Long road ahead for producers

Mr Hamilton, Hamilton’s Run, OB Flat, said the seasonal conditions were looking OK, but most farms were expected to suffer financially after opening milk prices took a hit.

He said the opening prices announced by processors Warrnambool Cheese and Butter and Fonterra at $4.80 a kilogram milk solids and $4.75/kgMS, respectively, were disappointing enough.

“I thought ‘surely Murray Goulburn would match these’, but they were a lot worse,” he said.

MG’s opening price was $4.45/kgMS, less milk supply support package repayments.

Mr Hamilton said with these prices, well below production costs, the industry was unable to move forward. He said there would be little investment, or room in budgets for things such as repairs.

“There will be no capital investment and after all this, we’ll still make a loss,” he said.

Mr Hamilton said banks had been supportive in dealing with customers, but many dairy farms were still carrying debt from the downturn during the global financial crisis in 2007-08.

He said this was a heavy debt as it was not an investment in capital and as such did not bring in any extra money.

“I would like to think people will see a light in the tunnel in six months’ time and see a positive change,” he said. 

“If there is not a real change by the time opening prices are announced next June, there is going to be a real problem.”

Mr Hamilton said this year he would probably end up sending extra cows to slaughter which would mean less milk to bring income and a reduced capability to rebuild when markets start to rebound.

He says the effects of this price hit will have long-term consequences.

“The great thing that has really come out of past few months is the way consumers support us and are willing to pay,” he said. “You don’t need to add much in cents to the price in the supermarket for it to make a difference, if it all goes back to the farmers.”