Global Dairy - Season shines for Victoria’s dairy farmers

GLOBAL DAIRY AUSTRALIA

South West Victorian dairy farmers Con and Michelle Glennen.

Season shines as Victorian dairy farmers cut costs

Rains have brought a big turnaround for many Australian farmers, with exceptional spring growth. Simone Smith reports.

It was an overcast day in October. Rain was due at Con and Michelle Glennen’s dairy farm within days. Normally, silage preparation would be in full swing.

Walking through the paddock towards the milkers, it’s clear the herd will be grazing these paddocks for at least another month.

“I can’t remember a season this good in my lifetime,” Con said. “I’ve been on this farm since 1992 and farming longer than that. I can’t remember it being this good.”

“We had a really good summer, good autumn start, and we are wet now and it is the start of spring. We went through winter with heaps of feed, we’ve had a great run.”

This stark improvement in seasonal conditions isn’t unique to Victoria’s south-west region and in some areas the turnaround has been more profound.

Throughout Victoria, which last season produced 63% of the nation’s milk, dairy farmers are making the most of the spring flush and conserving feed to help buffer drier seasons.

In some cases, especially in Gippsland – the eastern region of Victoria – some paddocks of ryegrass were going to head with their roots and stems submerged in water.

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‘I can’t remember a season this good in my lifetime. I’ve been on this farm since 1992 and farming longer than that. I can’t remember it being this good.’

Improved seasonal conditions have buoyed most Australian agricultural commodities with the dairy industry benefiting from reduced feed costs and improved livestock returns.

In September, Australia’s winter crop production was forecast to increase by 64% this year to 47.9 million tonnes, 20% more than the 10-year-average.

There’s also expected to be plenty of hay made throughout Australia, the quality though will carry a huge question mark following untimely rains throughout many export hay producing regions.

The upside is it’s a lot cheaper, there’s plenty of it however, it doesn’t look like it will be needed in many areas for months to come. The old saying ‘there’s money in mud’ has also sent the Australian beef industry into a restocking frenzy, as producers who endured years of drought and huge bought-in feed costs are now flushed with feed.

This restocking surge has been reflected in the price of dairy cull cows. These values were up 15% to the end of August and 19% compared to the five-year average, according to Dairy Australia.

Australia’s climate is fickle, the long-dry spells add huge costs to dairy businesses and strains profitability.

These pressures have been acutely felt in northern Victoria and the New South Wales Riverina, regions reliant on irrigation water to grow pastures and crops. Relief has been delivered for these farmers too, with irrigation water prices reducing up to 60 percent, according to member-based irrigation water trading platform Waterpool Trading.

The prices reflect the decline in demand and increase in availability due to droughtbreaking rains throughout large parts of Australia. The average price of water traded during the 2020 season (July 1, 2019-June 30, 2020) was $517.73 a megalitre. The price for water traded for the first four months of the 2021 season was $204.25 a megalitre.

Independent ruminant nutritionist Steve Ralston works with Debenham Australia with the bulk of his dairy clients in Victoria. He anticipated the grain spend across his southern region dairy customers would be down about $200/cow year-onyear. “If you are in Northern Victoria, you could double that,” he said.

These savings come from an average price drop of about $100/tonne for stock feed.

“For our customer base it is a decrease of about 35c/kg MS in the southern dairy regions,” Steve said.

Fodder was also expected to be $100 a tonne less than last season but dairy farmers would have to adjust their feeding regimes to account for quality downgrades. For dairy farmers operating a fully-fed Total Mixed Ration (TMR) system – a small proportion of business mostly operating in northern Victoria and the NSW Riverina - these bought-in feed savings would equate to $2/cow/day, according to Steve.

That’s about $1/kg milksolids in reduced costs, he said.

Fundamentally it is a margin.

“If you juxtapose year-on-year, prices (this year) dropped well less than $1 per kg from the historically high farmgate milk price last year,” Steve said. “The economics of dairy in northern Victoria are better this year than they were last year.”

Supplementary feeding is common practice throughout many Australian dairy farms. According to last year’s Dairy Australia National Dairy Farmer Survey

Above: Directly grazed pastures at Con and Michelle Glennen’s Victorian dairy farm is valued at 7-8 cents a kilogram of drymatter. Below: Con and Michelle Glennen farm at Noorat in South West Victoria, they are saving $300-$400 a day on irrigation costs due to the good season.

“nearly all” dairy farmers engaged in some level of supplementary feeding.

In 2018-19 the average was 1.6 tonnes of supplementary feed per cow per year. Steve said grain, particularly, “helps buffer an unreliable season” while the economics of dairying “generally support moderate concentrate feeding”.

“Australia is blessed with a vast amount of cereal grains within 200km of dairy regions,” he said.

“Here in Victoria, that’s a competitive advantage.”

Back at Con and Michelle Glennen’s farm at Noorat in south west Victoria, they are making the most of having the scales tipped in their favour.

“Milk prices aren’t bad, the commodities are cheaper, interest rates are cheaper, and we are growing grass,” Con said.

“We ordered vetch from a supplier for $250 a tonne testing 24 protein and 12 ME (metabolisable energy) with a 36 NDF (neutral detergent fibre), basically rocket fuel. “It’s $250 delivered to the farm, we stayed out of the market this time last year, there was just no return in it. It was up over $400 (a tonne) for that sort of stuff, near 50c/kg DM fed to cow and with the milk price, it just wasn’t on. Even though the price was better, the numbers didn’t add up.”

This year the Glennen’s return on grain feeding would be 30-40 percent per tonne. Last year they were breaking even, despite the better farmgate milk price. Milk production this season has been up 15 percent and they are milking 10 more cows – up to 380.

The Glennens are also rearing more calves. They have plans to grow to 500 milkers.

In early October, Con said they would have grass now “until the end of November no matter what happens”. Rain was due in the following days and, if they got a dry run, would start cutting silage towards the end of the month.

The irrigators were sitting idle in the paddock and this has been a huge saving for the business. Last year, they weren’t going in at this time of year, but the previous season they were running from the start of October.

Con and Michelle value price their irrigated pasture at 21 cents a kilogram of dry matter, directly grazed pasture is 7-8 cents/kg DM. Silage is 21-22 c/kg DM.

“I don’t care if we don’t start those irrigators until Christmas,” Con said. “That’s $300-$400 a day we are not spending.”

“The biggest gain we will make is from the best season we have ever seen, that’s the biggest return,” Con said.

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