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Dairy Price Cut In Australia Likely To Hurt Grain Producers
May 5, 2016

The decline in fortunes of Australia’s dairyfarmers is likely to have spin-off effects for grain producers, with the president of the United Dairyfarrmers of Victoria (UDV) saying dairy producers will be looking to rein in costs wherever possible, including grain purchases.

Adam Jenkins, who farms in Victoria’s Western District, said while there was a certain amount of inelastic demand to feed the nation’s approximately 1.75 million strong dairy cow herd, lower milk prices meant the incentive was not there to spend big on feed.

“The milk price situation is not that attractive, so at present it is a bare bones sort of situation, people going hand to mouth to an extent, not using more than they have to until there is a clearer picture on the season.

“However, people will still buy grain; they may be able to cut back, but they will make purchases.”

He said there had been rain in southern Victoria in the past week, but said it would be a race against time to get a feed wedge established before the cold southern winter limited growth rates.

In terms of grain availability, Mr Jenkins said he believed there was still grain available for purchase, but said dairy producers had to hunt around more to find it.

It was a similar story in the hay market.  “Stocks of hay and straw are starting to get a little tight,” he said.  Grain Producers Australia (GPA) chairman and a seller of grain and fodder to the dairy industry Andrew Weidemann, Rupanyup, in Victoria, said availability of both hay and grain stocks were tightening as mixed farmers held onto their reserves.

“Farmers are making sure they have feed for their own livestock so that means there is not much on the market,” he said.

“There’s also been solid demand from all the livestock industries, you can see that with all the grain bags in paddocks through grain producing areas that have been emptied over the past couple of months.”

AgScientia analyst Lloyd George said dairy’s reduced demand would be felt by grain producers.  “There are other domestic users there, but certainly in south-east Australia, Victoria’s dairy herd of a million or so cows dwarfs the other industries,” he said.

He agreed with Mr Jenkins that there wouldn’t be a wholesale exit from grain purchases, but added financial strain may have dairyfarmers looking at all alternatives.

“The feeding patterns in dairy have become a lot more consistent, but that is going to be tested this season,” he said.

He also said the flow on effects from the north, where sorghum producers were looking for a home for product given China was not buying large tonnages Australian sorghum this season would create some supplies of feed grain through other areas, although freight considerations would still create regional shortages.

By: Gregor Heard


Summer 2018