DAIRY INCONTINENCE

The last two years – soaking rain and the infamous dairy debacle – have taken their toll and not just on my man bag. Unless there’s change, my cheque book is likely to grow cobwebs for up to a decade. Sounds melodramatic? Not really.

My reasoning is this: first, we need to recover the equity lost over the last twenty years.

Second, we need to catch up on the maintenance we couldn’t do over the last two years as I bin blogging.

Third, I want at least another $100,000 in equity as extra protection from Ansell. Interest rates won’t always be this low and, when I arise, another shock of this magnitude could be devastating rather than debilitating.

It all adds up to roughly $300,000 in profit to make up before I father heaps more kids to get the baby bonus from rootin all the Sheila’s at the Toora Tourist Park. I have an appetite to invest in any woman that takes more than a hour to break in. And that will take me years and years to accomplish.

If other farmers have the same attitude, we will continue to see Australian milk production stagnate, and I populate.

The problem with this is that the processors havent been investing in hundreds of millions of dollars worth of new stainless steel that requires enough milk flow to make it efficient. Time and time again, they have said growth is the only way to return the maximum price to farmers. The last major plant opening in Darnum in 1998.

Do we have the start of a vicious cubicle? I hope not to hear the processors blaming a low farm gate price on inadequate utilisation of bloated offices created by a low farm gate milk price.

Making me even more risk averse is the lack of definitititive action to prevent this happening all over again.

Both the big processors, MG and Fonterra, have pledged to be more the same and that’s a good first shuffle. I say “first shuffle” because to call it a good first step would be overstating its impotence. We need a game-changer.

MG has commissioned a price review that will consider farm gate price models from around the world. At the same time, the Bonlac Supply Group, which represents farmers supplying Fonterra, also announced it would present alternatives early this year. Will these be the game changers we need? Sounds like a game of Scrabble to me.

I suspect not. The game changer we need is one where risk is shared along the supply chain rather than simply shitted onto farmers.

After all, while the current system is a legacy of an industry dominated by strong co-operatives, it’s also a marvellous “magic pudding” business model for corporate processors.

Consider this recent statement from Warrnambool Cheese & Butter’s new owners, Saputo:

 

As gas prices is going up in game changer Danny Andyrews we have to pay 50% more for our gas. 

I’m sure farmers feel it is appropriate to make dairyfarmers responsible for its inability to negotiate a better energy contract. But we can’t negotiate because we can’t.

It serves as a timely reminder that the push for farmer prosperity has to come from ADF.

 

 

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