CALLS for more litres ignore the real issue for dairy farms, writes SIMONE SMITH
The current terms of trade are terrible for dairy farmers.
A high Australian dollar, rising costs, poor farmgate prices and milk payment systems, a supermarket duopoly devaluing fresh milk, free-falling property prices, poor chopper values and uncertainty in the live export heifer market add to the strain.
It's not a pretty picture and certainly not an environment for growth.
Yet many parts of the industry have continued to call for more litres.
Growth didn't appear to be front-of-mind for most in the 600-strong crowd at Noorat's dairy crisis meeting last week.
Rather, it was about survival in the face of slim or non-existent margins.
Those at the meeting wanted to make a decent return for their hard work and investment.
They wanted a fair margin between farmgate costs and price.
And they longed for industry leadership - farmer lobby groups, processors and Dairy Australia - to focus on the one and only thing that drives the rest of the industry.
Profitable farmers.
Is it responsible to call for more milk when there's a chance rising costs may mean this milk isn't always profitable?
How much of the nation's milk production is coming from unprofitable dairy farmers?
How much is this hurting the next generation?
Or more importantly, how much is this turning away the next generation?
Luring farmers to produce out-of-season milk can be expensive for farm businesses.
It might provide better plant utilisation, but unless those putting cups on cows are making money, there won't be enough of the white stuff at any time of year.
Everyone in the industry must have producer's margins at the forefront of all discussions.
Encouraging extra production, particularly when elevated levels of expensive supplements are required, drives cost into a business.
The combination of this and high debt often leaves a dairy farm business open to volatility.
Is a business that rides the bumps of the global market, suffering a few scrapes and bruises in high cost, low price variability better than one which gushes blood some years and reaps big returns during others?
It's not about the money you make in a good year, it's about the amount of money you don't lose in a bad year.
If you ask many, the "good" price years seem to be far and few between.
The industry shouldn't have to get to a "crisis meeting" point to stress that the entire supply chain, and many regional communities are reliant on financially healthy farmers.
- Simone Smith is The Weekly Times' dairy reporter
