HIGH water prices are forcing a new wave of northern Victorian and Riverina dairy farmers to cut back their herds and losses or face leaving the industry.
Murray Dairy reports the annual loss of dairy farmers has hit about 11-12 per cent, as allocation water prices skyrocket from $100 a megalitre 12 months ago to $500/ML today.
The industry had already been weakened by the impact of the April 2016 milk price clawback, but Murray Dairy chief executive Jenny Wilson said farmers were now battling to source water.
“Farmers across the Murray Dairy (GMID) region own (on average) about 60 per cent of the water they use (as entitlement),” Ms Wilson said.
It means dairy farmers must enter the high-priced allocation (temporary) water market to meet 40 per cent of their needs.
Leitchville dairy farmer John Smith said a lot of people had to get out of dairying or cut back.
“I don’t think we’ll see the dairy industry at the level it has been,” Mr Smith said. “Not with a third of our water being taken up by the government, while others play games on the stock market with our water.”
Mr Smith has just closed down one of his dairy farms and sold its 300 milkers, after the resident sharefarmer said he wanted to cut his losses.
“The sharefarmer said they were only going to lose money, because the water I supplied ran out and we had to go back into the temporary market.
“So, they said to me ‘we don’t want to go into more debt’ and they wanted to get out while they could still get something.”
Mr Smith said he would run some beef cattle on the property, plant cereal crops and irrigate “opportunistically”, if and when water prices became affordable.
Even on the main dairy farm, which Mr Smith’s daughter Bernice Lumsden and son-in-law Scott sharefarm, the herd has been cut back from 800 to 600 cows.
“We have to farm differently, because we’re not going to sit there and cop this shit year after year,” he said.
United Dairyfarmers of Victoria councillor John Keely said it was obvious $500/ML was unaffordable.
But he said dairy farmers faced enormous risks if they didn’t irrigate this autumn.
“I’ve got about 400ML left, which I’m not going to sell,” Mr Keely said. “I’m going to keep milking.”