As Millers Forest dairy farmer Grahame Peacock works his farm to make feed for his milking herd, decisions on the other side of the world are impacting on his livelihood.
The downturn in the global milk industry and recent Murray Goulburn price slash has left Mr Peacock worried that the price he is paid for milk is about to drop.
Murray Goulburn, Australia’s largest dairy processor, has had a 40 per cent drop in forecast profits this financial year which has left 2600 of its farmer suppliers in four states over paid.
The company has cut the milk price it pays these farmers from $5.60 a kilogram to between $4.75 and $5 to recoup the money and said the new price would be back dated to the start of the 2015-16 financial year.
This means each affected farmer now has an average debt of $128,000 which has to be repaid to the company through low milk prices.
Mr Peacock and the company’s other Hunter suppliers are now bracing for a price cut as the company finalises its budgets for this part of NSW.
They won’t know their fate until the price for the next financial year is unveiled in June.
Mr Peacock doesn’t want a price drop to occur. He battled through low milk prices for years after deregulation hit in 2001 and knows how hard it is to pay the bills when the cost to produce milk outweighs what he is paid.
He has been earning 55 cents per litre through the winter months – a far cry from the 13 cents he was receiving when contracted to Dairy Farmers after deregulation – and is now skeptical about his future on the land.
“We don’t know whether it will be a five cent, 10 cent or 15 cent drop or more … At one stage were were only getting 13 cents a litre with Dairy Farmers and it nearly killed us,” he said. “We don’t know how badly we’re going to be affected, we’ve got no choice but to sit back and wait for news.”
Affected farmers contracted with the farmer-owned co-operative were earning 42 cents per litre before the cut and will now earn as little as 35 cents.
Hunter farmers who supply to other processing companies are worried Murray Goulburn’s price drop will entice their suppliers to follow suit.
Mr Peacock’s milk forms part of the company’s domestic milk market and ends up as fresh milk on the shelves in Coles, but he said the strength of the export market had an impact on the entire company. He blames Russia for part of the situation. He said Russia’s decision to stop importing milk from Europe left the Europeans grasping for the Chinese market, which was Murray Goulburn’s golden ticket to success.
