Dairy farming moving to the next phase?

We will be home by the time you read this, with a change of about 30 degrees in temperature!

Still it will be March and spring will not be too far away, and by my calculation we are owed an early warm spring. The time here in Australia has been very interesting as usual, and it’s been good to catch up with farming friends, go to a few farm days and chat to fellow dairy farmers.

Frank and Barb Tyndall have been amazing hosts, and kindly invited Elin to fly down from Sydney to join us in Victoria for our last weekend. We went snorkelling, canoeing, cycling, and walking in the superb summer weather.

A trip to Western Victoria last week driving along The Great Ocean Road, with spectacular views as one winds along the cliff; the road carved out of the rock, as it twists and turns to the west.

We stopped in Lorne to watch the spectacle of surf boat racing, before continuing along the coast to look at ‘The Twelve Apostles’, great limestone stacks along the coast where the sea has carved away the softer rock, leaving these forlorn figures to be slowly but surely diminished over time.

We climbed back inland through thick bush on narrow roads as we entered the Otway Ranges, with its great big Mountain Ash and Iron Bark Gum trees, towering above us. This area has the highest rainfall in the whole of Victoria, approaching 60 inches of rain.

An elaborate private park has been built in one part, with suspended walkways about 200 feet high, so that one can walk around high up in the trees. At one point there is a tower; a spiral staircase taking one up another hundred feet, so that we were at tree canopy level.

Further on along the walkway, there is a ‘cantilever’, where after walking along right to the end, one seems to be floating amongst the trees (it does sway a bit!).

We saw on our tour as we visited a couple of volcano’s, the smoke from the big fire in the Grampian mountains in the distance, where another 50,000 acres has been burnt to a cinder, with nothing to do but wait for the rain to put it out (just like the Aberfeldy fire I wrote about last week).

The temperature was 38c for a few days, with a hot northerly wind, the most dangerous of conditions and a grass fire on the outskirts of Melbourne raced along towards the city, almost getting to the suburbs, stopping literally yards from houses in the suburbs; a close shave as helicopters and fire-fighters saved the day.

Is Australian dairy farming moving to the next phase? That’s a question I have been asking myself over the last fortnight.

There are farmers looking to sell or rent out farms as they approach retirement, but the question is who will take them on?

I know of several farms which would be on offer to a good young operator with the performance and means to farm them profitably.

There are however, very few young people which have both the ability and means to do this; never mind the determination and grit which is undoubtedly needed to make a success of dairy farming.

It would cost a minimum of £2 million to buy a good, reasonably sized (400 cows) dairy farm with irrigation in Victoria including the cows and the necessary equipment. Not many people have that sort of money to hand and if they did, they might not maybe want to invest in a dairy farm and a lifetime’s hard work in making it a success.

But for those who have the ability, a certain amount of capital or cows, there are opportunities and the market is in their favour.

Renting a farm for a fixed period of four to five years with a fixed price to buy and an obligation for both parties to see it through, is one way to progress.

Four of five years of very good performance can generate profits, and of course a track-record for the bank, which would enable the purchase to go ahead. It is far from easy, requires top management and an element of luck.

If milk prices were to fall, or input prices and costs increased, not only would the required profits not be there, but the value of the farm may have dropped.

Very carefully structured budgets are essential, with realistic sensitivity tests, to see how far things could move before real damage occurred.

Should things improve on the other hand it would be easier to reach targets, and if land appreciated which one would normally expect, equity would be assured. As usual in business, timing is everything.

The similarities across countries are many, and here in Australia, whilst many dairy farmers quite rightly believe that their milk price is too low, they are not in a position to do much about it.

The high input and rising labour costs are certainly a bigger problem, and the average Australian farmer would struggle to get an adequate return on capital; certainly not good enough to borrow the money from the bank.

That frames the challenge for the young progressive, ambitious operator.

The choice of farm is of critical importance to his quest, top performance can only be achieved if the land has enough water, is of good fertility, and costs can only be low if the farm is well equipped and properly structured.

The opportunity for a young family who have that skill, drive and ambition is tremendously exciting, and is undoubtedly a life changing and a momentous decision.

I have been privileged to witness such a family making the choice of farm and the big decision whilst I have been here. I visited the farm they operate currently in a partnership and I am very impressed.

I look forward to watching their progress and visiting them again in the future, especially if the deal they are now working on for purchasing their new farm comes to fruition.

Sad news came through last week informing us that Jim Harrison, friend, mentor and very successful dairy farmer and businessman had passed away.

A truly remarkable man and we will all miss him. Jim had not been well for some time, but had largely brushed his illness aside, and was still to be seen at meetings and conferences.

As it happens, we met up with Charles Harrison, Jim’s son who is out here on his Nuffield Scholarship, on two separate occasions which was very pleasant.

Jim Harrison was involved heavily in the agricultural world during his busy life, and was awarded many awards for his efforts. Founding member of the Oxford Farming Conference, the Tenant Farmer Association, Ruminators Discussion Group and of course founding Chairman of Milklink Co-op, putting together the original executive team.

A great friend and hardworking supporter of Nuffield, the 300 Cow Club, The South of England Agricultural Society, West Sussex Grassland and European Dairy Farmers.

I could go on. There will be a memorial service at Cranleigh on the 5th of March.

Gwyn Jones