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Dairy farming booming, but some clouds still around

LOCAL dairy farmers are celebrating a great start to the season, with a stable milk price – and the prospect of an increase – good weather and falling costs of production all going in their favour.

“It’s been the best season ever,” said Tyrendarra dairy farmer and United Dairyfarmers of Victoria Wannon branch president Bruce Knowles.

“The feedback from farmers is they’ve never seen anything like it.”

The cost of production inputs had fallen, and the milk price was steady.

That was sitting around 640-650c/kg of milk solids, with Bulla paying the first “step-up” increase of the season, up 10c to 680c.

“Dairy companies were very competitive when the milk prices first came out,” Mr Knowles said.

“Fonterra have had to match that after trying to be very conservative with the anticipation of paying step-ups, but that pulled them into line.”

Already-low interest rates were likely to stay down due to the effects of the coronavirus pandemic, something that would benefit all farmers, Mr Knowles said.

“Things are ticking along quite nicely, we’re still making silage and we’ve got to make the most of it while we can.”

But there were some signs to be wary of.

A strengthening Australian dollar was one, even though about two-thirds of milk produced was for the domestic market.

“That’s an area of concern,” Mr Knowles said.

“Every time it goes up one cent (against the US dollar) it’s worth about 14c of milk solids for the exporters.

“There’s probably also the fact that (local) dairy farms are still being sold to beef, that’s still a major concern.

“The other thing is there’s been a drop in milk production over the last 6-12 months that’s created a shortage of milk.

“There’s also been a lot of milk disappearing from Victoria to NSW and Queensland and where that will fall back to, who knows.”

That was further complicated with the recent scandal involving ASX-listed dairy-related company Freedom Foods – which recently wrote off $591.5 million, raising the prospect of possible fraud.

“That milk has also got to end up going somewhere,” Mr Knowles said.

● Meanwhile there has been recent election success for two local dairy farmers.

One of them is Mr Knowles, who was elected as the new Region 10 representative on the United Dairyfarmers of Victoria policy council, taking over from Oonagh Kilpatrick, who recently resigned from the role.

He ran on a platform of giving farmers back their voice in the UDV “without the need to capitulate the dairy farmers voice into the control of processors”.

Mr Knowles will stand down as Wannon branch president.

Meanwhile Heywood dairy farmer Tania Luckin was re-elected as a milk producer director on the Dairy Australia board.

She was upbeat about the industry when speaking to the Observer in September.

“We’ve come off 10 of the hardest years we’ve had, but now there is some upside,” Ms Luckin said.

“COVID aside, we’ve had a fairly good opening (milk) price, grain prices are heading lower and it’s been one of the best seasons we’ve had to date across most of Australia’s dairying regions. “I speak to a lot of farmers from every dairying region on a regular basis and the majority of them are feeling more confident about the future.”

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