More dairy farmers could leave industry: Rabobank

Zach RelphCountryman
Rabobank has flagged “another wave of farm exits” among Australia’s dairy farmers.
Camera IconRabobank has flagged “another wave of farm exits” among Australia’s dairy farmers. Credit: Danella Bevis / Countryman

Rising dairy production costs are threatening to force “another wave” of embattled Australian milk farmers to walk away from the industry.

Elevated herd culling to combat rising feed expenses eating into revenue continues to rattle dairy farmers, according to agribusiness financial firm Rabobank, as the nation’s milk pool dwindles.

Rabobank senior dairy analyst Michael Harvey is warning milk suppliers could opt out of the dairy shed in the season ahead amid increasing costs, citing the sector’s uncertain future.

“There are clear risks to the outlook for milk production,” he said.

“As without a timely autumn break there could be another wave of farm exits and ongoing herd reduction.”

According to lead industry body Dairy Australia, there are 159 dairy farms in WA. That is down from about 180 dairy farms across the State in 2009.

Witchcliffe milk producer Miles Mottershead, who has about 430 milkers, has no intention of leaving the dairy sector.

However, the second-generation dairy farmer said he would not be shocked if fellow farmers elected to draw the curtain.

“Operational costs keep marching on and the industry can’t keep operating like this,” Mr Mottershead said.

“There are a lot of people who have had a gutful.

“Australia’s milk production keeps declining and that shows that there is a major problem.”

Latest reports have forecast the country’s milk production to reduce by 8 per cent to 8.6 billion litres at the 2019-20 season’s end.

In the 2018-19 season-to-date, Australia has produced about 5.7 billion litres of milk.

It signifies a 5.8 per cent drop in output compared to last year’s totals, with WA’s milk production slipping by 2.5 per cent to 256 billion litres.

Despite the drying milk pool alongside Rabobank’s bleak industry assessment, Mr Mottershead harbours some confidence and predicts the sector to slowly rebound.

Mr Mottershead branded Coles and Aldi’s decision last month to follow Woolworths and abolish the $1-a-litre dairy scheme a “PR stunt”, yet touted it to gradually improve farmers’ earnings.

“I think we could be starting to turn the corner,” he said.

“It could take more farmers to leave and production to drop further, but I do think it’ll start to turn.”

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