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21 Aug 2018
Australian drought brings 'perfect storm' with Gov policy in firing line
By Bruce Jobson
Australia’s dairy industry is in the grip of a perfect storm due to drought conditions, low milk prices, escalating feed costs, spiralling water prices, a lack of political will and federal government policy.
The Government recently announced a AUD$100 million (£53.8m) increase in drought funding. For many, it is too little, too late.
Australia’s dairy farmers have suffered a severe two-year drought, declared the worst in recorded history in the Murray-Darling basin.
The area covers 410,000sq.miles, almost twice the area of Great Britain.
With other drought affected areas included, this amounts to twice the land mass of the UK and Republic of Ireland combined.
In areas of Queensland, there has been even less respite as drought conditions have continued for seven long years.
Australian agriculture is in the maelstrom of a national disaster.
Livestock farmers have been severely affected resulting in feed spikes, with grain and hay costs doubling, allied to decreasing yields.
Thousands of farmers have sold their livestock due to lack of water, grazing and feed, all resulting in accumulated debt. After a lifetime’s work some have merely sold up and closed the farmyard gate.
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Deficit
QUEENSLAND’S dairy production is expected to result in a 150 million-litre deficit, with milk being expensively imported from other states.
The long-term trend in declining numbers has been systemic, with more than 71 per cent of the country’s dairy producers having left the industry since the 1980s.
Farmers claim Coles, Woolworths and Aldi recently increased prices by 10c per litre (5ppl), and failed to pass on increases to desperate producers.
The furore has continued unabated, with the Government last month agreeing to pay AUD$150m ($80.6m) towards a US-backed space project to Mars.
Farmers claim Ministers have ‘idily sat back and done nothing, while Australia continues to burn’.
The extent of the situation
ABOUT 10 per cent of the country’s dairy farmers left the industry during the past year due to spiralling feed costs and financial risk.
Drought conditions have also resulted in decreasing financial returns in Northern Victoria, an area relying heavily on irrigation.
Dairy production has fallen by more than 30 per cent and grain farmers are predicting crop failure for many years.
The country’s drought cycle is well documented, but severe hardship was not predicted.
Long-term forecasts for autumn and winter rainfall over the past two years predicted average levels in south-eastern Australia. In addition, the drought has become a political storm, with state Government versus government policy the frustration of many.
Within the vagaries of Australian policy, farmers have to purchase water entitlements.
The Government changed its policy prior to the record-breaking drought.
Unintended consequences have reverberated across the country’s agricultural and rural economies.
The Government granted the most precious of all commodities, water, to be traded as a commodity.
The cost of tradable irrigation water has risen from a low of AUD$50 (£27) up to AUD$800 (£430) per million litres.
The increase in the price of grain has placed enormous strain on intensive livestock systems. Record prices for lamb and beef have further inflated the price of grain and hay.
Phil Ryan, a dairy farmer near Bega, on the New South Wales south coast, said: “The trading of water as a commodity has allowed financial speculators to purchase water entitlements. This action has resulted in the price of water being ‘inflated’ beyond the financial feasibility of many farmers.
“Water storage systems have held back irrigation water from previous years, and the unused entitlements of speculators have subsequently limited the availability of water to farmers in drought affected areas, further inflating the price.
Projects
“The Government also holds ‘environmental water’ supply which is intended to ensure the health
of the rivers systems and other environmental irrigation projects.
“This would also appear to have been mismanaged and, in some part, wasted. Local Bega cheese is one of Australia’s most recognised brand names, and in our area alone, 10 per cent of dairy farms have closed in the past 12 months.”
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