21.3%.
Torie Harrison – eastAUSmilk Project Officer
Big attendance at Dairy Resilience Dinners
Well we managed to pull it off. In two weeks eastAUSmilk hosted eight Dairy Resilience Dinners across the flood impacted regions of Queensland.
The meetings were held in Wondai, Kandanga, Maleny, Beaudesert, Plainlands, Allora, Toowoomba and Pinelands.
Another Dairy Resilience Dinner is to be held in Malanda at The Top Rail (Old RSL) on Thursday 21st April.
Please RSVP to 0437 923 398. Jade looks forward to seeing you there!
The events were a huge success with attendance reaching over 160 people. Big thank you to all our farmers who supported the events. I also need to thank the DAF Dairy Team and the eastAUSmilk team for their support made it possible.
When all types, social, sporting, community and industry events were being cancelled due to flooding it made me convinced that Dairy Resilience Dinners were needed now more than ever.
These events have been delivered through the Farm Business Resilience Program which aims to build the strategic management capacity of farmers to prepare for and manage business and climate risks.
Feedback received has been positive with most expressing the dinner was a great opportunity to get off farm for a couple of hours and check in on how our friends are coping. The general sentiment is that we should have more of these events for the dairy industry.
Discussions focused on the flood impacts on farm and the various assistance available for primary producers to assist their businesses with flood recovery as well as touching on the new drought assistance suite.
It was fantastic to have representatives from QRIDA, Rural Aid and the DAF Dairy Team in attendance to support the discussions.
The Farm Business Resilience Program are co-funded through the Australian Government’s Future Drought Fund and the Queensland Government’s Drought and Climate Adaptation Program DCAP.
Torie Harrison – Project Manager eastAUSmilk
Who is going to pay?
We are starting to see the effects of the Russian – Ukraine conflict with fuel prices crashing through the $2 per litre barrier. Australia’s 26 million people use about 34 billion litres of fuel each year or about 1,300 litres per person. Based on the fuel price increases we have seen since last year, that’s an increase of about $1,000 per person.
While that sounds bad enough, that’s assuming that costs incurred by primary producers, transport and other businesses can be passed onto consumers.
Unfortunately getting markets to work in an open fashion is nearly always more hope than reality. It’s an undeniable fact that Governments of all persuasions want cheap food for the population. If too much is spent on food, it simply does not leave enough for discretionary spending and for Governments to tax us in some other way.
It is highly unlikely that the Australian Competition & Consumer Commission (ACCC) will make any decision that has an adverse effect on consumers.
If fuel was the only commodity that was increasing in price, it might be bearable, but this comes on top of fertiliser, chemicals and steel reaching extraordinary prices. Agricultural industries are still recovering from multiple drought years only to be hit with horrific flooding this year.
The latest figures from the Queensland Dairy Accounting Scheme (QDAS) show that the average QDAS farm spent $60,000 last year on fertiliser and fuel. That figure will at least double this year. The biggest impact on dairy costs might still be coming with upward pressure on grain markets already seen this month.
What happens in Ukraine this month is extremely critical for grain prices. The Autumn planted wheat should be fertilised now for a June harvest and the Spring planting should be near completion. How much of that is actually getting done is anyone’s guess.
As bad as this situation is, it’s also an opportune time with a federal election looming for our dairy advocacy groups to ask the question of our political leaders and everyone in the dairy supply chain – “are you prepared to pay a sustainable price for high quality Australian grown produce? “
“Well, are you?”
Ross McInnes – District Councillor eastAUSmilk