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Australian Dairy Farmers still feeling a struggle a year after price cuts
April 27, 2017

For northern Victorian dairy farmer, Dianne Bowles, the past year has left her $150,000 in the red.

“I’m very tired, I’ve had too many sleepless nights, I’ve had to make too many hard decisions. No breaks, nothing. It’s just been really hard.”

A year ago, Australia’s largest milk processor Murray Goulburn, shocked the sector by announcing it would slash the farm gate price for milk to below the cost of production, and revealed it would claw back past payments, leaving many farmer suppliers in hundreds of thousands of dollars of debt.

It’s largest rival, Fonterra, followed suit and the industry was plunged into crisis.

Now, Australia’s milk production sits at a 21-year low with many farmers exiting the industry or cutting back operations.

Farmers left stunned

Before it cut prices, Murray Goulburn told its suppliers it expected to pay them around $6 a kilogram of milk solids, so when it announced on April 27 2016 the price would actually be $4.80, they were left stunned.

For Dianne Bowles and her husband Gary the timing was terrible.

“Three months before that we had purchased our neighbours farm, we had bought more cows and added staff,” Ms Bowles said.

“It was all done in the hope of high milk prices, then everything was taken away from us.”

Last year’s wet winter made life on the farm in Mead, 290 kilometres north of Melbourne even more stressful.

“We had issues with our cows walking through mud up to their udders, up to their bellies. A lot of them had feet issues, and a lot of mastitis.

Nearly 80 kilometres south east, in Lockington, former Murray Goulburn director and supplier Paul Weller decided to end a nearly five-decade relationship with the cooperative, and start supplying the competition, Fonterra.

“Before the price cut announcement, I’d gone out and bought water, hay and grain,” he said.

“I think it was really unethical of the company to turn around and say, ‘oh no, we’ve paid you too much’, because they misled us into thinking we had more money than we ended up with.”

Consumer support waning

Outrage at the treatment of dairy suppliers saw farmers take to the streets across the country in protest.

Attention turned to cheap supermarket milk, often sold for $1 a litre, and the market share of Coles and Woolworths branded milk plummeted from 66 per cent of sales down to 51 per cent in a single month.

But now that market share has risen back to just under 60 per cent, according to data from Dairy Australia.

Dianne Bowles said consumer support on social media and at the checkout was a huge support through difficult times.

“I don’t think that shift has sustained itself, but I think the people that have changed have stayed there and realise the benefit of paying that extra dollar, and not just for cheese, but milk and butter and yogurt, so it’s great.”

“It’s absolutely amazing, and I don’t think people realise what an absolute boost it gives to your spirit, knowing that just that little thing it does make a difference.”

Action still pending

Murray Goulburn revealed in February it had sustained a $31.9 million dollar loss in the six months to December 2016, and that around 20 per cent of its milk supply had evaporated.

It comes as no surprise to Mr Weller, who told ABC Rural at least three or four dairy farms within a short radius of his own property had closed up in the last year.

As signs of the crisis mounted the Federal Government stepped into offer concessional loans to producers, by the end of March 2017, $100 million had been loaned out to 177 successful applicants.

118 applicants missed out, and the loans have faced criticism over their complex paperwork and lengthy approval times.

The Federal Government directed the Australian Competition and Consumer Commission to look into the behaviour of Murray Goulburn and Fonterra, and launched its own industry-wide inquiry into competition in the dairy industry.

Agriculture commissioner Mick Keogh said the past 12 months had caused a serious “fracture” in the trust dairy farmers had with processors.

The ACCC expects to hand its recommendations to government in October.

Federal senators conducted their own inquiry into the dairy sector, with findings due to be handed down in May.

Murray Goulburn is also the subject of an investigation by the Australian Securities and Investment Commission, as well as a class action lawsuit brought by investors in the company’s unit trust.

Lasting scars

As an active member, and advocate for the dairy industry, Ms Bowles said she was troubled by how fractured the industry had become over the last 12 months.

“[Dairy farmers] don’t support each other as we used to, we just look after ourselves.

“If you supply Murray Goulburn, as we’ve continued to do, we’re looked down upon as making a stupid business decision, but it is our decision, not theirs, and that’s not good for the industry either.”

On a particularly tough night last year, Ms Bowles created a Facebook page, ‘Show Some Dairy Love’, which has grown into a popular online community and mental health support group.

“We’ve got 11,200 members worldwide now,” she said.

“It’s turned into a real mental health support page, there’s people on there that really struggle with mental health issues, and they just say, ‘hey I’m not really travelling that well today’, and a heap of people just jump on and support them.

Despite the rough year, neither Ms Bowles nor Mr Weller have turned their backs on Murray Goulburn.

Ms Bowles said she is encouraged by the processors’ new management, while Mr Weller said he wouldn’t rule out returning to the processor in the future.

The year ahead promises more favourable weather, coupled with low grain prices which will help feed the cows.

And prices on the international stage are showing some signs of recovery.

Its was very difficult from the end of April until the end of September”, Mr Weller said.

“But then when things started to dry out at the end of October, and the price rise came I think people started to see there was a future.”

 

Source: ABC News



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