DAIRY farmer confidence has fallen below 50 per cent following processor farmgate price cuts for milk solids.
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Dairy Australia’s latest Situation and Outlook report released on Wednesday said an already challenging season, because of dry conditions, became significantly more difficult as the effects of the price reduction continued to unfold.
For many suppliers the high cost of irrigation has added to their production costs.
The National Dairy Farmer Survey, done during February and March, showed the number of farmers feeling positive about the future had dropped from 74 per cent last year to 67 per cent.
A follow-up survey after the April price cuts suggested the figure was now below 50 per cent.
“Late-season cuts to farmgate prices have caused a significant further decline in sentiment across most regions, which follow up research is currently attempting to quantify,” Dairy Australia analyst John Droppert said.
Mr Droppert will meet with dairy farmers and support staff in Wodonga on Tuesday morning to talk about the latest Situation and Outlook report.
Murray Dairy chief executive Jenny Wilson said the support network had seen “a rapid increase in inquiries” about services available, mainly focused on farm finances.
Cash flows were already pretty tight and levels of debt are pretty high coming out of a dry season. So the challenge for a lot of farmers is being able to service that level of debt and then make the numbers work for them coming into next year
- Jenny Wilson, Murray Dairy
“Cash flows were already pretty tight and levels of debt are pretty high coming out of a dry season," Ms Wilson said.
“So the challenge for a lot of farmers is being able to service that level of debt and then make the numbers work for them coming into next year.
“Until you understand what your financial situation is you can't really make clear decisions about what your options are.
“So, just being clear about what your situation is has a big impact on your whole way of thinking and way of operating.”
Ms Wilson said Devondale Murray Goulburn and Fonterra had been working with suppliers to look at repayment options since announcing its pay cut and recovery of overpayments to dairy farmers.
“In particular Murray Goulburn has been doing a lot more work in that space and what it means for their individual farmers,” she said.
Murray Goulburn deputy chairman Ken Jones, who farms at Kergunyah South, recently said the price cut decision was extremely tough to make and was the dairy giant’s only viable option.
A turnaround is not expected in the industry until at least 2017.
Murray Dairy’s Situation and Outlook briefing breakfast on June 7 will be held at The Cube Wodonga, starting at 7:30am.
Mr Droppert will talk about the report and Ms Wilson will provide information about what help and services are available for farmers.
“The recent farmgate price cuts have intensified margin pressure and dampened opening price expectations,” Mr Droppert said.
“Confidence has suffered as a consequence, and on-farm investment is likely to slow substantially.
“Northern Victoria is of particular concern, given the confluence of income (milk price) and cost (particularly water) issues, together with a large proportion of highly geared businesses.”