Processor Murray Goulburn has announced its opening price for the new season will be $4.45 per kilogram of milk solids, or $4.31 for farmers who opted to take up a support package.
Last year the company forecast prices around $6 a kilogram.
Tasmania’s Primary Industries Minister Jeremy Rockliff labelled the announcement disappointing and said it would devastate many farming families.
«They’ve suffered from drought, the cost of production has increased as a result of watering their pastures, floods and then this price is a triple whammy,» he said.
Farmers lost hundreds of dairy cows in the floods that devastated northern Tasmanian properties earlier this month.
Dairy Australia managing director Ian Halliday predicts workers will be laid off as farmers struggle to deal with the price cut on top of recent flooding.
«There’s probably some farmers that are going to be putting people off and that’s unfortunate but you can also understand current financial situations some farmers are in,» he said.
Tasmanian Farmers and Graziers Association dairy chairman Andrew Lester said the depth of the cut took everyone by surprise and farmers were devastated.
«It’s a good 5 per cent below the lower predictions,» he said.
«There’ll be a significant number of farmers [operating] below cost of production.»
Cuts below ‘worst-case’ scenario
Meander dairy farmer Brian Lawrence is one of Murray Goulburn’s 70 Tasmanian suppliers.
He said the latest cut was not sustainable.
«We’d been working on a $4.50 milk price as probably the worst case,» he said.
«[The floods] affected us with lower pasteurisation … we’ve used more feed in the last fortnight because of the wet conditions.»
Despite the latest setback, Mr Lawrence remains optimistic about the industry’s future.
«We’ll just have to run a pretty tight ship to get through to this time next year,» he said.
«We’re sure most people can get through this, it won’t be without pain.»
Mr Rockliff is confident government support packages for farmers are sufficient.
«We have to work with our farmers to ensure that they remain viable and sustainable and continuing employing people in rural and regional Tasmania,» he said.
Financial support packages for flood-affected farmers were announced two days ago.
Australia’s second-largest milk processor, Fonterra, is yet to announce its price for next season.
Source: ABC
http://www.abc.net.au/news/2016-06-28/dairy-farmers-likely-to-leave-industry-after-milk-price-slump/7550894