Northern Victorian dairy farmers, facing high production costs, weigh options

With grain prices hitting $385 a tonne, hay reaching $400/t and water at $350/Megalitre, farmers say they badly need rain, to grow spring pastures for grass or hay.

Echuca dairy farmer Steve Hawken said cost of production pressures would also be alleviated by processors offering milk step ups.

“The most important thing on processors’ minds should be the farmers,” Mr Hawken said.

“It’s a perfect storm, really, and there is not one single solution.”

Mr Hawken said he had the capacity to milk 340 cows but was likely to run 280, because of grain prices.

“That’s for plain wheat, but I need canola meal, maize and vitamins to keep the girls happy.”

Dairy Australia senior analyst John Droppert said while DA had not published a forecast, guidance from processors was that prices would close higher than where they opened.

“I would suggest that’s not an unreasonable assumption,” Mr Droppert said.

“Timing will be key, though, for many.”

High water costs were another concern, with brokers saying concerns about a dry spring and summer had seen a temporary price spike.

Steve Dalitz, Numurkah, said this time last year, he had 250ML of carryover water; this year he had none.

While he had an assured 300ML, he used 700ML a year.

As a result, he had decided to reduce his herd, selling 45 yearlings two months ago.

”I figured I would have to keep them for another 12 months, or buy water, to grow grass or hay,” Mr Dalitz said.

“Hay is non existent now – you have to buy it from the western districts or South Australia, and there is not much left,” Mr Dalitz said.

“There’s not even any straw around, for fibre.”

He said while the property received decent rainfall recently, it would only get the pastures through for a couple of weeks.

Farmers were very dependent on what rice and cotton growers would do.

“If they decide to plant, water prices will go through the roof,” he said.

Waaia’s James Dillon agreed dairy herds could be reduced.

“Oaten hay is $400, who can afford that?,” Mr Dillon said

He said farmers would have to do their sums and try and grow as much grass as they could. 

“They are better off paying $300 a megalitre for water, which is going to get roughly two tonnes of food, from spring growth, per megalitre,” Mr Dillon said.

“A decent farmer, using urea and everything else, should be able to get some good grass growth.”

Marshall Jacobs, Rochester, who milks 80 cows, said fellow farmers were talking about reducing herds by 10 to 20 per cent.

But even if herds were reduced, Mr Jacobs said it was likely the price of cull cows was likely to be hard hit, by the drought north of Victoria.

“My concern is that at Mortlake (saleyards) they were trucking cattle in from Coonamble, NSW,” Mr Jacobs said.

“That puts pressure on our market  - we can’t even sell dairy cattle down the west, as choppers, whereas traditionally you used to be able to make a quid down there.”

Paul Stammers, Katunga, said feed costs were an issue, with the wheat price being one of the biggest concerns.  

He said he was currently milking around 220 cows, but that number may be reduced if costs remained high and there were no price step ups. 

“The job is right on the limit for wheat and if you are looking to fodder, there wouldn’t be a hell of a lot of profit there,” he said.

“If we can’t buy feed at a reasonable price, we will be looking to cut cow numbers.”

“The price of putting water on in August is going to be a lot more than if you start putting it on, at the usual time, say in mid-September.”

Light falls of rain were helping and he was hoping to reach an inch (25mm) by the end of August, to help cereal crops, planted only a few weeks ago

“We sowed quite late, waiting for moisture,” he said.

Meanwhile, in the south-west of Victoria, farmers are facing the opposite problem.

Mr Stammers said one positive was the return of Chinese export orders for young stock, now the Bluetongue scare had been resolved.

Tom Acocks, Rochester, said the farm grew 75pc of its own fodder, including maize and silage, which cushioned it from some cost of production shocks.

“Dairy farmers need to be thinking a lot further ahead than what happens now,” he said.

He said the farm, which milks between 850 and 900 cows, would need to buy water, “but we have between now and April to buy it.”

“It’s not as there are no inflows into the dams and water volumes being traded are not really significant,” Mr Acocks said.

“Farmers in the region really do need to do their numbers and don’t panic just yet,” he said.

He said the farm would have the opportunity to put some silage away, this spring.

“It’s not a lost cause, we have some crops which will make good silage as a risk mitigation, for next year.”