Dairy farmers face uncertain time

THE dairy industry on the North Coast is at a crossroads with on the one hand, lower farm-gate milk prices and on the other, increased production costs.

The industry in its current state is not sustainable, says Bexhill dairy farmer Ken Bryant.

The cost of production is greater for many farmers than the farm-gate price they receive.

The answer? It's simple, he says. Consumers must be prepared to pay a little more for their milk to support the industry.

The major supermarket chains must also "have the ticker" to raise their price above the $1-a-litre slashed rate Coles was the first to introduce about 18 months ago.

He wants to hand on the 220ha he farms north-east of Lismore to one of his three children, just as his parents - who also live on the property - did for him.

"But I don't think there is any chance, to be honest," he said.

Beyond discount-rate milk prices, a broader range of concerns confronts the industry.

The drought in the United States has caused the world price of grain, which accounts for about a quarter of total dairy costs, to rise.

Mr Bryant pays about $50 a tonne now, but expects he could pay up to $400 a tonne should the situation worsen.

Increased energy costs are also squeezing producers.

They're reliant on energy to run irrigation equipment, machinery, milkers and the like and, just as for households, those costs have increased dramatically in recent years.

But the market for milk on the North Coast has also changed.

Mr Bryant is one of the lucky ones. He supplies Norco, whose business is diversified and includes ice-cream and other products as well as bottled milk.

But for others, a restructure of the industry, which has seen processing largely moved to Victoria, means the bottom has fallen out of the market for milk not required to meet drinking milk demand.

Norco general manager Brett Kelly appreciates the difficulty dairy farmers face.

"I agree the milk price across the country is not sustainable in the long-run for Australian farmers and it is really important consumers realise and understand we have to support our farmers," Mr Kelly said.

But, ironically, Norco chairman Greg McNamara said some of the strength of that brand was thanks to Coles.

"Coles have been fantastic to us in the past few years," he said.

"If you looked at what Norco has done in its ice-cream business in Lismore, Coles has been supportive of that."


Dairy industry snapshot

National dairy herd: 1.6 million cows

Average herd size: 230 cows

Annual milk production: 9.1 billion litres (5700 litres per cow)

Farm-gate value: $3.9 billion

Milk utilisation: Cheese 33%, skim milk powder/butter 27%, drinking milk 25%, whole milk powder 12%, butter 2%

Production (in tonnes): milk powders 373,750, cheese 338,600, butter 122,500

Export value: $2.75 billion, 8% of world dairy trade, 43% of national production

Major markets (in tonnes): Japan, China, Singapore, Indonesia, Philippines

Per capita consumption: Drinking milk 103 litres, cheese 13kg

Workforce: Direct employment of about 40,000

Source: Dairy Australia, 2010/11

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