April 13, 2011
 

Australian dairy farmers evaluate effects of reduced milk contracts

 

 

Far North Queensland dairy farmers said the reduction in volume contracts is not as severe as they expected.

 

The largest group of dairy farmers, the Dairy Farmer Milk Co-operative, has agreed to supply major processor National Foods 872 million litres of milk next year which is 62 million litres less than last year.

 

In Far North Queensland, the coming season's local milk contracts will drop from 55 million to 51 million litres.

 

James Geraghty, from the North Queensland branch of the Queensland Dairy Farmers Organisation, said farmers had predicted much bigger cuts locally.

 

"It was indicated that the volumes would be down in the mid forties. The volume has now come out at 51 million litres," he said. "The volume has taken a lot of pressure out of the industry. Although it is a drop, it is less of a drop than we thought it would have been."

 

Further south, Andrew Burnett, who farms near Gympie, said supplying 2,000 litres less milk a day will mean an income cut.

 

"It is going to be pretty tough for us personally, because we had two floods in four days at the start of the year and we are taking a huge cash flow hit just on milk volume and also farm repairs and that sort of stuff. With prices getting knocked around like they have, you really question your viability."

 

In New South Wales, the amount of milk required by National Foods will drop 33 million litres next season.

 

Manning Valley dairy farmer Tim Boone said the news is not good for his business.

 

"It is not going to put us out of business, but it is going to make it a struggle to keep going," he said.

 

"We have a lot of debt here, so we still have to pay the interest rates and the principal on this loan so even though it is not going to kill us, it is definitely going to make it a lot harder in the short term at least."