Dairy Australia’s year in review highlights power, labour costs
Dairy farmers are battling costly expenses across the nation, but some states have been more profitable than others.
Victorian dairy profit margins have doubled in the wake of the 2016 clawback — but the cost of running a farm is galloping as well.
New figures from Dairy Australia covering the post-2016 era reveal a revival in fortunes for the beleaguered sector, with surpluses in most states hovering close to $4.00 per kg milk solids.
Victorian and South Australian farmers were the biggest winners last financial year, with an average surplus figure of $3.94 per kg milk solids.
NSW stood at $3.84, Queensland at $3.75 and WA at the back of the pack with a $3.49 per kg milk solids average in the 2022-23 season.
Victorian and SA farmers enjoyed the biggest surplus jumps between the 2016-17 and 2022-23 financial years; in the wake of clawback, they were barely making $1.50 per kg milk solids in profit.
Dairy Australia industry analyst Isobel Dando said record-high farmgate prices played their part in the pricing purple patch for the sector.
But a combination of surging power prices, labour costs and other input expenses eroded the gains somewhat.
“Farmgate prices were at record highs last season. What our figures have shown is that expenses were also very high last financial year,” Ms Dando said.
Released recently, the Australian Dairy Industry in Focus report goes someway to explaining why farmers continued to leave the sector despite strong prices, with a correlation between shrinking margins in 2019-20 and an exodus of primary producers.
“Everyone’s power bill is going up, many businesses have the issues with labour costs,” Mr Free said.
“Rates are an area where farmers in particular are also feeling pressure, along with those other price rises.
“The UDV wants the state government to do more to reduce the rates burden, it’s not the fault of councils alone.”
“Power bill prices aren’t going to go down anytime soon,” he said. “Running a dairy takes a lot of power, it’s not like a household, so that needs to be acknowledged.”
The annual review confirmed Australia’s milk pool fell to a 30-year low last financial year, clocking in at 8.129 billion litres.
Alex Sinnott, The Weekly Times, 23 November 2023.
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In Focus report reveals dairy industry statistics
Despite relatively high milk prices offered to farmers, the number of dairy farms has fallen.
For more information and to subscribe to In Focus, visit Dairy Australia
Source: Farmonline, 14 January 2023
Dairy Australia staff surge as milk production slumps by a billion litres
As national milk production slumps by almost a billion litres, Dairy Australia has boosted staff numbers to 178.
Dairy Australia’s staff numbers have surged almost 30 per cent in the past five years, despite national milk production slumping by almost a billion litres.
DA’s annual reports show it had the full time equivalent of 139.65 staff in 2016-17, with 91.3 FTEs at its Southbank headquarters, plus 48.35 FTEs spread across its eight regional development program sites.
The latest 2021-22 annual report shows that number has grown to 178 FTE staff, but gives no breakdown of how many work at Southbank versus the RDPs.
As DA’s staff numbers increase national milk production wanes, from 9 billion litres in 2016-17 to a forecast of just on 8 billion litres this season.
The wages bill reflects the hike in staff numbers, having grown from $14.9m in 2016-17 to $18.34m in 2021-22.
DA managing director David Nation said employee numbers “fluctuate over time based on the significant increase in the delivery of services to farmers and the industry and the reduced dependency on consultants to deliver these services.
Dairy Australia managing director David Nation responded to questions on increased staffing by stating he plans to enhance farmer engagement.
“There are also plans to enhance Dairy Australia services and engagement with farmers through our 8 regional locations. Which includes the bolstering of expertise and capacity to support farm businesses.”
The wages hike comes despite DA losing a bid earlier this year to gain a 20 per cent increase in the levies farmers contribute to its research, development and marketing efforts.
At the time the Australian Dairy Farmers Board urged the nation’s 5000 farmers not support any increase in the levy, given dairy processing giants – such as Fonterra, Bega and Saputo – refused to contribute, despite enjoying the benefits of the R&D body’s $10 million investment in post farmgate manufacturing research, market access and development.
Woolsthorpe dairy farmer Glenn Britnell said the question DA needed to answer was “What value have we got from employing more staff while producing less milk?”.
“I don’t mind if they step up their staffing, but are they creating value down the chain?”
Cohuna dairy farmer Steve Henty said DA had delivered value to his own operation over his lifetime, but could not attribute anything to its R&D that had helped him over the past five years.
However he said “when there’s an emergency they (DA) do really step up, calling to ask what we need, and when things are tight.
As for the decline in milk production Mr Henty said “everyone has to take a little bit of blame”, from those with big numbers of cows who “had not been able to find the right balance”, to “those of us of a certain age who are thinking of running beef”.
Dairy Australia provides resources for managing wet conditions
Dairy farmers across Australia, particularly on the east coast, are again dealing with wet conditions and floods this spring and summer.
The third successive La Nina event means above average rainfall is forecast for many Australian dairy regions.
Dairy Australia has a number of resources available to help dairy farmers to manage wet conditions and to prepare for and recover from floods.
Floods can be unpredictable and destructive.
It is easy to become overwhelmed after a flood event.
A flood can also affect power supply to the farm.
Preparing for power outages helps farmers develop a contingency plan that will save time and keep the dairy operational during a power outage.
Floods can isolate farmers from their community, damage infrastructure, cut essential services, cause death or injuries and result in costly dumped milk.
Being ready with a contingency plan will save time and help keep the dairy operational.
Forward planning a team approach and practice are the key steps to minimise disruption to the business.
Recovery from any natural disaster can be slow, stressful and costly so it is worth spending time at least once a year to discuss areas of business risk with family and employees.
Animal welfare
When conditions get wet, the risk of mastitis and lameness can both increase.
After a flood, farmers should thoroughly assess sick or injured stock - if recovery is unlikely (e.g. from clinical mastitis or lameness), consider culling or humane euthanasia.
Write down an inventory of feed availability and accessibility - use it to budget daily cow requirements.
Wherever possible make feed mix changes slowly.
After a major flood event, cows may be unsettled and continuity of feed intake may be disrupted for a few days.
Try to use 'safer' feeds such as hay/silage or pasture as the main component of the diet until the cows settle back into a routine.
Milk yields may suffer initially but should recover within a few days.
Check damp hay stores for risk of spontaneous combustion.
If labour resources allow; reduce the risk of clinical mastitis by the following steps:
• Wash and dry all teats before cups go on (always use new paper towel for each cow).
• Strip cows every day to detect, treat and isolate clinical days.
• Ensure all surfaces of all four teats are covered with teat disinfectant.
• Keep teats clean and dry for at least an hour after the cows leave the shed.
• Set up feeding and other routines so cows don't lie down soon after milking.
To manage lameness:
• Identify lame cows and separate into smaller groups, close to the dairy, on the best feed available - consider milking them once a day.
• Treat lame cows as soon as possible.
• Be patient when moving all cows - tell staff to expect it to take twice as long as usual. Reschedule staff working hours to accommodate the change in routine.
• Try to keep yard concrete clear of stones to reduce injury to soft feet.
• Consider using material (more than 30 centimetres deep) over damaged parts of the laneways to reduce injury to cow's feet (within 30m of dairy yard) such as wood chips, sawdust, limestone.
To manage downer cows:
• Provide feed, water, bedding and shelter for downer cows. If there is not enough time to provide an appropriate level of nursing care, including lifting and regular assessments, people must consider humanely euthanase the cow.
• Downer cows must never be left in the paddock without feed, water, bedding, shelter and confinement or left hanging in hip clamps.
Keep an impact diary
Dairy Australia recommends farmers keep an impact diary after a natural disaster. This records the impact the disaster has had on the farm.
Keeping an impact diary is an important part of the recovery process from any natural disaster as it substantiates any claims for grant funding applications or assistance packages. The impact diary records any costs, time and resources devoted to clean up tasks and enables a better estimate of financial loss.
Use a phone or digital cameras to take photos of any damage and/or water levels for insurance claims and to help future planning. See Dairy Australia website for more information.
Source: The Land, 8 November 2022
Dairy Australia plans new phase in Dairy Manifesto sustainability campaign
IN 2019 Dairy Australia launched the Dairy Matters 'Manifesto' campaign with the objective of building community trust by reinforcing the industry sustainability commitments: enhancing livelihoods, improving wellbeing, best care for animals and reducing environmental impact.
Dairy Australia marketing manager Glenys Zucco said as the industry made progress against its sustainability commitments, it was important it continued to tell that story and demonstrate that it understood community expectations.
"Our insights tell us that improving health and wellbeing and reducing environmental impact are what's most important to our community, so this year we are launching Manifesto 2.0, where these two commitments and the actions we are taking will be a key focus," Ms Zucco said.
"The recognisable voice of dairy ambassador Jonathan Brown features as our narrator for the campaign, where our overarching message is about Australian dairy's sustainability promise. A promise to protect what matters most."
Although 21 million Australians enjoy dairy foods every day and milk is in 98 per cent of households, nine out of 10 people are not consuming the recommended daily intake of milk, cheese and yogurt.
To encourage consumption and drive home the role of dairy foods in a healthy balanced diet, the campaign will leverage the fractures trial research published last year, as well as new data that says Australians are unaware of just how many serves they should be consuming per day.
Health messages and resources including posters for clinics will also be delivered to health professionals to ensure they feel confident to recommended dairy consumption and respond to health-related questions or concerns from the community.
The campaign will also communicate environmental messages and the progress dairy is making across the supply chain, focusing on topics of community interest including water use, packaging, biodiversity and commitments to achieving net zero emissions.
The campaign is being delivered across TV, digital and social media, with a particular focus on our younger Australians via podcast partnerships and the development of content for TikTok and YouTube.
With both health and environment proving to be critical topics in the minds of the younger generation, TikTok creates an exciting opportunity to tell the dairy story in a way that is authentic and engaging.
Learn more at dairymatters.com.au.
MLA, Dairy Australia join to set up dairy beef extension training program
AgSTAR Projects managing director Maria Thompson has told the conference there is an opportunity to improve the breeding, the feeding and the management of any marketing of the calves destined for dairy beef pathways.
Australia's dairy and red meat peak bodies have joined to develop a new five-year extension and adoption program for the dairy beef sector.
Dairy Australia and Meat & Livestock Australia will jointly fund the Growing Beef from Dairy study program and encourage its take up.
AgSTAR Projects managing director Maria Thompson told the Growing Beef from Dairy Conference, Melbourne, that only 37 per cent of dairy cattle, of a 1.5 million herd, were bred for replacements.
That meant an estimated conservative surplus of between 500,000-600,000 calves.
"We have existing, and emerging, dairy beef pathways - there is most certainly an opportunity to improve the breeding, the feeding and the management of any marketing of the calves destined for those pathways," Ms Thompson said.
She said there were management challenges on farm, as surplus calves had been seen of having no monetary value.
There was also the issue of the cost of infrastructure, rearing and finding skilled labor.
"There is a huge social welfare licence issue for the industry," Ms Thompson said.
"This area has become a priority for industry, in particular for stakeholders, so they can have access to best management practices and information, the latest research and development."
The project aimed to develop the tools to assess the viability, costs and benefits of rearing dairy cows for beef.
"It will essentially be developing a suite of information and tools to upskill to support both dairy and beef producers to make better decisions across the supply chain, to ultimately improve animal welfare and meat quality outcomes," she said.
The team developing the training package hoped to talk to everyone in the dairy-beef supply chain.
"It's a market-focused outcome for surplus calves - where is the target market, what is the end point for those calves?" she said.
The training package would aim producers to make more informed and better decisions, based on the age and weight of calves, regional, seasonal and market variations.
"A key element of the project is working with farmer and the supply chain to understand what the barriers are and to ensure they are thinking about 'what is the market for my calf, what is the next step, where is my calf going?'," she said.
The project would develop bespoke learning modules, target to calf age and weight.
Source: Andrew Miller, Farmonline National, 19 September 2022
Dairy Australia situation report: Inflation chasing farmgate profits
Profitability in the dairy sector would be soaring if it wasn’t for a multitude of inflationary pressures, a new report confirms.
Record prices for dairy are being chased by galloping inflation as the clock ticks down to the start of the new season.
Released Wednesday, Dairy Australia’s latest situation and outlook report reveals fertiliser and fodder costs will continue to stalk the sector into the new financial year.
Early announcements of opening milk prices have set new records with two of Australia’s big three processors opening with prices above $8 per kg milk solids.
However, Dairy Australia analysis manager John Droppert said fertiliser, fuel and grain prices were surging on the back of export logistical blockages in Asia as well as flow-on effects from the Russia-Ukraine war.
“Labour shortages are also a big factor in business planning for farmers, not just dairy farmers,” Mr Droppert said.
“Anecdotally, farmers who may in normal circumstances plan to expand their operations aren’t able to due to the shortage of workers. But they may be making smaller-scale investments and upgrades to their farms.”
Fodder prices continue to eat into the profit margins of dairy farmers, with Queensland producers hit particularly hard.
Statistics provided by the Australian Fodder Industry Association to Dairy Australia showed the Atherton Tablelands had some of the highest fodder costs with an average of $350 a tonne for pasture hay.
The fire-ravaged Bega Valley also had heightened hay costs at an average of $285/tonne for cereal hay, although the fodder costs had eased in recent months.
“Fodder and fertiliser costs have placed pressure on many farmers in the past year,” Mr Droppert said.
“Obviously, depending on which region you’re farming in, supply has an impact and that flows onto the average costs.”
Results from this year’s National Dairy Farmer Survey were included in the report.
The survey confirmed that profitability continued to improve this financial year, with 88 per cent of survey respondents reporting an operating profit in the 2020-21 season, and 90 per cent expecting to do so in the 2021-22 financial year.
Mr Droppert said 82 per cent of Australian dairy farmers were confident about the future of their own businesses while 68 per cent of respondents were feeling optimistic about the industry’s overall trajectory.
Nationwide, 700 farmers participated in the survey covering the eight dairy regions.
“Farmer confidence is at its highest level since 2015 and there was little variation by region in terms of confidence — it was across the board. Although clearly northern NSW and southern Queensland have endured several testing months following the floods,” Mr Droppert said.
“Strong prices this season and the record opening prices for the coming season provided a big confidence boost.”