A number of farmers in the Simpson area have struggled to buy groceries in the past few months because repayments on fodder advances and other commitments had absorbed all of their milk payments.
AT least half-a-dozen dairy farms in the south-west have gone into receivership and dozens more had no money for household expenses after paying farm costs, a rural financial counsellor says.
Vince Thorne, from the Wimmera South West Rural Financial Counselling Service, said there were many dairy farmers not receiving any money from their milk payments because it was all being directed to paying off fodder advances and other farm costs.
He said milk companies often provided fodder advances to suppliers, with the interest-free repayments later deducted from the companies’ payments to the farmers.
The fodder advances were often used by farmers to buy in fodder and grain to feed their cows and during winter to buy nitrogen-based fertilisers.
Mr Thorne said more dairy farmers than usual were asking for the fodder advances because the dry season and failure of summer crops had increased the need for off-farm feed.
Winslow’s Jock O’Keefe, from the dairy farmer activist group Farmer Power, said he had heard there were a number of farmers in the Simpson area who struggled to buy groceries in the past few months because repayments on fodder advances and other commitments had absorbed all of their milk payments.
He said he had heard of dairy farmers going into receivership in other parts of the state.
“It’s not just this region that’s in trouble, it’s Gippsland and northern Victoria as well,” Mr O’Keefe said.
Coffey Hunt accountant Garry Smith, who works primarily with clients in the south-west dairy industry, estimated the cash flow for his clients would drop by an average of $250,000 this financial year.
Milk prices were presently down by 15 per cent on last year, grain prices were up by 30 per cent and power costs had increased between 30-80 per cent from 2011-2012, he said.
Mr Smith, who has spoken at recent functions convened by the Farmer Power group, said he believed there were “mechanisms of support” that government could improve to help struggling dairy farmers.
He said one potentially positive aspect to the dairy crisis was this year’s looming federal election.
“The political heavyweights are taking note,” Mr Smith said.
Farmer Power’s activism had also made people in the south-west realise how important the dairy industry was to the region’s economy.
He said farmers in financial difficulty needed to develop good relationships with their financiers and suppliers and let them know about their financial situation.
ehimmelreich@fairfaxmedia.com.au