VINCE Thorne knows he won’t be popular among south-west dairy farmers by saying that government cash handouts are not the answer to the present dairy industry crisis.
However the Cobden-based Wimmera/South-West rural financial counsellor is still willing to put his neck on the block by saying it.
Mr Thorne said cash handouts would not fix the financial problems besetting many south-west dairy farmers.
“They will just delay them,” he said.
“We need people to change their management to make a profit with the money they are paid (by their business).”
Mr Thorne said federal government assistance given to farmers during the recent drought had not helped many stay on the land.
“They were no better off.
“It just delayed the inevitable which was to leave the industry,” Mr Thorne said.
Some farmers had received up to $600,000 in government drought assistance from 2005-2010 but had still not survived.
“It was a huge amount of money the government put in but it was not successful in all cases,” he said.
Mr Thorne said he believed the answer to the dairy industry’s problems lay with boosting farm returns by increasing demand for Australia’s dairy exports.
That would be achieved by lowering the value of the Australian dollar and improving dairy processors’ access to export markets, he said.
Mr Thorne said the good cash flow provided by monthly milk cheques had prompted some dairy farmers to borrow too much money.
Lending bodies were more willing to lend to farms that had a good cash flow such as dairies than other agricultural enterprises such as livestock production, he said.
Prices for dairying land had been inflated in recent years by strong competition and lending bodies had been willing to give loans on those high valuations.
However valuations for dairy farms had since declined.
“A correction is occurring,” Mr Thorne said.
Dairy farmers with low equity in their farms were the ones most likely to be in trouble.
“A lot of the ones that were plugging away have dropped in to the category of those with little hope.
“That is why there is the outcry now.”
However he said it was important to remember there were many dairy farmers in the south-west who were doing well.
“Not everyone is in trouble,” he said.
Mr Thorne said he was paid to work three days a week as a rural financial counsellor but had worked virtually full-time so far this year to deal with the increasing number of clients.
He was working with three to four clients each week and receiving an extra one to two each week.
“I am spending many hours with each of them.
“Last week I would have spent 10 hours or more with each of three farmers,” Mr Thorne said.
He said most clients did not have the option of going to the bank to get more money because the bank was unwilling to lend to them.
ehimmelreich@fairfaxmedia.com.au