Production could fall further if milk price drops

The high cost of fodder and its lack of availability, as well as continued high fertiliser and herbicide costs, could mean a drop in the milk price would be devastating for some producers.

According to a Rabobank report, national milk production continues to be below average with full season production likely to come in at around 8 to 8.2 billion litres.

Milk production remains 6.2 per cent down on last year for the season so far, and is 8.3pc below the five-year average.

Dairy farmer and NSW Farmers dairy committee person Robert McIntosh, Woodside Park, Berry, said while production on the South Coast was up, it had not yet reached those levels experienced prior to the wet of 2022.

"Production in the wet was secondary to animal welfare and feed availability," Mr McIntosh said.

The herd rebuild continues to impact on production, as well as consistent feed availability in homegrown and purchased feed, and the prices of seed and fertiliser.

Mr McIntosh said feed quality and availability was generally good due to a balance of rain and warm weather.

"Corn silage crops are off and most of the area has been re-sown with winter pastures," he said. "Pasture costs are high in seed, fertiliser and fuel.

"Purchased grain and hay from western areas are reflecting the higher input costs and some quality inconsistency."

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Mr McIntosh shared his thoughts on the opening 2022/23 milk prices.

"Opening prices are strong, reflecting the increased competition for milk from processors, but no significant increases on last year," he said.

"Contract terms are concerning, with farmers needing more security over three to five years."

Mr McIntosh expects production to be down in the foreseeable future.

"In a nutshell, recovery is happening but slowly," he said. "Like most ag commodities, we don't see the increases at the farm gate that appear at the retail outlet."

North Coast dairy farmers selling into the high-demand liquid milk market say they should not be affected by softening global commodity prices because a shortage in Queensland and NSW demands more drinking milk, not less, and prices required to deliver enough product must remain.

Woolworths supplier Tim Bale, Stewarts River via Taree said domestic milk providers are less and less affected by export of dairy components and if processors use that as an excuse "they will have no dairy farmers left".

"They just need to look at what's happening in the industry. If prices fall there will be a bigger exodus," he said. "There is a serious decline in milk production and somehow we have to stop it because the demand for liquid milk is insatiable. Processors have got to look at the demand and where the industry is going and they need to think about future volume."

Processors have delivered real rises in farmgate prices during the pandemic, but almost instant spikes to inputs cruelled any cash windfall to the point that the industry is stationary, with no ability to reduce enormous debt on family enterprises.

"We are holding our own, but still recovering from last year's disastrous flood," says Lactalis supplier Wayne Clarke, Dobies Bight via Casino, who relied on flood grants to help see the family operation through.

"Replacing cows and getting the calving pattern back right all takes time and money. The fatigue is real and something you have to deal with.

"There are concerns that southern processors are still looking at export prices to gauge their farmgate offer, with New Zealand already lowering its price. Should prices come back the extra stress will likely make a number of producers question why they remain in the industry."

After three years of rain on the Mid North Coast, Wauchope dairy farmer Luke Cleary, said most farmers were back on track for milk production and planting management.

"We've come off the back of one of the most atrociously wet periods in living memory," Mr Cleary said, who is the chair of Mid Coast Dairy Advancement Group.

"It had a big impact on people, with some isolated by crossings in the floods saying they have anxiety attacks whenever they hear rain on the roof."

But in August when the rain stopped he said it was a turning point for dairy farmers as it "finally dried up".

"We've had the ideal autumn planting weather, we were able to drill in oats and rye grass without weather delays in the past six weeks, which is much of the same story for people in the region," he said.

But he said those at Old Bar who saw 300mm fall overnight about a month ago had seen some delays.

"It's nothing like last year,' he said.

"Last year we were still planting winter feed in spring as we couldn't walk on a paddock let alone get a machine on the paddock, it was even too wet for drone planting."

With just weeks before new milk prices were announced, Mr Cleary, who produces around three million litres a year, hoped processors would "put out a good price".