Producers’ confidence sours

The confidence levels of WA dairy farmers have plummeted to an all-time low according to the most recent survey by Dairy Australia.

This was despite the 2011 Dairy Australia Situation and Outlook report showing confidence as measured by the National Dairy Farmer Survey had increased slightly overall in 2011, with the proportion of dairy farmers feeling fairly to very positive about the future of the industry rising from 65 per cent to 69 per cent.

However, there was considerable variation between regions with confidence in WA dropping to less than 50 per cent.

Significant declines in confidence were also recorded in Queensland (down 22 points), most of NSW and in SA.

Producers in Victorian regions, particularly Murray Dairy and Gippsland, are reported to be more confident than they were in 2010, as are Tasmania and Bega Valley dairy producers.

The report said positive attitudes about the industry’s future were supported by the belief there will be ongoing export and domestic demand for dairy products and improving milk prices.

However, concerns about recent supermarket milk pricing strategies and perceived low farm gate prices are driving less positive attitudes about the future.

Farmers surveyed overwhelmingly nominated farm gate milk price as their major current challenge, with 51 per cent believing it will be their greatest challenge in future.

This proportion is the highest recorded in the survey’s history.

The proportion of farmers mentioning weather and climate as the main challenge has fallen to 8 per cent down from 12 per cent in 2010.

The cost of farming inputs, including fuel, feed, power and labour, was nominated as the main future challenge by 12 per cent of respondents.

WA Farmers Federation dairy president Peter Evans said the report’s results regarding confidence in the WA dairy industry were not good. With 60 WA dairy farms interviewed as part of the survey, he said it meant the report’s findings were very reflective of WA sentiment.

“Confidence is poor in the industry following the collapse of Challenge Australia Dairy (CAD). While uncertainty over the future of CAD has gone, the industry wants to see direction forward from the remaining processors in the industry, ” Mr Evans said.

“We have just endured the worse season I can remember since 1969 and this combined with the price discounting of Coles is threatening the whole industry.”

He said that while ex-CAD suppliers were still waiting for their first dividend payment from CAD administrators PPB, he was confident that by the end of the year two of WA’s remaining processors would be in a position to increase milk prices if they wanted to secure supply for opening export markets.

Mr Evans said he was aware of some serious work being done by WA’s two largest processors to open up export markets into South-East Asia for fresh milk.

“This really is the only opportunity for WA. Manufacturing will not work here as processing companies can’t be assured of growth in these markets, ” Mr Evans said.

“With an export contract for fresh milk, processors can increase supply as it becomes available in WA.”

Mr Evans said the Department of Agriculture and Food WA trade offices had played a positive role in South-East Asia to see this opportunity realised and deserved to be commended.

He said in order for supply to be available for this future, market processors would have to increase milk prices to maintain and increase their current intake.

“I am hopeful processors will recognise that, ” Mr Evans said.

“The fact two of WA’s processors have a vision for the future is the biggest positive for producers.

“This is what this industry has been lacking in recent years; the sale of Brownes out of Fonterra to a WA owned company has given hope back.”