On the fertile plains at Denison in Gippsland, the Lamb family has been milking cows for decades. And over the years, the family has been loyal suppliers to dairy processor Murray Goulburn.
Gippsland dairy farmer Kate Lamb’s family has supplied Murray Goulburn with milk for decades. Photo: Jason South
They stuck with it through the Global Financial Crisis, various management changes and the upheaval of dairy industry deregulation.
And in recent years, like many Australian dairy farms, they have increased the size of their herd, today milking about 600 cows.
The price cut is “a big kick in the guts” says dairy farmer Kate Lamb. Photo: Jason South
Recently Kate Lamb and her husband Robert had been considering buying more land. But that idea was quashed when they heard – first via a radio report on Wednesday – that the dairy processor would slash the amount it paid for their milk.
“We heard it on the radio driving into Sale, and I’ve never seen my husband actually so angry,” Mrs Lamb said.
“It was just a big kick in the guts,” she said.
“They’ve got all the money for this infrastructure, there’s no holding back on plans, and yet they’re going to screw the farmers,” she said.
Murray Goulburn’s mid-week announcement sent shockwaves through the industry. The nation’s biggest dairy processor said it would cut the price it paid farmers for milk, and revealed a net profit forecast of between $39 million and $42 million, less than half its prospectus forecast of $89 million from last year.
It also revealed that its managing director would step down, as would its chief financial officer.
The news left farmers reeling, and asking; what went wrong, and, how come important forecasts were so far out?
While the milk price cut is bad news for farmers, the effects will not stop at the farm gate. When farmers get paid less they have less money to spend in local towns, in places like Maffra near Denison, which are heavily dependent on the dairy industry. They may also look to cut back on using contractors, such as people who spread fertiliser.
Graeme Anderson, 72, who also farms at Denison, said this week’s news was “shattering”. Asked to describe the impact on his farm of the milk price cut, he answered bluntly: “Dramatic. The operating surplus that we would have spent again on the farm – that’s gone.”
Mr Anderson said the lower revenue in the hands of farmers would have “a huge impact” on the wider district, affecting tractor and machinery dealerships and people in towns. “It will have a huge effect on confidence,” he said.
It would also likely mean that farmers who donate cash to local sporting clubs, say $500 or $1000, would not be able to, he said.
The Lamb and Anderson families farm in the Wellington Shire, where agriculture employs about 12 per cent of workers.
Local mayor Darren McCubbin described the picturesque town of Maffra as a “dairy town”.
“The dairy industry is the bedrock of the Maffra community,” he said.
The presence of dairying in the area is not just visible in the local paddocks, Maffra is also home to a Murray Goulburn factory.
“The thing about the dairy sector is that it has flow-ons to other sectors,” Cr McCubbin said. “So farmers who are going to be hit by the changes in the milk price obviously buy less product. They buy less in the supermarkets and so on and so forth, it flows all the way through the sectors.
Source: The Age
