The Australian dairy industry has been milked for profit over the past 15 years, according to David Beca, the chief executive Australia’s largest dairy farming enterprise, the Van Diemen’s Land Company.
Speaking to local media on Wednesday, he said the industry down under is producing less milk now than it did back in 2004, due to a number of “underlying issues” which have driven up production costs.
Although a huge crash in farmgate milk prices during 2016 has widely been reported in Australia as a major contributor to the problem, Beca suggests an industry trend which has seen farmers opt for grain over grass is also adding to the downturn.
“There has been a gradual farm system change which is producing more milk per cow from less pasture in the diet and higher levels of concentrate,” Beca explained.
While in theory is a good thing, the higher production levels of milk per cow is being offset by the steep cost of grain.
“It explains the trend of decreasing profitability and sustainability,” Beca said.
“It impacts on almost every area of the cost structure negatively.”
In the State of Victoria, dairy cow’s pasture consumption in the last 15 years fell from 66 percent to around 50 percent, according to Dairy Australia.
Even in Tasmania, where grass is more abundant due to higher levels of rainfall, the figure fell from 81 percent to 72 percent.
But simply turning back to grass feed over grain is also laced with challenges.
With ongoing drought in large parts of the country, the cost of water irrigation to grow grass is becoming too expensive for many farmers.
“We have to look deeper and realize that our profitability has eroded,” Beca said.
“For a business or an industry to make progress, normally you want to see a 2 – 3 percent improvement in production over time.”
“In Australia there just hasn’t been growth.”