THE gates have been shut to southern dairy farmers wanting to move north to take advantage of decent farmgate prices and more reliable rainfall and water supplies.
Milk processors in NSW and Queensland are no longer accepting new suppliers on their books.
It’s probably the first time in history that all processors buying milk within NSW have closed their intake and potential new dairy farmers are being forced to other agricultural industries as farmers keenly interested in moving from the drought-stricken Riverina and Murray Valley have their relocation plans blocked.
Milk supply agreements forged at the height of last year’s price rise scramble have become worth their weight in gold in northern NSW and southern Queensland, where producers have been able to ride out the economic downturn relatively well because they are supplying the liquid milk market and have locked in long-term contracts.
As farmers in Victoria and southern NSW supplying the export market wait tentatively on overdue opening milk prices for the 2009-10 season – which Dairy Australia estimates will be between 25 and 29 cents a litre – the 50c-plus which most northern NSW farmers are likely to receive next financial year looks pretty attractive.
Senior dairy analyst with Rabobank, Tim Hunt, Melbourne, said some reductions in farmgate prices for NSW producers supplying the liquid market were expected “but it won’t be the halving of prices seen elsewhere”.
“Those contracted farmers in NSW are probably the best-placed dairy farmers in the world at the moment,” he said.
“By the time their contracts are up for re-negotiation, it’s likely the worst of the global economic crisis will be through.”
Dairy Farmers Milk Co-operative (DFMC), which supplies milk to National Foods, is standing by the price it pays contracted NSW and south-east Queensland supp-liers and Lismore-based Norco has set its opening prices just two cents/litre down on last season, while Parmalat in Brisbane has dropped only one cent.
Farmers on the South Coast believe Bega co-operative, although a major cheese processor, will not cut its farmgate payments nearly as much as Victorian processors.
DFMC chairman, Ian Zandstra, said while there was some room for current suppliers to grow, no new farmers were being taken on and that was likely be the case for some time.
Likewise, Norco, which is fielding calls on a weekly basis from southern farmers keen to relocate, says it will be at least a year before new milk can be accommodated.
Chairman, Greg McNamara, put it down to a growing milk supply in the region, processors’ ability to buy cheaper milk from Victoria and slowing growth in the sales of fresh milk in Australia.
“This is the first year since 2000 we have seen growth in production on-farm,” he said.
Aspiring milk producer, Douglas Schlenert, who has worked for other dairy farmers for years and is now ready to roll with his own farm near Wagga Wagga complete with 200 cows and $80,000 in infrastructure, is frustrated.
He has pleaded with NSW and Victorian processors, saying he can’t sit on his investment for long.
“If new young farmers are being blocked now where do the big co-ops and companies think they are going to get their milk in the future?” he said.
But with up to 25pc of National Foods’ NSW suppliers tipped to exit the industry when contracts expire next year and in 2011, farmer leaders agree the dairy industry can ill afford to be turning people away.
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