Rural sector milked dry: Australian dairy farm numbers plummet as industry battles high debt
Monday, September 16, 2013/
A number of high-profile Australian dairy farms are currently on the market, as industry figures reveal the number of dairy farms in Australia has fallen by 71% since the 1980s.
With the continuing decline in farm numbers, industry analysts are concerned the consolidation is continuing, with some suggesting in the coming years Australia may not have enough dairy farms to sustain the industry.
Figures compiled by Dairy Australia from the state milk authorities show in 1980 there were 21,994 registered farms in Australia, but in 2012-13 this number had declined to 6398.
Western Australia’s largest dairy enterprise Lactanz Dairies is currently on the market through Colliers International, thought to be worth around $30 million. Its four New Zealand-owned farms are in receivership.
This morning reports also emerged that Raleigh Dairies farms in Coffs Harbour, NSW, were up for sale again, while negotiations were believed to be underway to buy Australia’s oldest dairy business, Van Diemen’s Land in Tasmania.
Van Diemen’s Land is thought to have attracted the attention of Fonterra and the China Investment Corporations in a joint bid.
A number of other dairy farms have also been placed in receivership of late.
President of Australian Dairy Farmers Noel Campbell told SmartCompany the industry is currently a “two-speed economy”.
“The industry has two different paths, Queensland, northern New South Wales and Western Australia are domestically focused and that accounts for about 25% of the industry,” he says.
“The other areas are export focused, with some domestic production.”
In Victoria, Tasmania, southern New South Wales and South Australia, the dairy farms mainly manufacture dairy products such as yoghurt, cream and cheese for exporting to Asia and the Middle East.
“Basically the industry until the last few months was in a downturn because the domestic producers which make the white milk were affected by prices of the supermarkets and the export businesses were impacted by the high Australian dollar,” Campbell says.
“The industry was looking pretty dire up until two to three months ago. Certainly there are quite a few farms on the market because of the debt levels reached during these recent years.”
Dairy Australia industry analyst John Droppert told SmartCompany the phenomenon of decreasing farm numbers is common to all agricultural sectors.
“We have to ask, are we losing too many farms? There are some regional communities where there aren’t many left at all,” he says.
“In Western Australia in particular there has been a high number of exits over the past few years. But the concern lately has been in Queensland and NSW, where businesses are still suffering from the pressures of the domestic industry and dealing with the supermarkets.”
State figures show there are now only 731 registered dairy farms in NSW, having fallen from almost 4000 during the 1980s.
In Victoria, the state most dominated by dairy farms, the number has fallen from 11,467 farms in 1980 to 4284.
Droppert says the consolidation of the industry is ongoing, and a recent deal between Coles and Murray Goulburn and Norco to supply milk for its home-brand products could be a catalyst for further consolidation at the processor level, too.
“Consumers want value for money and the supermarkets are reducing costs in line with that,” Droppert says.
“The most likely change we’ll see is a focus toward locally produced milk and some opportunities around that, but the broader trend of people wanting value for money won’t change anytime soon.”
Campbell says there is some good news for dairy businesses, with those exporting able to capitalise on the opportunities presented by the Asian Century.
“Certainly our biggest growth market is China and they’re looking to shore up some of their supply by purchasing farms here,” he says.
“But we have a disadvantage because of the lack of a free-trade agreement, so that’s something we really want to see changed. It will significantly help us because at the moment we’re paying a 10% tarif, meaning New Zealand are 10% ahead of us.”