Dairy farmers are looking at walking away from their farms, as the dairy crisis starts to impact according to a national confidence survey of dairy farmers.
The annual national farmer survey of 800 farmers from around Australia, looked at farmer confidence, which showed that less than half of farmers surveyed remained confident about the industry’s future.
This figure has fallen from 75 per cent four years ago, and has been declining over the past three years.
The confidence of farmers has not been recorded this low since 2013 when it was at 43 per cent, which was at a time when farm gate returns were low, and there was challenging seasonal conditions as well as a high Australian dollar.
The trends were recorded across all dairy regions, however Victorian dairy farmers are the least positive.
Over a quarter of respondents in Western Victoria and South Australia are looking a leaving the industry, with 16 to 19 percent of farmers in these regions already in the winding down phase.
Pressure on small farms
Smaller farms of fewer than 150 cows were those most likely to be winding down.
The survey found that larger farms with over 500 cows were more optimistic about the future and were more likely to stay.
Most farmers were looking at increasing their herd size, with 37 per cent of farmers considering that option.
Farmers were more optimistic about their own operation, than the broader dairy industry.
Uncertain about prices
John Droppert, senior analyst with Dairy Australia said overall, farmers were happier with their own businesses but less so about the industry.
“This is a reflection of uncertainty around the structural changes and that will take some time to settle,” he said.
The report also found that dairy farmers were feeling uncertain about the prices they received from processors with 18 per cent of farmers having switched milk processors that they supply.
There was another 14 per cent of milk suppliers who were also looking to change who they supply their milk to.
However, a greater number of famers did report making a profit last financial year — 60 per cent of respondents, with 67 per cent of farmers expecting to make a profit this financial year.
The report delivered an optimistic market outlook for milk prices, with global demand shifting to Australian produced dairy products.
While this outlook is for more promising prices for milk, farmers are faced with increasing costs as the dry conditions have forced farmers to buy fodder as they have been faced with more challenging seasonal conditions.
Mr Droppert said hay, grain and irrigation water prices were all eroding margins and “presented significant headwinds for the season ahead, particularly in those parts where dry conditions persist.”
Saputo opening price announced
Meanwhile Canadian dairy company Saputo, who earlier this year took over dairy co-operative Murray Goulburn announced their opening price for the 2018/19 season.
They have opened at $5.75 per kilogram milk solids for its southern milk regions of Victoria and Tasmania and 49.6 cents per litre for their suppliers in the NSW Sydney market region.
In its announcement to its suppliers, Saputo said that this opening price was responsible and allowed room for upward movements if improved market conditions area realised throughout the year.
The company has not released it final milk price for the 2017/2018 season, which they say is dependent on external factors that could impact returns.
This announcement only leaves Fonterra and Bega Cheese to announce their opening price for the upcoming season.
By: Nikolai Beilharz and Helen Taylor
Source: ABC Rural