Category Archives: Dairy crisis

  • -

Who’s business is it anyway?

A week or so ago, I had a surprising – and a little disappointing – discussion with a friend of mine in relation to our farm business and my family’s life in general.  And the discussion got me thinking about all the people that feel they have an opinion on our businesses, our lives and our reputations.  Especially when the offer to comment back is not reciprocal.

I am launching into divulging aspects of my farm business and life that really – and I shouldn’t have to say it, but I will – is of NOBODY’S BUSINESS BUT MINE AND MY FAMILY’S.  But for the sake of this post, to shed light on the conversation and to also give a perspective on my thinking process about all of this, I will let you in on things.

Let me begin at the conversation and work backwards.

The comment was put to me that due to a comment of mine on Facebook over one of the weekends about doing some hand drawn plans for a house extension, and the fact that Mark and I took the kids down to Apollo Bay for 10 days in January, that people have said that we were whinging about not being able to pay bills, but now we can afford to take holidays and build a house.

Wow!  Sounds like we are travelling overseas for extended leave and building a mansion.

Not that any of these people have ever said anything to my face.  EVER.  (Feel free to do so by the way….I would love to hear you tell me about how I am hypocritical about money).

There has long been a firmly held – but incorrect belief – that landholders and primary producers are “rolling in money”.  This belief I should say, is held by extended family members as well, not just by public.  However, for anyone that has been involved in agriculture to a reasonable degree, will know that the reality is not further from the truth.  True, our assets and the things we own are worth quite a bit of money, but assets do not equate high income.  In fact, the opposite is almost true for agriculture.

Think I’m stretching the truth?  Well how about some facts and figures.

It is common knowledge that in April last year, two of the biggest milk processors announced (for different reasons) that they were going to average the milk price to $5/kgMS (milk solids).  Dairy farmers do not get paid in c/litre like the public buys it.  So I imagine that $5/kgMS sounds pretty impressive.  Except for the fact that it is UNDER THE COST OF PRODUCTION for many dairy businesses.  In other words, we were – and still are – being paid less for our milk than what we can make it for.  Many half enlightened do gooders helpfully suggested that farmers just stop milking.  After all, the processors need the milk, so if we turned off the tap so to speak, then they would have to pay us a higher price.  Ummm….no.  That’s not how it works.

Dairy cows, like many agricultural animals, cannot simply “turn off production” like turing off the aforementioned tap.  The timing of the price drop also meant that a large proportion of the southern dairy farmers were caught in their peak milk period (i.e., the time of year that they produce the most amount of milk).  Stopping production was not something we could do.  In addition to this, if enough dairy farmers cease producing milk and the total amounts falls to a certain level, then there actually is legislation that can force dairy farmers to milk cows.  Did you know that?

So in May and June, in a bid to even out the year’s price to an average of $5/kgMS, the processors actually dropped the price to $1.80 ish/kgMS.  This effectively gave us a negative cash balance for those 2 months.  This is the TRUE part.  Families COULDN’T AFFORD FEED THEIR FAMILIES MUCH LESS RUN THE FARMS.  But as I mentioned above, we still had to milk.  And feed cows.  And buy fuel.  And purchase chemicals.  And run the farm like nothing had ever happened to the milk price.  Oh, and we still had to feed our kids, pay school fees, daycare and kinder fees and continue on like normal for our kids, like the stress of the world was not on our shoulders.

As an example, for our May milk (paid in June) we received just over $10,000.  The day my milk payment arrived, I opened up 2 bills from Barwon Water.  Each of them was over $5,000.  So the water bills alone used up my monthly money.  And I still had to feed cows, purchase dairy supplies, pay staff (’cause they don’t work for free!), pay fuel and and that point in time, was paying for seed that we needed 2 months earlier because tunnel moth and red legged earth mite destroyed 3/4 of the pastures on our farm.

Sounds exciting and so lucrative doesn’t it?

In order to get through those 2 months, most of the autumn calving farmers were forced to take a loan with their respective milk processors.  These loans were paid to us to bring us back up to a $5/kgMS for May and June milk, BUT the kicker was…..we have to pay that back with INTEREST.  Even though we were backed into a corner to take it in the first place, by the result of mismanagement that had NOTHING to do with us.

This is a simplistic view of the situation, however, comments from outsiders on how we use our money are also simplistic in nature too.  Just keeping it all on an even keel here.

Taking holidays.  Ok.  When Tom (who is 11yo) was a baby, Mark and I went away and stayed in a self contained house for a couple of days for a break from the farm.  It was at that point that we realised that we could not afford to take holidays in motels/hotels/resorts anymore.  We needed at least 2 rooms and that hiked the price up substantially.  So when Biddy (now 9yo) was a baby, we purchased a caravan and that is what we take holidays in.  We go to low cost places, where the kids can entertain themselves and we cook our own meals most of the time.  For a family of 6, our 10 day holiday in Apollo Bay works out to be cheaper than some of my friends who have smaller families but go to Melbourne or Sydney for the weekend. (Oh and I should say that we holiday in Apollo Bay because it is close enough to the farm, that if anything needs doing, we are close enough to nick back).

The tone of the comment – and others before – have been that we must have it pretty good if we can go away for 10 days, 2 weeks or even a month (every 3rd year) at a time.  Just another comment that gets me riled a bit.  Those that are working in paid employment enjoy their time off.  Whether that be on a traditional weekend (Sat/Sun) or whether it is over the school holidays, or whether it be during the week.  There are very few people who as employees get NO time off at all (and if you think you are getting no time off, then your employer is probably pulling a swift one on you, because by law, you are entitled to regular time off).  Not so for us.  Each YEAR, we get one 10 day break and one 2 week break to spend time together as a family away from the farm.  That is it.  We don’t get weekends off, or every school holidays, or even public holidays.  If we want to spend time as a family, then we all trudge up the paddock and help out with the tasks.  Just to spend time together.

In a year, there are roughly 96 weekend days, 12 public holidays and 4 weeks leave.  There is also sick leave for those that take it and use it as holiday (yes, as employers we know people do this).  So for the average worker, there are about 128 days that you are free to spend as you will.  With your family if you wish, or working on your projects, or sprucing up your house, or taking a holiday.  If I added in a few more days over the course of the year on top of our annual holidays, then we spend 30 days away from the farm as a family.  That means the average Joe has about 100 MORE HOLIDAY DAYS than us, and 1/3 of that is PAID LEAVE.  Ironically, when we take leave, we have to not only pay for the holiday or break we are taking, but we also have to PAY FOR STAFF TO BACKFILL our jobs.  So we pay twice.

Again, sounds great hey?

Many studies have been done that show that everyone needs leave.  Everyone needs downtime.  So why shouldn’t dairy farmers?  Why, when we take leave, people look askew at us and assume that we are either rolling in it, or hypocritical about our spending habits?

Finally, the house extension.  This is an easy one.  How many people buy a house with cash?  How many renovate their homes with cash? I’m guessing not very many and of those that do, it would be in the extremely low percentages.  So if “normal” people are taking loans to do this major stuff, why wouldn’t people assume that dairy farmers do the same thing?  The money to renovate doesn’t grow on a money tree out the back.  We will have to borrow it like anyone else.  And pay it back with interest.  Like anyone else.  Should farmers have to live in standards of housing below anyone else in the community?  Why can we not improve our lifestyle and farm assets?

Some may comment and say that it is hard luck for us, and we chose to be dairy farmers and so, by extension, we should just learn to live with the short vacation times, houses that our families have stretched to beyond capacity and the milk price fluctuations.  Yes, in part, that is true.  But what we shouldn’t have to do is JUSTIFY ourselves and the way we operate our businesses and family lives to people that have no idea about what we have to go through.

What I ask is this; THINK about what you say before you say it.  Perception is not always the reality.  If you are not prepared to have a microscope placed on you, your business and finances, don’t do it to us.  If you want to be educated about the issues facing the dairy industry and how they affect our lives, ask us.  Don’t gossip behind our backs.

So I ask again…..who’s business is it?  Who’s business is it to question what we do in regards to our business.  The answer is, no-one outside the business.


  • -

Get ready to break out the pitchforks

Fonterra announced it’s end of financial year report yesterday, and front and centre was this figure: $834 million profit.

Wow.

Quite frankly, I doubt whether many dairy farmers are going to read past this figure because it is just so BIG.  And it flies in the face of Fonterra CEO Theo Spiring’s comment that Australian dairy farmers were being paid too much.  Adding insult to injury, Theo went on further to say that “What we are doing is drive (sic) every cent of money which we can out of Australia back to New Zealand shareholders in this extremely low milk price environment.”

Again…wow.

I’m guessing that Theo (and let’s be fair in sharing the blame around here..Gary Helou, former boss of Murray Goulburn) aren’t overly concerned that the milk that they sip in their overpriced lattes in the city actually contains only a poofteeth of the money that dairy farmers are paid for them to enjoy.

But why waste good time and energy on being concerned about the nations dairy farmers?  Because one of them isn’t here anymore and the other resides across the ditch.  But we are here.  Still slogging it out, trying to make ends meet and retain some sense of normality for our kids.  But to open up emails, twitter feeds, Facebook posts this morning to be greeted by $834 million profit.  Well….it almost made me choke on my own morning cuppa and spill the white gold!

I went to an industry forum on Wednesday that was put on by the Young Dairy Network (supported by Dairy Australia) where a number of speakers presented information on the wider industry outlook, Victorian farm results and on farm practical applications.  A sobering dinner speaker Dr Jon Hauser, bought a sense of reality to the day when, in his own words (“these are my opinions only”) suggested that Victorian dairy farmers that were supplying the commodity export markets could in reality not expect to see highs of $7/kgMS or even $6.50.  Sobering yes, devastating information, no.

In amongst all of yesterday morning’s noise dealing with the huge profit announced by Fonterra, there was also a hearty discussion about Wednesday’s forum.  Some criticised, some supported.  What I found interesting about the criticising camp was that it concentrated around the notion of getting rid of Dairy Australia.

I’ll come clean.  In a past life, I worked for the Department of Agriculture (or one of the many names it presented itself as) and I was an extension officer.  This role meant that I was to take R&D results and deliver them to farmers in either workshops, discussion groups, focus groups or one on one in a form that could be implemented on farm.  Back then, the DofAg was the go-to for independent research, development and extension.  But those days are gone.  Completely gone.  Dairy farmers pay a levy which funds Dairy Australia.  Dairy Australia (DA) uses this money to drive R&D, extension (or workshops), promotion and raising the profile of the dairy industry to our city counterparts.  Is it perfect?  No.  And I will be the first one to say I have some criticisms and reservations about some of the activities.  But do I think it is a waste of money?  No.  Do I think that it should be scrapped?  God no.

Getting rid of DA would do no good for the dairy industry.  Without them in the landscape, farmers would be at the mercy of research and development that was done by commercial organisations that have a vested interest in a particular set of results.  And we would pay handsomely for it.  More than the levies paid to DA.

Someone on Facebook made the comment that they could take the money they paid in levies to DA and do their own research.  Good luck with that.  Your $8K (as was quoted in the post) is not going to go very far.  Sure you can travel the globe and check out innovative and interesting farming practices, but implementing them back on your own farm is quite another thing.  A quarter of that amount is going to disappear in travel costs alone.  And then there is the accomodation, meals, drinks….

DA and the United Dairy Farmers of Victoria (UDV) are being caught up in the blame game that is happening right now.  However, what we must understand is, neither of these organisations had any sway on what happened.  Yes, the UDV has been active in the arena of trying to sort out the mess, but they didn’t cause this.  DA didn’t cause this.  The leadership of Theo Spierings and Gary Helou caused this.

If we are going to break out the pitchforks and go on a Salem type witch hunt, let’s make sure that we are hunting the right people.  Let’s make sure that the heads on the spikes are the ones that put us in this predicament.  Because I want this industry to not just survive, I want it to thrive.  I want to have the confidence in the longevity of it.  When hubby and I eventually give up the dairy game, I don’t want to be buying my milk out of Tetrapaks from China.  I want to have the knowledge that the forums such as Wednesday’s are going to keep happening.  Because that will mean that young people are still interested and entering our industry.

Which is a good thing.


  • -

Dairy industry talks

Well, there has been a lot spoken and many promises made.  Let’s hope that these talks actually ACHIEVE something.  Other than just talk.  And more promises.  Because let’s face it, dairy farmers are fed up with both.

VFF article on Barnaby Joyce’s dairy meeting