Australia: Dairy farms seek buyers

Farmers Weekly rounds up a year’s news through the eyes of farmers across the globe. Today we hear from Charles and Stacey Wallis in Australia

Charles and Stacey Wallis farm in Mount Gambier, south Australia, milking 650 cows on 1,025 acres.

Australian dairy farmers are facing a very uncertain future on the back of four difficult years. Our profitability will be down this year due to a lower milk price and higher input costs, including our ridiculous carbon tax, which was introduced in July.

At AUS$23/t (£15/t) of emissions, the average Australian dairy farm of 330 cows is expected to pay $5,000-7,000 (£3,000-4,500) a year. In our locality, we have six of the 10 largest dairies in Australia, with 1,500-2,000 cows, so the tax costs will be higher here. We are finding there is no magic herd size for profitability – debt service capacity is much more relevant as our interest rates are 6-8%.

Many farms are for sale and there are no willing buyers, even though dairy land is much cheaper here than in New Zealand. We have been caught up in the effects of the US drought, which has pushed up grain and feed meal prices, cutting margins.

Key facts

Population 22.8 million

Average rainfall 660mm

Agricultural area 409m ha

Half of Australia’s agricultural area is under beef production. It is the second largest global exporter of beef behind Brazil

Last year’s wheat price was $200/t (£129/t); this year it is $300/t (£194/t). Canola [rape] meal has gone from $300 to $400/t (£194/t to £259/t). Lupins and other protein sources show a similar rise. Barley needs to be $40/t (£25.90/t) cheaper if we’re to include it in our rations.

Meanwhile, even though drought has increased world prices for dairy products, our average price per litre – based on online dairy commodity auction Global Dairy Trade – has fallen. Last year, all exporting countries had more growth than the market could consume.

The benchmark, based on New Zealand’s prices as the world’s largest exporter, is low. So we got AUS23.5c/litre (15.2p/litre) for 2012 compared with AUS26c/litre (16.8p/litre) in 2011.

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