It is crucial an increase is made to the farm gate milk price otherwise dairy farms around the country could be forced to close, a Bega Valley farmer has said.
Phil Ryan has run cattle at Toothdale for the past 11 years and said a combination of drought, high feed prices and low payments for milk products were causing intense pressure on dairy farmers.
“Our current milk price is historically high. If we had received a price at this level for the last 10 years, with lower feed prices, our businesses would be more resilient and therefore more sustainable. All of our costs keep rising, so our milk price has to as well,” he said.
Mr Ryan currently sells milk produced on his farm to Bega Cheese for about 50cents per litre. But he said with this year’s feed prices going sky high, in order for his business to be secure the price might need to be raised as high as 70cents per litre.
In the long-term, he said a price above 60cents per litre was what needed to be paid to farmers for the industry to survive.
“I’d rather be supplying Bega than anybody else, but this year in particular the current price is not enough for me to have confidence in surviving a prolonged dry spell,” he said.
“Part of the reason Bega diversified was as there has been consistently low margins in cheese production.
“$1 milk gets headlines, but the price of 1kg block of cheese represents a price lower than $1 a litre. Major supermarkets are selling 1kg blocks of cheese for $6.60/kg up to $11kg which represents a price of 66cents to $1.10 per litre.”
As supermarkets have been selling products at such low prices it has impacted what farmers were paid, he said.
“Consumers have repeatedly shown their willingness to pay more for dairy products if that flows through to the farmers,” Mr Ryan said.
“If they were not offered $1litre milk or $6.60/kg blocks of cheese they would pay $1.50 a litre or $15/kg.”
Mr Ryan believed the dairy industry in Australia had already reached breaking point due to the quantities of dairy products the country now imports.
“Consumption has grown so that we are now consuming approximately six billion litres of domestic dairy products and approximately three billion litres of imported dairy products while exporting approximately three billion,” he said.
“It means this year we should become net importers for the first time.
“Free trade is not working for the Australian dairy industry. It doesn’t make sense to me that we’re importing three billion litres of product.”
Mr Ryan said the milk price processors offered to farmers was non-negotiable, so processors needed to negotiate better margins in their contracts with supermarkets which would allow them to pass on better prices to farmers.
“Farmers have to insist on better pricing from processors, but unfortunately one of the few options we have to do that is to choose to no longer be dairy farmers,” he said.
If low farm gate milk prices continue across the country, Mr Ryan painted a bleak picture of the industry in 20 years time.
“There will probably cease to be a dairy industry in Queensland and certainly northern NSW,” he said.
“Victoria will supply mainland Australia with fresh milk and many of our dairy products will be imported from New Zealand.”
A painful year on the land
Conditions got so harsh this year Mr Ryan had to sell off 65-70 cows he otherwise might not have sold and he has put plans for a new dairy on hold indefinitely.
“I’m worried,” he said.
“Feed prices have made it a very difficult year and we’re going to have those feed prices over the next 12 months until there’s a new grain harvest.
“They’re the worst they’ve been not just in my years, but ever.”