By Adam Jenkins, UDV
We’re all gutted by Murray Goulburn’s announcement of an opening milk price of $4.31 per kilogram of milk solids.
It’s left many of us floundering, wondering how we’re going to break even.
There’s a lot of anger out there. And we can all kick, scream and call for re-regulation.
But the reality is we have to deal with the here and now. It’s the very reason that the United Dairyfarmers of Victoria, Australian Dairy Farmers and Dairy Australia, are using Taking Stock and Tactics for Tight Times to help us all find a way forward.
In the short-term we need to sort out meeting our commitments to creditors and look at what re-financing options are available. Obviously there’s not much most of us can do over the next couple of months about changing calving patterns or radically restructuring our operations.
But we can start to change the way we feed our stock, given there’s a massive correlation between the proportion of home-grown feed you produce and profitability. We should be aiming to produce 60 per cent or more of our feed on the farm.
And we need to push MG and other factories to simplify their milk pricing structures so we don’t end up seeing dairy farmers lured into high input and high-risk input systems.
In the longer term we’re facing a new reality. Despite what some people may tell you, we’re ultimately price takers in a volatile global marketplace awash with dairy commodities.
Sure we can extract some premiums from specialist ingredients and demand supermarkets lift milk and dairy cabinet pricing. But at the end of the day we’re exposed to a global dairy market.
The removal of quotas in Europe and low feed prices in the US means that the global market will continue to be over-supplied.
But it’s not all doom and gloom. The price of energy, fertilisers, feed are down. And interest rates are declining.
This all helps reduce our costs of production.
I’m the first to admit that times are going to be tough in the season ahead. But there’s no point just getting angry and going into denial.
We all have to get back to basics – basic principles on farm and in the factories.
We can’t afford to run high cost, high risk farming or milk pricing systems anymore.