THE true picture of Victoria’s dairy price crisis is emerging with dairy farmers facing massive water debts.
By: PETER HUNT
Source: The Weekly Times
The Weekly Times can reveal almost 2000 irrigators are more than four months overdue in repaying $11.98 million to Victoria’s largest water corporation.
Three hundred of those farmers owe an average of $40,000 each.
Goulburn Murray Water has reported a 43 per cent surge in overdue debt over the past two years, mainly from dairy farming irrigators battling to repay debts accumulated in the wake of last year’s milk price cuts.
Most worrying for dairy is the 300 irrigators on GMW’s books who are more than four months overdue on repaying at least $10,000 each, with the average owing about $40,000.
“A retrospective price cut by processors to the milk price paid to suppliers in April-May 2016, coupled with continuing dry conditions at the time, was a shock to customers,” GMW managing director Pat Lennon said.
In the lead-up to April last year, many dairy farmers paid high prices for temporary water, based on dairy processor Murray Goulburn Co-operative’s forecast end-of-season milk price of $6 a kilogram of milk solids.
When reality finally struck home, MG cut the milk price back to $4.31/kg MS in the wake of disastrous financial results.
“GMW recognised these market conditions would impact on the ability of some of these customers to pay their 2016-17 accounts and have effects into the future,” Mr Lennon said.
In its annual report GMW states: “Overdue debtors, greater than four months, are still considered collectable due to them being secured by a lien (claim) over the customers’ properties.
“In the event that debts are not paid, when a property is sold, any outstanding debts will be recovered as part of the settlement process.”
The pain of last year’s milk price cuts has also led to a spike in overdue water bills on Southern Rural Water’s accounts, as Macalister irrigators struggle to pay.
The amount SRW customers owe, which is more than three months overdue, has risen 25 per cent in 12 months, from $1.7 million in 2015-16 to $2.14 million in 2016-17.
SRW chief financial officer Stuart Wrigglesworth said much of the increase was due to the introduction of extended payment arrangements for some customers in the Macalister, Bacchus Marsh and Werribee districts.
“There’s been an increase in customers seeking these arrangements, but not to the extent seen up north,” Mr Wrigglesworth said.
GMW has introduced hardship arrangements that offer irrigators discounts, waived interest provisions and deferment of existing debt to ensure farmers are not at risk of losing their water supply.
“Over the past 12-18 months GMW has continued to take steps to address hardship concerns for customers in respect of ongoing dry conditions and the 20 per cent reduced dairy price impacting customers (more than 1300 including farms growing feed for dairy farms), Mr Lennon said.
“GMW recognises that providing assistance to customers by supporting viable businesses is in the best interest of both customers and GMW.”
Victorian Farmers Federation water council chairman Richard Anderson said GMW was doing all it could to assist irrigators.
“They’ve (GMW) done the right thing, bringing in different payment options and scheduled payment arrangements,” Mr Anderson said.
“Now GMW has to monitor these debt levels, so it doesn’t face problems.”
Mr Anderson said everyone was struggling and many farmers were slow to pay on many inputs, from hay to water.
“People are slow to pay me (for hay),” he said. “It’s the same for all of us.”