Monday, August 10, 2015

Labour BeLittles Dairy Industry

There has been much wailing and gnashing of teeth over the recent cyclical downturn in dairy product export prices and consequent farm gate payout.  The ultimate folly was Andrew Little’s declaration that the dairy industry is in  crisis.

Little couldn’t tell a cow’s arse from a roasted aubergine.

The dairy industry is flexible and resilient, for those who will accept change and think ‘outside the square.’  It is some years now since Adolf wrote up or read dairy farm budgets but the principles don’t change and all over the country farmers and their professional advisers will be examining options.

The level of debt is the overriding factor in these considerations and some, whose foolish banks obliged them by financing them into overpriced farms and herds when the payout was at its peak, will be forced to sell.  They took the risk and they lost the gamble.  That’s business.  It is NOT a crisis.

There are many choices available and here are a few.

  • ·        Sell the herd and apply the sale proceeds to debt reduction.    Employ a keen young sharemilker.   With cow prices low it’s a great time for a sharemilker to make a start.

  • ·        If the soils are the right sort, and many are, sell the herd and lease the property to a potato/onion grower for two years.  They need fresh ground to control various diseases.

  • ·        Sell 20%of the herd and apply the proceeds to debt reduction.  The reduction in operating costs will be significant as will be the reduction in stress levels for the farmer.  Stop buying truckloads of urea.  Stop buying bought in feed.  Watch the cost per head of animal health drop as the stress on the cows is reduced.

  • ·        On a larger operation it may be possible to lay off one labour unit.

Of one thing you can be sure.  It is not in the interests of the trading banks to see wholesale forced sales of dairy farmers and when I hear stories about farmers being forced to sell when they have not missed a payment on their mortgages I’m very skeptical.  Maybe there is something else going on about which the public is not being told?  I well remember one ratbag twenty years ago who was a big noise.  He was always late paying his mortgage and one day the bank just told him to FO and issued a property law act notice.   You see, they found out he’s told them some lies previously and they simply decided they were tired of him and kicked him out..

Funny that.

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