Western Dairy report shows WA dairy farm decline

This was despite local dairy farmers being paid more for their milk by the State's four main milk processors than in the previous five years.

An industry "snapshot" in Western Dairy's 2021-22 annual report released this week showed there were 116 dairy farms in WA still supplying processors with milk at the end of last financial year.

This was down from 132 dairy farms listed in Western Dairy's 2020-21 annual report - 16 dairy farms fewer, or a 12 per cent reduction in the number of local dairy farms year-on-year, despite ostensibly favourable seasonal conditions throughout most of the year.

In comparison, Dairy Australia's recent 2021-22 annual report's 'facts about Australia's dairy industry' stated there were 4420 dairy farms nationally.

Its 2020-21 annual report listed 4618 dairy farms nationally - a decrease last financial year of 198 dairy farms or just over 4pc nationally.

In 2016, before the WA dairy industry turmoil over milk supply contracts with processors Brownes Dairy and Harvey Fresh, which ultimately saw some dairy farmers forced out of the industry because they had no one to sell their milk to when their contracts expired and were not extended, renewed or picked up by other processors, WA had 160 dairy farmers.

The treatment of particular dairy farmers by some processors during the 2016-17 financial year, coupled with eight years of what farmers considered unreasonable downward pressure on farmgate milk prices until Coles and Woolworths supermarkets ended their $1-a-litre retail milk pricing in the 2019-20 financial year, severely eroded farmer confidence and led to an exodus from the industry.

MORE DAIRY NEWS

Since then, WA dairy farm numbers have diminished 27.5pc, effectively slowly transferring bargaining power within the local industry from major processors - Brownes, Harvey Fresh, Bega Dairy & Drinks and Coles Supermarkets, which buys milk direct off farmers and has it processed by Bega under a toll arrangement - to the remaining dairy farmers.

Last financial year WA dairy farmers were paid a provisional average price of 54.46 cents per litre for the milk they produced, according to Western Dairy's annual report.

In 2020-21 they were paid an average of 53.5c/lt, in 2019-20 52.28c/lt, in 2018-19 50.17c/lt, in 2017-18 49.87c/lt and in 2016-17 50.58c/lt, the report indicated.

Total milk volume produced in WA last financial year was just under 344 million litres - about 4pc of national milk production and down from just under 362mlt the previous financial year and from a recent high of 385mlts in 2017-18.

According to Western Dairy, the contribution of local milk production to the State's economy was $187.2 million in 2021-22, the lowest it has been in the past six financial years and compared to $193.6m in 2020-21.

The local dairy industry continued to employ about 1200 people last financial year, the same as in the previous financial year, because the total number of cows milked remained about 50,000, the annual report stated.

With a similar total number of cows milked, but at 16 fewer dairy farms, last financial year the average WA milking herd size increased from 379 cows to 431.

In the annual report Western Dairy chairman, Busselton dairy farmer Robin Lammie, said the local industry continued to face "massive" input cost increases and labour shortages - a hangover from COVID-19 border closures.

"Unprecedented world trading conditions - due mainly to the Ukrainian war with Russia - has seen massive inflation in most cost areas of dairying, including fertiliser and fuel," Mr Lammis said in his chairman's report.

"This comes at a time (when) labour shortages remain an ongoing issue.

"However, we (Western Dairy board) have tried to focus immediate attention on the matching of significant increases in milk prices to the huge inflation of these input costs.

"Rapid movement in both areas has seen consolidation of dairy businesses, which has come at a time where we are being encouraged to produce more milk.

"However, I'm sure with continued confidence and an increase in skilled workers, we can achieve stability and growth in the future."

In her regional manager's report, former Western Dairy manager Julianne Hill, said a "a more positive 2021-22" had followed "a couple of tumultuous years" for WA dairy farmers.

"The better season was enhanced by some processors offering dairy farmers higher milk prices in the latter part of the year, as well as added incentives for reaching various sustainability markers," Ms Hill said.

"Confidence in the industry's future improved in WA, with increased positivity amongst farmers about their own businesses."

The annual report paid tribute to former Western Dairy employee Rob La Grange who stood down due to ill health during the year from his current part-time work, after helping deliver the 'Our Farm, Our Plan' initiative.

Mr La Grange who had worked in New Zealand's dairy industry, was recruited from Tasmania as one of the first regional dairy industry development specialists and later oversaw dairy industry training in WA.

Western Dairy's annual general meeting will follow its Spring Forum at Bunbury next Wednesday, December 1.