MORE stable milk prices, combined with lower grain and fertiliser costs, has seen many northern NSW and southern Queensland dairy herds rebuilt to pre-drought levels, but processor signals and a lack of winter and spring rain are likely to keep production static.
Fresh milk suppliers have weathered the economic downturn well, with most farmers on contracts which guarantee returns of more than 50 cents a litre until mid next year.
Those who have come off contracts have worn reductions in the order of three to five cents, but that is minor compared with the drastic 33 per cent slash Victorian milk producers have copped courtesy of weakening global demand and falling commodity prices.
While northern NSW farmers are now planting feed crops on the back of mainly light falls, particularly those about the Coffs Harbour area who received up to 60 millimetres last week, southern Queensland has become desperately dry.
Irrigation water there had been restricted to 40 per cent of entitlement and the region had no subsoil moisture for summer planting, Queensland Department of Primary Industries and Fisheries principal extension officer for dairying, Graeme Busby, Toowoomba, said.
“We are, however, coming out of a season where farmers have been able to accumulate reasonable silage stores,” he said.
There had been a swing to spend on capital equipment as a result of the stable milk prices, distribution of share money from the sale of NSW processor, Dairy Farmers, and the Federal Government’s doubling of the maximum amount of depreciation allowances for this and the next financial year, he said.
This had included everything from new tractors to the introduction of electronics in dairies, with the focus on improving efficiency.
But with processors indicating there is no demand for extra milk – and closing the doors to new “out-of-town” farmers – Mr Busby said it was unlikely farmers would look to increase stock numbers.
Parmalat suppliers Noel Adlem, of “Ups and Downs”, Kingaroy, and Bevin Black, of Nanango, said they did not know of anybody who had invested in infrastructure to increase milk production in the long term.
Mr Adlem milks 100 Holsteins, while Mr Black has reduced his Holstein herd by half through the seven-year dry to 140.
Mr Black says the good farmgate prices of recent years have only allowed him to “catch up”.
“Until July, rainfall had been 50 per cent better this year than in previous years but we are now very dry,” he said.
Analysts say there are still a number of former Dairy Farmers suppliers yet to spend their share sale proceeds and further industry exits could swing the laws of supply and demand further in favour of northern NSW and Queensland farmers.
Meanwhile, agribusiness banker Rabobank’s latest dairy report indicates overseas demand is improving.
In particular, there has been a sharp jump in Chinese imports, and firm buying in key North African and Middle Eastern markets.
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