November 19, 2009
A new report launched today has forecast nearly 10 percent of dairy farms in the Macalister Irrigation District (MID) will be severely cash negative in the next 12 months.
The Nationals Member for Gippsland Darren Chester has repeatedly called on the State and Federal Governments to develop an industry assistance package to help struggling farmers remain viable through the downturn in global prices.
He said the difficult economic condition would have wide-reaching impacts on Gippsland, given that the local industry is one of Australia’s most important dairy regions, producing 2.1 billion litres of milk a year worth $790 million.
Dairy makes up around 45 percent of the total value of agricultural commodities in Gippsland.
“The report has forecast 34 farms will face extreme difficulty trading over the next year and one in 10 will be severely cash negative, despite taking action to restructure debt,” Mr Chester said.
“Just six per cent of dairy farms in the MID will be cash positive.
“Both levels of Government must step up and support the dairy industry through these tough times through a short-term assistance package and by funding dairy infrastructure as part of the MID 2030 Strategy.”
Mr Chester said the crisis was beyond the control of individual farmers as a result of world export markets, low milk prices and uncertain seasonal factors.
“Our dairy farmers are among the most productive and efficient in the world. They are world-class producers of a world-class product and they are used to managing a variety of risks in their businesses,” Mr Chester said.
“The dairy industry is as critical to Gippsland as the car industry is to a city like Geelong and yet we have seen a remarkable double standard in the government’s treatment of the two industries at this time of global economic uncertainty.”
Mr Chester said the dairy industry had a strong long-term future in the region, but needed assistance to deal with the current difficulties.
“I am particularly concerned about our younger farmers who may be carrying significant levels of debt. I believe we need to give them confidence in their futures on the land,” he said.
“The government could provide assistance to ensure our dairy farmers are well placed to capitalise on improved conditions in the future and it should be investing in improved irrigation infrastructure to increase the security of water supply.
“As a nation we have bailed out the car industry and we’ve also handed out billions of dollars in $900 cheques to prop up the retail sector.
“I think it is reasonable to develop an assistance package and infrastructure upgrade for the local dairy industry in these exceptional circumstances. It would be a modest package in comparison to those cash splashes that we have seen by the government.
“It staggers me that this government has been prepared to hand out $900 cheques but has not even looked at a critical issue, such as investing in improved infrastructure delivering increased water security in Gippsland.
“The dairy industry in Gippsland is faced with ageing infrastructure and an inefficient system. The MID 2030 Strategy was released two years ago and can improve the supply system.”
The report released today at the Macalister Research Farm found that the milk prices needed to return to at least 36 cents a litre in order for farms to remain profitable.