AS IF producers don’t have enough to worry about at the moment. While the drought conditions are decimating many farms, not only in West and South Gippsland, but across Victoria and beyond, the severe weather pattern that brought heavy rain also caused a lot of damage.
Some good news first. Jack Jiang, public relations for Tabro Meat, said they commenced operating on Wednesday. While they are operating with direct supply at the moment, this could see saleyard numbers decrease and potentially increase competition. Equally good news is that the new abattoir at Trafalgar will commence operations soon too.
In reality, competition has weakened this week with Australian Meat Group, Dandenong South, closed for some maintenance work in their cooling area, and not because Bruce Makin got married, as some were suggesting; however, demand strengthened prior to what could be an explosion in the supply of cows.
Murray Goulburn’s (MG) announcement that they were slashing the price of the payment by 30 cents per kilogram of milk solids, after a large downgrading of their profit margin, has left many dairy farmers in a new limbo.
Some ramifications of this has been the resignation of their chief executive and chief financial officers, and co-operative members calling for MG’s chairman, Phillip Tracey, to follow them.
Mr Tracey is a dairy farmer himself, milking in excess of 2000 cows in South Gippsland, and is fully aware of the continuing effects of MG’s announcement.
My prediction is that many dairy farmers will exit more chopper cows in the coming weeks, as it is not viable to keep buying hay, silage and grain to keep cows milking that will earn them significantly less money than budgeted for, when MG’s prices were “guaranteed” at a higher level. Maybe there have already been enough cows culled from herds, but I don’t think so. All of this considered, one dairy farmer didn’t need to lose four cows, killed when the extremes winds felled a tree on them on Sunday morning.
Dairy farmers have to re-consider their options, and one processor said they had three phone calls after MG’s announcement from dairy farmers wanting a hook price for their whole herd. Both Fonterra and Burra Foods have said they’ll not reduce their price, which could see their phones ring off the hook with suppliers wanting to exit MG.
As we all know, when farmers are making money they spend, particularly dairy farmers to operate their farm. If their milk cheques drop in value, then less money flows into the community.
