Rural Bank's June Insights says there is confidence in the dairy sector around the opening farm gate milk prices for the 2020-21 season, but it doesn't feel that way for many local farmers.
The minimum opening milk price in southern Australia will average about $6 to $6.40/kg MS, and opening prices were about 7.3 per cent lower than the $6.80/kg MS opening price of 2019-20.
The commodity overview found softer demand for dairy products both locally and overseas and the prospect of increasing supply this season due to a favourable autumn break.
Gunbower dairy farmer Stephen Brown said a good autumn break did not solve water issues for northern Victorian dairy farmers.
“I think anyone who thinks that’s a good milk price is off their head,” Mr Brown said.
“They wonder why people exit the dairy industry and it’s not because they’re broke, it’s because they want to get into something where they can make some money.
“Most of the money in this country comes from rural areas and I think governments over decades have got it down to a fine art to make sure we don’t see any of the money, we just produce cheap food for the masses.”
Bamawm dairy farmer Steve Hawken said the industry was forcing the processors to list a lower price, and that he had recommended to dairy farmers not to jump into signing contracts.
“I've spoken to about 100 farmers in the last week and I'm saying to them, don't go signing anything, and let the factories realise they can't get people to supply them,” Mr Hawken said.
“There is a milk supply shortage this year and stiff competition, and food services haven't fully warmed up yet.
“The industry will turn around, demand will take off, and the milk won't be there — and if they start importing dairy that would be a terrible mistake.”
Lemnos dairy farmer Bernie Macgill said he was under less stress this season due to many factors, including increased water availability.
“The milk price could always be better, but we’ve had a good autumn season,” he said.
Mr Macgill said it was essential to have young farmers enter the sector for the future of the industry.
“We would like to see more people getting into the industry but the bar is too high for them at the moment; I see more exits than entries, and we need to do more for younger farmers.”