What a bloody mess the Dairy Industry is in now yet if was only 10+years since John Howard brought in a plan Which basically whipped out the dairy industry here in Qld and Northern NSW... Many left the industry here in Qld as the fresh milk supply was handed on a platter to Victorian Dairy farmers...Dairy farmers in Qld who were deemed to be inefficient were given compensation to close down. Howard's government introduced a 10cents a litre levy to pay for this. What is the situation now? Victorian dairy farmers are screaming for help...When Qld farmers needed your support, where were you...Counting up the extra $$$$? You can still buy Qld Milk ( Pauls)here in Qld but it is twice as dear..However Coles and Woolworths screwed the Victorian dairy farmers so now we all have cheap milk,,,I wonder if they take the transport cost into the price they sell it for $1lt. Wonder how our dairy farmers will survive once the TPP comes into force...Milk from NZ flowing in...No droughts in NZ? ANOTHER ??? What happens if a disease like mad cows disease sweeps into Victoria? IMO diversification in some instances is best for the nation as a whole. The car industry in Victoria and SA is about to close with an estimate of jobs losses of 200k +...I bet that money will be forthcoming for the Dairy Industry in Victoria. I know lets buy only 10 subs and 50 F35's...Then we will be able to help our own industries. I wonder if the Chinese and Putin know, that we can't have a war till 2030 because we don't have enough subs/.. Regards Errol 43 I think ICE BLUE is a dairy farmer that has gone down the gurgler thanks to governments sticking their nose into the Dairy industry.. If so battle on friend of SS, may there be better days ahead.
Over in England bread and milk are sold below cost in the supermarkets, they are called 'loss-leaders'. The idea being that you will go to TESCO to pick up the bread and milk at a price so low that no one else can compete, and you will stay to buy the rest of your shopping. They don't mind losing the revenue because they more than make up for it in other sales. They also tell the farmers how much they are willing to pay for the goods and if the farmer doesn't want to play ball, they simply stop buying from them altogether and go to someone else. If you lose the contract for a major supermarket then you will have no one else to sell to. Once there is only one supermarket left the supermarket can decide how much they want to pay. Still, cheap milk!
Once again, well intentioned regulations have destroyed a valuable and profitable primary industry. Try obtaining an export clearance for fresh milk - if you succeed, China will pay as much as $11 per liter. Allow farmers to direct sell (without all the onerous regulations), and watch dairy farming become more profitable overnight.
Hey mate, No the dairy is fine, Yep drop in milk price, however we also have a hedging system to ride out the tough times. Basically we have a special account so when times are good we put into the account and it is tax exempt. When you pull it back out and add it to a slow years earning then you pay the tax on it. We are also at low debt levels as its a generational farm. New farmers with high debt and high production costs will feel it the most. It will have a greater impact in the wider community a good example is we buy a new quad bike every 20k hours. Ours is currently at 16k hours and needs new tires, we thought instead of $2k on new tires we would buy another bike earlier, now with the price drop we will keep the bike and spend the $2k on new tires. So bike shop miss's out on the sale of a new bike. We did or are closing the Bullion business but has nothing to do with dairy.
Because the board is a bunch of numptys!!! We are an MG (devondale farm) so again a board of numptys! In all seriousness tho there are many factors that have bought this on, lets call it the perfect storm, MG was relying on a strong market in china which they forecast wrong, drought leaving us short of water and feed ( we have had 5x B-double trucks full of hay delivered this year) normally we got plenty of grass. Commodities globally are taking a beating, but everyone is relying on china- gov, companies, farmers its pathetic really trying to run a business on forecasts. Fonterra I think made the right moves dropping first, they could see it before MG, you have good years and bad years thats just the way it goes. Government intervention never helps in any market.
Add to that that some farmers have a genetic disposition to racking up debt, it's no wonder some of them struggle.
shiney - Have to agree, specially the new farmers, but I think that extends to the wider Australian community, They seem to have this obsession with being up to their neck in debt, household debt is staggering.
Mate, the suppliers meeting was basically - all hang your heads in shame and resign, which resulted in 1 instant stand down, their reply was 'we cant all resign as there will be no one to run the company' which is a fair call, so start replacing fellas cos its off with ya head. Have to agree with Williams here.
Isn't this the case of too many dairy farmers? Supply and demand, supply outstrip demand prices go down. Case in point, farmers complaining about supermarket selling milk at below cost. If no one farmer sells to Coles and woollies then they won't be selling it below cost. more likely the real story is that either efficient dairy farmers can supply milk to the two giants at a profit or there is too much milk production. Much like ore exports, China slow down prices go down, mines shut.
Note if the inefficient farmers leaves (sad but bankruptcy) another farmer will take over, hopefully can get the land cheaper and be better more efficient farmer.
If I was China and felt like being a dick, I'd pay a reasonable price while stockpiling, then without warning I'd seriously curtail purchases when farmers were overextended, and when they go out of business I'd buy up the farms while Australian politicians in my pay could say that no Aussie firms wanted to buy and run the farms. That would never happen though :|
Nah won't happen, because milk is not some rare commodity, there is plenty of it being traded in the world markets. These aren't Chinese government buying farms, it's Chinese companies. Anyway what's the harm, if they bought a farm, they can't take the farm with them, they still need to pay local wages and taxes, another big plus unlike ore, once depleted it isn't just a big hole.
Waleed Aly found a good sob story for ratings for his show. MG and Fonterra are two different business' and you cant compare them. MG suppliers own the company - they get paid for milk but also take company profits thru shares. To supply MG you must buy shares (not the ones on the sharemarket). Quoting prices on what it costs a farmer to make a liter of milk is like throwing darts at a dartboard, pick a number, all farms are different and all have different running costs. Farming is not just about livestock and crops, A FARMER needs to be a good BUSINESS man/woman as well, a lot of good farmers are poor business men. Why the hell would a farmer run a dairy up in the malee with little rainfall and they have to buy water? Crazy shit. If you have to buy water then more than likely you have to buy feed - go's hand in hand. Have to agree with IPV6 partly, too many dairy farms in the WRONG places. Too many farmers have too much debt, too many farmers have poor business skills. If dairy farmers had any balls they would quit complaining, quit asking for the government to step in and start dumping milk. Starve the nation and overseas markets, a few weeks of no milk on the shelves, no infant formula, no baked goods - eg bread, etc, etc would put the ball back into their court.
I should also say we have been expecting this drop for about 12 months now. Media Reports say MG dropped rates followed by Fonterra. Fonterra is a NZ based company and they dropped the NZ milk price last year, being we sell into the same overseas markets the writing was on the wall 12 months ago.
@ $1/liter they are still making a killing oh those poor farmers with this millions in assets and poor sods only being able to afford a $120k land cruizer and not a $250k range rover of noes poor farmerz
