Skyrocketing input costs eat into dairy margins, despite record milk prices: ADF president
GRAIN PRICE INCREASE: Currently, one of the biggest costs is grain, with wheat prices jumping 25 per cent in recent weeks.
While high opening milk prices are critical for the viability of the Australian dairy sector, increasingly volatile global markets are taking effect with rising cost pressures through the supply chain.
There is strong competition from processors in the market, which is fantastic for dairy farmers.
The increase in the milk price paid to dairy farmers is not keeping pace with the unprecedented rises in the cost of farm inputs. Some farmers are under significant pressure. - Rick Gladigau
ADF recognises that these opening prices for milk at the farmgate are strong, and we believe there is potential for more increases because processors need to meet existing domestic and international contracts with a limited milk supply.
However, the costs of fodder, fuel, fertiliser and electricity are skyrocketing, eating into the margins of most dairy producers.
Currently, one of the biggest costs is grain, with wheat prices jumping 25 per cent in recent weeks. In extreme cases, feed costs can represent one-third of a dairy farm's turnover.
In a volatile market, the increase in the milk price paid to farmers is not keeping pace with the unprecedented rises in the cost of farm inputs. Some dairy farmers are under significant pressure.
It is timely for farmers to review their operations in response to the increasing input costs.
Real action needed to support dairy recovery
The next three years is a defining period for the sustainability of the Australian dairy industry. As the recognised national policy and advocacy organisation working for dairy farmers, we will be doing our utmost to ensure the reality of this situation is well understood by the Labor government and consumers.
The government made pre-election pledges that respond to several issues in our policy statement - which if properly executed - will help the profitability and sustainability of dairy farmers. These include:
setting minimum standards for nutrition in residential aged care;
improving existing regulations that deliver accurate and clear food labelling;
providing $500 million for agriculture in the $15 billion National Reconstruction Fund;
protecting the competitiveness of emissions-intensive export industries;
investing $3 billion from the $15 billion National Reconstruction Fund to fund emission reduction initiatives; and
directing financial support to energy efficiency projects under a new Powering the Regions Fund and funding two regional tech hubs.
More money needed for regions, biosecurity, jobs
Beyond these pledges, ADF is calling on the federal government to invest more in regional development, biosecurity capabilities and a skilled regional workforce to reduce risks to dairy production, support the adoption of supply chain traceability reforms and reduce the impact of pests and weeds.
It is heartening to read that 88 per cent of respondents to the 2022 National Dairy Farmer Survey reported an operating profit in 2020/21. With the rising cost of inputs during the past two months, the outlook for some farmers in 2022/2023 is less optimistic.
For many dairy farmers the uplift in opening prices will give them the confidence to continue to invest into their farms. For others, however, labour shortages, high beef cattle prices and soaring land values we will see them make a business decision to exit the industry for differing reasons.
Due to the surging costs of farm inputs, the need for movement in retail prices is critical. A significant upward movement in milk prices at the checkout in the short to medium term is essential.
The ongoing strength of the dairy sector is crucial to Australia's future, as we navigate the COVID-19 recovery phase. Resilient and prosperous regional communities need a robust dairy sector.
We look forward to working with the new Labor government to deliver on our election platform, much of which seeks to drive profitability and sustainability through the Australian dairy industry. This includes creating even more transparency of prices across the dairy supply chain.
Source: Rick Gladigau, President, ADF, The Land, 1 August 2022
Dairy leaders urge Australia to throw “the kitchen sink” at FMD
The Australian dairy industry has enacted the emergency animal disease team to coordinate the dairy value chain’s response to the heightened threat of Foot and Mouth Disease (FMD) and Lumpy Skin Disease (LSD).
Representatives of the dairy industry’s farming, processing and research and development sectors, from Australian Dairy Farmers, Australian Dairy Products Federation and Dairy Australia, are part of this team.
“Together, the dairy industry and the Australian government, are working together to prevent an incursion of FMD in Australia, not just from Indonesia, but from other countries as well,” Australian Dairy Industry Council (ADIC) president Rick Gladigau says.
Mr Gladigau says the dairy industry supports the Australian Government’s increased surveillance and testing of meat and other animal products for FMD, both at the border and through targeted checking of retail outlets as well as the amplified measures as recently announced. The addition of sanitised foot mats at Australian airports and more control measures in Indonesia are welcome, too, and the industry looks forward to these being rolled out as soon as possible at all appropriate airports," he says.
“We have been working closely with the Government every step of the way. We’re asking the Government to throw everything at FMD, especially at our borders, and take all suitable measures to ensure that FMD does not enter Australia!” says Mr Gladigau.
“Border checks of imported food products – in travellers’ luggage and retailers’ consignments – are vital because the main way FMD is spread worldwide is in food. It’s not just in footwear. It’s not only from Indonesia. Where the Government can do more, then we look forward to them doing so.”
Mr Gladigau says some media outlets reported yesterday that Department of Agriculture, Fisheries and Forestry testing had detected FMD when this was not the case. Viral fragments were detected – not the disease. “We urge the media to use extreme caution in their reporting. Australia is free of FMD and LSD,” he says.
“These detections of viral fragments are a timely reminder that Australia needs the strictest biosecurity measures possible. There are no silver bullets for biosecurity. There is no one measure that works on its own.
“It's everyone’s job to ensure emergency animal diseases do not enter Australia. Biosecurity is everyone’s business. We all have a role to play in protecting Australia’s livestock industry from pests and diseases.”
The Australian Bureau of Agricultural and Resource Economics and Sciences estimates that a widespread FMD outbreak in Australia would have a direct economic impact of around $80 billion.
Australian dairy sector experiencing a chronic shortage of labour
ADF president Rick Gladigau has described dairy's labour shortage situation as "desperate".
Politicians are again being reminded that labour shortages must stay high on the agenda post this weekend's federal election.
Australian Dairy Farmers (ADF) president Rick Gladigau said as in many other sectors in the Australian economy, dairy was experiencing a chronic shortage of labour as a consequence of the full employment rate and the slow opening of international borders post COVID-19.
Mr Gladigau described the situation as "desperate".
"Although exacerbated by COVID-19, this is not a new challenge and while we have made progress in advocating for an improved labour strategy and policy over the past 18 months, labour needs to be a priority for any incoming government," he said.
"In particular we need to see the ALP increase its offering to Australian dairy farmers and the wider dairy industry. In the final days leading up to the election, we remain unclear how an Albanese-led government will assist."
Mr Gladigau said there were still levers available that would further assist dairy farmers' day-to-day labour challenges.
He backed a call from Seniors Australia to exempt employment income from the age pension means test to boost workforce participation.
"The current means testing for the age pension discourages many older Australians from working," he said.
"Exempting work income from means testing means pensioners can return to work, and help meet critical labour shortages across dairy, and many other industries."
Deloitte Access Economics estimate that a 5 per cent increase in workforce participation from Australians over 55 would result in a $47.9 billion increase to GDP.
"Dairy regions have retirees, many who wish to work; however, are not incentivised to do so due to the means test," Mr Gladigau said.
"With many retirees already residing in dairying regions, some of the current accommodation challenges are mitigated with this proposal.
"It would be another proactive step in overcoming this labour hurdle.
"Dairy would welcome the opportunity to work with Seniors Australia and run a trial using our industry as a test case, as we need workers today."
Mr Gladigau said the government's National Agricultural Workforce Strategy and $30 million implementation commitment in the 2021 budget was a good start to addressing the sectoral challenge, but further investment was needed.
"At least $300 million would enable the establishment of a large-scale workforce capability fund to resolve worker shortages and build capabilities needed for the future," he said.
Mr Gladigau also cited progress in the last 18 months as including the review of ANZSCO (the Australian and New Zealand Standard Classification of Occupations) and upgrade of occupations and skills on a dairy farm, as well as updates to the Dairy Industry Labour Agreement which makes it easier for farmers to source staff from overseas.
"We have several members who currently have applications lodged, and with the easing of COVID-19 travel restrictions, it is hoped application processing times are prioritised and this option becomes more viable for an increasing number of dairy farmers," he said.
The Agriculture Visa was another significant step forward according to Mr Gladigau, and while it had been designed and was ready for trial, there had been some difficulties commencing this trial, although Vietnam has now signed up its support.
"Ensuring this visa is working efficiently is a top priority for the dairy sector, as we've specific skills shortages in areas such as AI technicians, which international jobseekers could help address," he said.
Mr Gladigau said despite these wins, ADF would continue to push for further support.
"Our successful launch of the national Pathway for People in Dairy and the Dairy Passport, supported by securing a $715,000 grant from the Victorian government as part of the government's $50 million Agriculture Workforce Plan, demonstrates the value of both our NFF membership, and direct lobbying," he said.
ADF chief executive David Inall said labour shortages were being amplified by increased pressure in the housing market.
Rental prices have surged, and housing prices are growing steadily.
Dairy regions are often sought after for sea or tree-change destinations, meaning housing accessibility is especially constrained for dairy workers.
"To help alleviate these issues, ADF welcomes government investment for building dairy capabilities and increasing housing initiatives for regional areas - especially those that can deliver medium-density options which is the most underserved type of housing for dairy regions," Mr Inall said.
Source: The Land, 19 May 2022
Budget pledges hold hope for dairy
PLEDGES: Dairy farmers will be pleased to see initiatives in the budget addressing the increasing cost of farming, including flood recovery.
Last week, the federal government and opposition used the 2022 budget speeches to make their cases to be elected to govern Australia for the next three years.
Neither delivered everything Australian Dairy Farmers (ADF) is seeking on behalf of members, yet, together, they made commitments that support three objectives in our 2022 Federal Election Policy Statement:
an improvement in nutritional health in Australia, especially in aged care, and abroad
an investment in planning and infrastructure to grow jobs and liveability in the regions
an increase in dairy sustainability and productivity through innovation and markets.
The budget reply from opposition leader Anthony Albanese was silent on agriculture, however dairy farmers stand to benefit from a pledge by Labor to set minimum standards for nutrition in aged care. This is a policy based on science and if properly executed will increase the consumption of dairy foods in residential aged care.
Research shows that when aged care residents increase their daily intake of dairy foods from two to 3.5 serves per day the incidence of fractures and falls declines. Fractures are reduced by one-third. ADF has been calling on politicians to consider how they can help resolve malnutrition in aged care. This commitment to better nutrition delivers and warrants bi-partisan support.
The budget reply, however, did not acknowledge the importance of agriculture to Australia's economy. It overlooked that revenue derived by agriculture is shared across the economy.
By contrast, the budget from the government, recognises that farming feeds and clothes Australians. It contained spending on initiatives that support two of ADF's other key policy objectives - more investment in regional development and more funding for innovation to increase sustainability and productivity.
Dairy farmers will be pleased to see initiatives in the budget addressing the increasing cost of farming, including flood recovery, and further support to grow jobs in our regions.
Key announcements in the budget that support the dairy sector include:
The fuel excise and excise-equivalent customs duty rate that applies to petrol and diesel will be halved for six months, which will create savings for every dairy business as of today.
Over $2 billion in support measures for flood affected primary producers, small businesses, not-for-profit organisations and councils will help the 190 dairy farms that have been impacted by the NSW and Queensland floods.
$6.9 billion investment in nationally significant, transformational water infrastructure projects to assist in developing regional communities and an additional $137.4 million towards infrastructure and compliance initiatives for the Murray-Darling Basin, which will address water security.
$2 billion to establish the Regional Accelerator Program (RAP) to drive transformative economic growth and productivity in regional areas, potentially supporting some of Australia's dairy industry's regions to enhance their supply chain competitiveness.
Over $1.2 billion to expand mobile coverage, connectivity, resilience and affordability in regional Australia which will assist in stimulating adoption of digital technologies.
$250 million to extend the Modern Manufacturing Initiative to support businesses in priority sectors - including agriculture - to deliver high impact projects such as domestic manufacture of fertiliser and other inputs.
$148.6 million to support more investment in affordable and reliable power, including the development of community microgrid projects in regional and rural Australia such as replication of the Nowra bio-digestor plant in other dairy regions.
Some of these and other initiatives in the budget support delivery of the ADF's policy statement.
In particular, the investment in R&D is welcome. Concessional tax treatment for corporate taxpayers who commercialise their eligible patents linked to agvet chemical products, and $505.2 million to support university research projects from proof of concept to commercialisation will in time bring benefit to the farm gate.
Policies that drive nutritional health, regional jobs and on-farm productivity and sustainability support dairy's economic recovery and set the foundations for agriculture to grow to $100 billion by 2030.
We can expect further announcements during the election campaign in coming weeks.
The next three years is a defining period for the sustainability of the Australian dairy industry.
With the right policy settings, the next government can ensure the dairy sector sustains its contribution to life in Australia.
Source: Rick Gladigau, ADF President, Farmonline National, 10 April 2022
Gladigau unapologetic but learnt his lesson
The Australian Dairy Farmers president says he has learnt his lesson after commenting on his fellow board members in the press and on social media, but is not apologising.
Rick Gladigau, who has been on the national dairy advocacy board since 2019 and has only just become president, told The Weekly Times that, "If you think you're going to change the world by getting on to the board, (then) you haven't been on a board before.".
The comment was apparently in reference to the two farmers elected to the ADF board a week ago on a change agenda, Ben Bennett and Heath Cook.
Mr Gladigau then took to social media to double down but, after a backlash, took a slightly different approach when asked what he had meant by the comments in an interview on Friday.
"We do have different opinions as directors, but we can work collaboratively to turn things for the better and, across the industry we need to be collaborative, to be able to achieve doables," Mr Gladigau said.
"So, I basically say my public comments over the new ADF board have probably been taken out of context and probably taken the wrong way to what it says, which is the way that it looks and I've learnt my lesson, it's not going to happen again."
Mr Gladigau would not say what the correct context or interpretation would have been, other than to repeat the importance of working collaboratively.
Asked if he meant others were not working as collaboratively as they should, Mr Gladigau said, "I'm not saying that at all.".
He also said he was not trying to walk back the comment, only that it had been misconstrued.
Regarding any need for change, Mr Gladigau said, "I've been around a long time, but there's plenty that we're doing and we do a lot right."
The structure of dairy advocacy was on the agenda, which he said "wasn't going away", although there "won't be instant change".
Mr Gladigau said ADF's new three-year strategic plan dealt with priorities like climate policy, labour challenges and the importance of dairy in the diet.
The advocacy body was also prepared for the upcoming federal election.
Still, he could not say what ADF would lobby for ahead of the election, other than that there needed to be "recognition" of both the dairy industry's efforts on climate and the role of dairy foods in health, as well as action on labour shortages.
"Everyone's looking for skilled labour and a skilled workforce, so it's training people as well," Mr Gladigau said.
"And some people talk to me about how they need housing, that sort of stuff in regional areas. Obviously, the government isn't going to supply housing, but how do we make it all work?"
Mr Gladigau refused to answer his own question or give any details about what "recognition" meant when it came to the role of dairy foods.
After saying it was important dairy was included in the diets of elderly people in aged care facilities, Mr Gladigau would not say how that would be achieved or if it should be mandated by governments.
The form of that dietary recognition and the recognition of dairy's climate initiatives would only become clear when ADF released its policies, he said.
It was, however, only a "possibility" those policies outlined in the strategy document would become public.
What is certain, though, is that Mr Gladigau is opposed to releasing the directors' election results.
He said last year's results were only made public due to difficulties with the online voting process and this year's candidates had not been asked for their permission.
One of those candidates was Victorian dairy farmer and former ADF director, John Versteden, who was unsuccessful in this election.
Mr Versteden said he had not been told how many votes he had secured, despite separately asking the ADF president, chief executive and a director.
"I don't see why you wouldn't release the votes," Mr Versteden said.
"If you put your hat in the public arena, you have to deal with the results, whether they go your way or not."
Mr Versteden said the secrecy surrounding the election outcomes was "disrespectful to the process".
He also called for greater transparency when it came to proxies, which he said allowed two or three people to effectively control half the votes cast.
"Grass roots farmers have been asking for more transparency; let's give it to them," he said.
Source: Marian Macdonald, Farmonline National, 6 December 2021
Australian Dairy Farmers president takes swipe at new board members
Less than a week after the election, the new Australian Dairy Farmers president has sparked a public spat that appears to target two new board members.
It started with a quote in the media by the freshly-appointed president Rick Gladigau and was only exacerbated when he commented on a Farmer Power social media post.
In an article centring on the two farmers, Ben Bennett and Heath Cook, elected to the ADF board on the promise of change, The Weekly Times writer Peter Hunt reported Mr Gladigau saying: "If you think you're going to change the world by getting on to the board, (then) you haven't been on a board before.".
When that was posted to Farmer Power's Facebook page, Mr Cook responded with, "Just wow, challenge accepted.".
Mr Gladigau joined in the discussion on the Farmer Power forum, describing it as "too funny" and doubling down on his media comments.
"Yep, I take ownership of the comment and stand by it, even if it was the only comment in the 3 paragraphs that PH could find space for regarding me," he said.
We need to all remember Rick is new to this role and has his trainer wheels on.- Heath Cook
"Should I not be surprised no one questions a bold headline of Boardroom rebels and there (sic) going to shake up the national dairy industry! (sic).
"I have served on numerous boards and committees both paid and voluntary, I dont (sic) attend thinking I am going to change the world."
Mr Gladigau went on refer to the various responsibilities he had as a director.
"As an ADF President, I expect my board members to remember they are representing our members, that there are governance laws and procedures and they hold the position with the dignity it deserves," he said.
"I believe that while the focus is on 2 new farmer directors who I consider both bring skills to the board as does the new independent, we are grassroots and that as a board we will continue the great advocacy and policy work with our small but dedicated staff.
"Yep, we have work to do, structural reform is only one piece, but hey, at least let these new directors get an understanding of everything that is going on at ADF."
Approached for comment, Mr Cook called for calm.
"I don't think this should be blown out of proportion," he said.
"We need to all remember Rick is new to this role and has his trainer wheels on.
"The board should have a diverse range of opinions, that's what makes a good board great.
"Bring on the discussion."
Farmer Power chief executive Garry Kerr said he was surprised by Mr Gladigau's comments.
"First, I would have thought he'd have better things to do," Mr Kerr said.
"Second, you don't get down and dirty outside the boardroom when president of the ADF, there's no dignity in any of that."
Just 20 hours since it was published, Mr Kerr said the post had been viewed by about 2650 people and the numbers were rising rapidly.
Source: Marian Macdonald, Farmonline National, 2 December 2021