Price climbs as volume falls
Milk processor Fonterra is paying a record price for milk but can’t get as much as it wants.
Although the improved price is sending a strong signal to farmers, they can’t respond with more volume and they are telling Fonterra Australia’s managing director Rene Dedoncker that labour is one of the main reasons.
The issue was raised at an industry professional’s breakfast at Moama on May 25.
But no-one had an easy answer.
One farmer suggested lifting wages could be tried to entice more young people into the industry.
“This year we all expected production to be on par with last year, but it is about three per cent down,’’ Mr Dedoncker said
“Tasmania is about six or seven per cent down.
“It is a conundrum.
“In a year with highest milk prices, we are three per cent down.”
While Mr Dedoncker said there were a range of issues impacting supply, the single biggest problem seemed to be labour.
“Our Christmas volumes were down, for example,” he said
“I think mum and dad farmers got to the point where they said: we need a break, and they couldn’t find labour so they just dried off their herd.”
He said the labour shortage was not confined to dairy but was across all agricultural industries, including horticulture.
Asked about how the company was coping with the shortage, Mr Dedoncker said his plan was based on the milk he has.
“We can’t plan on a wish and prayer. I have to plan with the milk I have got,’’ he said.
“But I think we have some confidence. We think farmer confidence is growing. Herd numbers are higher than last year, so the season ahead does look decent.”
On the issue of the United States’ shortage of infant milk formula, Mr Dedoncker said Fonterra’s New Zealand head office was engaging with the US.
While he said the Australian company would be prepared to help out in an emergency, the company had to look to the long-term, and examine if there was an ongoing arrangement before making a commitment.
Dairy Australia figures show Victorian annual milk production was down 3.7 per cent up to March, compared to the same time last year.
Monthly totals for the start of the year were between four to seven per cent lower than last year.
However, northern Victoria has suffered a more modest decline, with the year-to-date volume down only 0.9 per cent at the end of March.