Strength in numbers

By Sophie Baldwin

INVERGORDON DAIRY farmer John Bell believes there is a strong future ahead for the Australian dairy industry, but it must change and evolve to benefit.

He said the current farm gate milk price needed significant improvement for a healthy and robust dairy industry. Rising feed and water costs would negatively impact any gains from today’s milk price and further damage an already frail industry.

Mr Bell said dairy farmers could improve their profitability by using their collective bargaining power for a better farm gate milk price.

“Processors want milk at the lowest possible price, supermarkets compete to sell milk at the lowest price to the consumer — which negatively impacts on producer profitability,” he said.

“The options left to dairy farmers are to involuntarily reduce production by leaving the industry or demand a better farm gate milk price to remain viable.”

Mr Bell said it might be hard to quantify what was a reasonable price in today’s market, but he believed a flat rate of more than $6.50 kg/MS was not unrealistic — there were already processor benchmarks and price disparity in excess of $6.30 to some suppliers.

“There is a shortfall of milk as a consequence of Murray Goulbourn and Fonterra’s actions, which the industry has not yet recovered from. Diversity into A2 and organic milk also adds a new dimension to this shortfall.

“If dairy farmers are to increase production to pre-Murray Goulburn and satisfy the demands of processor and consumer, the industry will need more cows. However, there will be a real time lag to reach those previous production levels.

“The window of opportunity exists for the average dairy farmer to use their collective bargaining power for a better farm gate milk price now.”

Mr Bell said many Australian dairy farmers seemed unable or unwilling to work together to bring about change.

“If we have a united front, we can get a better return on our investment and no dairy farmer would have to rely on government handouts to put food on the table.”

As a former Murray Goulburn supplier, Mr Bell was incensed by the lack of corporate governance and the MG board passing its failure onto the suppliers. At the time he was vocal for suppliers to unite and initiate legal action, but a lack of unity — compounded by loyalty and complacency — thwarted any such action.

“I was staggered to learn during that period that many farmers were receiving food parcels and Centrelink payments.

“Milk is found in most Australian homes and yet farmers were producing it at significant loss to supply the processor, supermarket and ultimately the consumer.

“No other industry principals would be subjected to such humiliation.”

Mr Bell said the initiative of United We Stand and other like-minded individuals had the potential to become a game-changer in the industry.

“Such core groups have commitment and motivation, but they need support and commitment from suppliers.

“Many co-operatives evolved from core groups with similar ideals and established a business to represent the interests of farmers. In this instance such a core group, formally structured, would be a conduit for the suppliers to the processor.”

Mr Bell has travelled the world extensively, involved in the oil industry for 40 years — working for major oil companies and establishing his own engineering and project management company in Melbourne with offices around the world involved in offshore drilling.

“The core elements of my business involved risk mitigation and leveraging off commodity changes and purchasing power, principles which can be applied in the dairy industry.”

In 2014 he decided to change direction and invest in agriculture.

He grew up on his father’s cropping farm in the United Kingdom and started work on dairy farms in the early 1960s.

“My father used to buy his seed and fertiliser and sell his crops to the same people every year; he had the same misplaced loyalty for co-operatives that many dairy suppliers had for MG,” Mr Bell said.

“At the age of 18, I sold his crops for him to new market outlets with a more profitable return.

“My father’s traditional suppliers complained about the loss of my father’s business, but they had taken advantage of my father’s loyalty and inability to negotiate for years.

“Agriculture is something I understood from my early days, however, farming in northern Victoria has not come without its own steep learning curves.

“I bought my dairy farm in northern Victoria because Australia has been my home for 30 years and I firmly believed, and still do believe, there is a positive future in Australian agriculture despite the various negative events of the past few years.”

The 435 ha farm is capable of milking 900 cows comfortably, although currently the herd size is sitting around 400. Soil types are sandy loam and clay soil, and about 235 ha are irrigated. The property is currently for sale.

Mr Bell believes dairy farming is on the cusp of change.

“There is a huge emerging export market in close proximity and new technology ready to be introduced.

“Family farms will always be part of the industry, however, corporate farming will bring much-needed investment, embrace technology and open up career paths for the next generation.

“When our prime minister suggests ‘farmers need to show more resilience’, it demonstrates how ignorant the government is to the many challenges facing the industry, which include water traded as a commodity, restrictions on foreign labour and discouragement of foreign investment, which are all damaging to the industry and its future.

“Farmers do not need handouts from the government; they need regulation in the industry, domestic and foreign investment and the opportunity for expansion, which will ultimately benefit all Australia.”