Young Victorian dairy farmers Melanie and Paul Ackerley are bucking a range of industry trends on their farm, 100 miles southwest of Melbourne.
Most important points:
- Grain, beef, sheep and dairy processors are confident they will turn a profit in 2022/23
- Farmgate milk, mutton, beef and grain prices are all at a high level
- Some farmers postpone large investments because input costs rise
The dairy industry is shrinking. It has lost 20 percent of its farmers in the five years since the Ackerleys bought their farm in 2017.
The two properties adjacent to their farm have gone the way of many in southwestern Victoria, moving from dairy production to beef.
But the Ackerleys would like to produce more milk.
And it’s a good time to sell milk. The decline in the number of farmers has reduced national milk production, and now processors are bidding close to $10 per kilogram of milk solids (kgms) as they compete for dwindling supply.
National commodities forecaster ABARES predicted that average dairy farm incomes will rise 35 percent to $338,000 per farm in 2021-2022, and again next year, thanks to higher farm milk prices.
But any increases in the coming year will be greatly mitigated by the rising costs of fuel, fertilizer and feed for Mrs Ackerley’s livestock.
“If we think back to now five years ago, for an equivalent kind of dairy ration, we’re probably looking at an increase of more than 100 percent, so from $350 to $600 per ton. So we’re looking at some significant increases,” she said. .
The price of feed is rising because grain prices are so high that farmers have widely used less land for forage and more on wheat, pulses and rapeseed.
When Culgoa cereal grower Georgina Warne decided what to plant, the high rapeseed price was enough to tempt her to try the crop for the first time.
And with wheat at $450/t, Ms. Warne saw the reason to pay $1,300/t for fertilizer this year.
But there is also diesel for the farm machinery and the chemicals used to protect the crop and keep weeds at bay.
“I can’t say it’s scary because all these bills are budgeted and I’d be ignorant if I didn’t expect them,” she said.
“Last year, for example, I paid an average of $750/t for farm urea, which I thought was very expensive.”
Last year’s record crop increased farmers’ incomes by 28 percent to $620,000 per farm in 2021-22, a staggering 76 percent above the long-term average.
Rabobank reported last week that confidence in the coming season was highest among grain farmers, with “40 percent of growers expecting business conditions to improve in the coming year”.
bullish on cattle
Prices paid for beef, lamb and mutton at retail outlets across the country have broken record after record as farmers competed with meat buyers to rebuild their herds and herds after the latest drought.
Saleyard prices are expected to fall over the next 12 months, and ABARES estimates that the value of beef and mutton exports will fall about one percent to $25 billion in 2022-23.
But in Hamilton, Victoria, where the dairy farmers moved to the beef and sheep farmers, they kept a constant number of herds. Livestock farmer Heath Templeton was not too concerned about falling prices at the yard.
“I don’t think it will drop that much. No records will be set, but it will still hold up at a very good pace,” he said.
“Two weeks ago I sold heifers that fetched up to $10 a kilo.”
Beyond the farm gate
In May, the Australian Banking Association declared the Australian agribusiness a “star performer” in its assessment of national corporate lending.
In the 12 months to February 2022, its members lent $4.3 billion to agricultural, forestry and fisheries businesses, a 30 percent increase from the previous 12 months.
A string of good seasons and the expectation that high prices will continue has led to a frenzy of investment on farms.
“The infrastructure spent on farms has been astronomical,” Templeton said.
“A lot of people are putting in new sheep yards, new cattle yards, their wool sheds are being upgraded.”
But the hunger for more investment may wane as farmers wait to see how high their input bills will rise.
While the Ackerleys still have long-term plans for expansion, they’re waiting for this moment.
“The uncertainty has kept some things under wraps and we just said let’s keep it where we are now,” Ms Ackerley said.
But years of high livestock and grain prices have pushed investment beyond the gate and into Hamilton, Mayor Bruach Colliton said.
Nationally, finding sufficient labor remains one of the biggest obstacles to agriculture, especially in horticulture.
But between the COVID-induced exodus from Melbourne and the high availability of long-term agricultural work and agricultural services, Hamilton has seen an increase in population.
“We’ve seen new sports teams starting up, especially in the younger sector. We’re seeing a lot more smaller companies in our CBD and smaller towns,” said Mr Colliton.
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