Dairy farmers brace for difficult year
Sat July 21, 2012 10:53am
SOUTH Australia's dairy farmers face a torrid time as plunging farmgate prices, weak international markets and the introduction of "permeate free" milk take their toll.
Misleadingly, Dairy Australia's latest figures show the confidence of SA's 300 dairy farmers has rebounded from a miserable 45 per cent last year to 62 per cent. But that is still below the 69 per cent national average and the state's association is predicting a slide.
South Australian Dairy Farmers Association president David Basham said low farmgate prices meant many of the state's farmers would operate at a loss this year, cancelling out the minor profits they made in 2011.
He said weak international markets were a major factor, as was a new "marketing gimmick" by the major milk companies now heavily promoting "permeate free" milk.
Mr Basham said the average SA farmer made a $50,000 to $60,000 profit last year, but a plunge in farmgate prices of up to 8c a litre would leave them in the red this year.
"It is not as bright as it seems," he said. "Prices were better last year and confidence among farmers improved. The downside of that is I suspect next year's confidence numbers may not be so strong as we've had an 8 to 12 per cent pay cut."
Mr Basham said most milk companies were paying more thas 40c a litre last year. Pricing this year was between 35c and 37c. "For the average farmer, that is going to be a hit of close to $100,000," he said.
"That's probably the difference between making a living and making a loss.
"This is going to drive them into the negative unless they can find ways to cut costs."
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