Shock price cut ‘bad timing’ for farmers

11-07-2018 by admin

DAIRY: Former head of dairy company Van Diemen’s Land Company and dairy companies in New Zealand Nicola Morris. Ms Morris is the current CEO of Tasmanian Irrigation. A volatile milk price and its recent downward spiral is not what is affecting dairy farmers so passionately, but rather the timing, the former head of Van Diemen’s Land dairy company Nicola Morris says.
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Ms Morris, the current CEO of Tasmanian Irrigation is no stranger to the dairy industry, spending some years as the head of the Circular Head dairy company as well as managing 48 farms in Uruguay for New Zealand Farming System’s South American beef and dairy enterprise.

“It’s a hard one…rightly or wrongly they [the dairy farmers] have had a fair chunk of their income come out of their budget for the foreseeable future,” she said.

“It’s like if I told you that I would be halving your salary next year, you might not like it but you could get used to it. But if I told you today that I would be halving your salary from tomorrow…”

Fonterra and Murray Goulbourn recently slashed the global milk price by 60c per kilogram of milk solids effective from May.

Farmers will receive about 14c per litre of milk they produce, which is less than what they can produce it for.

Ms Morris said the writing had been on the wall for those in the industry but said a lack of communication by the milk processors had hit farmers hard.

“If you know the price then at least you can make plans, its the timing that has really got everyone…there’s been absolutely no warning, from what I can see in papers and articlesMurray Goulbourn was saying as late as January and February that everything is fine,” she said.

Milk price has always been a volatile beast and fluctuations in the price are not uncommon, however slashing prices to an average of 60c a kilogram would really affect the bottom line.Ms Morris said farming was a “biological process” and you couldn’t just stop the plans you’d made for the future because of a price change.

“People have sown their crops and their cows and in calve, they can’t just stop that,” she said.

She said she believed the supermarket war on cheap milk had impacted on the industry and the recent price cuts.

“I’ve never seen milk so cheap anywhere before, I believe it must be impacted by that, sooner or later that cheap milk will have to be paid for and it will come out of the price paid to dairy farmers.”

Despite a push for a review of the price structure and for a fixed milk price, Ms Morris said she was unsure if that would fix the problems at hand.

“The idea has merit, New Zealand used to have an Dairy Council and a fixed price but with the price so volatile I’m not sure who would set it and how they would choose the number.”

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