CUTS to dairy consumer marketing is the logical place to try to bridge the gap created by plunging levy funds to the industry’s national research, development and extension organisation.
So say producer groups, who have welcomed Dairy Australia’s move to safeguard farmer profitability programs and research and development as much as possible.
Dairy Australia has budgeted for a 14 per cent decrease in income over the next three years in line with dropping levy money from farmers as a result of low farmgate prices and decreasing production.
It has decided to cease television advertising linked to the Legendairy campaign, saying the focus now will be on programs to support farm profitability, farm capability and the core issues facing the industry around its license to operate.
Job losses may also be on the cards. Staff announcements will be finalised by the end of the month.
United dairy farmer of Victoria president Adam Jenkins said farmers realised there needed to be a sharpening of the pencil and felt that crucial extensions services and research and development needed to be the priorities.
“We certainly don’t want to see programs cut that will have big implications three or four years down the track but we know there will have to be some tightening of the focus on R and D,” he said.
Chief Executive Officer with peak NSW group Dairy Connect Shaughn Morgan said given the circumstances, it appeared cuts were being made in the appropriate areas.
“Dairy Australia needs to ensure it remains an innovative hub of excellence and this transfer of funds appears to be able to deliver that,” he said.
“If we don’t support farmers through continuing R and D, it flows back to community through food security issues and lost economic opportunities.”
Mr Jenkins said job shedding was a ‘massive confidence blow’ to the industry and it was happening throughout the dairy industry at the moment.
Dairy Australia has moved quickly to re-draft its 2016-17 budget in the wake of big reductions to farmgate prices triggered after Murray Goulburn and Fonterra in April.
It originally anticipated an annual income of between $61 million and $63m, but with lower milk prices and milk volumes expected to drop about five per cent in southern Australia it is now budgeting on about $53m or less this year.
Expenditure cuts will primarily come from significantly reduced expenditure in consumer marketing.
Television advertising linked to the Legendairy campaign will be ditched.
“Supporting dairy farmers is the key focus of our immediate programs,” Mr Halliday said.
“Our investment in services and resources to guide and assist dairy farmers in the immediate term has been ramped up.”
DA has reallocated existing funds, which have been combined with extra input from government and processors to create a total industry support package of $11.4m.
“The dairy industry is facing one of the most challenging years it has experienced for some time,” Mr Halliday said.
“This is having an impact on everyone in the industry and DA is no exception.”
DA management and the board had adapted current programs to focus more strongly on farm profitability, farmer capability and the core issues facing the industry around its licence to operate.
About $2.8m from existing funds has been committed to work with dairy farmers through the umbrella “Tactics for tight times” program.
One key element of this program is Taking Stock, which provides free, confidential, one-on-one support for producers with an experienced dairy advisor.
Taking Stock assists dairy farm businesses in identifying their current business and operational challenges and guides them towards improving their profitability.
“We talk with farmers from all regions every day and we have a fairly good idea what they are going through,” Mr Halliday said.
DA would continue investment into long term research, development and extension programs. Initiatives like our leading scientific research through DairyBio and DataGene, which would consolidate the activities related to genetic improvement of dairy cattle, would continue to provide long term benefits to the dairy industry.”
With the gradual withdrawal or reduction of extension services run by many state governments, DA was also continuing to enhance extension services in dairy regions.
It would also continue to expand its people development services to farmers to include farm business and HR management programs.