Yesterday Mr Humphris and his wife Lyndal were stunned to be told by Murray Goulburn that the best price it could now pay its 2600 supplying farmers for their milk from July was 33c a litre.
The Humphris family runs 330 milking cows on a small irrigated farm near Tongala in the rich Goulburn-Murray irrigation district. The sudden turnaround has knocked $380,000 off their annual bottom line.
In April, they were budgeting on an income of $1.1 million for the 2.1 million litres of milk their herd produces annually, enough after paying feed, irrigation water and health costs, to break even.
Now, after Murray Goulburn’s shock announcement yesterday that its milk price would plummet to a record low of $4.31 per kilogram of milk solids — 33c a litre — Tim Humphris is staring at a year ahead where he will lose at least 10c a litre.
“I was really hoping that MG opening price would still be fairly strong; that even when they took the $150,000 loan they say we owe them off for retrospective overpayment in 2015-16, that we would still be in a workable position,” Mr Humphris, 44, and a father of two, said yesterday.
“But this is such a shock — so huge a gap — between what we budgeted for and expected, and what we will now get, that I’m not making much sense; how do you shave nearly $400,000 or 40 per cent off a budget that is already cut back to the bone?”
Mr Humphris, a former vet, says he, like so many Victorian and Tasmanian dairy farmers hit by the recent milk price crashes imposed by Australia’s two biggest dairy companies, MG and Fonterra, is struggling to cope.
With a large bank debt still owing on the farm the family bought eight years ago, his options are limited. He can sell some cows, or all his milking herd, or the whole farm. He could quit farming, although he knows agriculture’s future, in principle, is bright.
Selling 100 year-old heifers, the future of his herd, would bring $100,000.
He said: “I can’t afford to milk because I’m losing 10c for every litre my cows produce; but I can’t really afford to stop milking either because we need some income to pay our bills.”
Like many dairy farmers, Mr Humphris blames Murray Goulburn for poor financial management, as much as global dairy downturn, for the price crash.
He has always been a proud Murray Goulburn man; supplying milk every year to the farmer-owned processor that he trusted and believed in, and supporting its decision last April to partially float and sell off a $500 million capital fund to outside investors.
But yesterday, as Australia’s biggest dairy processor slashed the price it will pay its farmers for their milk from July by another 14 per cent — after a 10 per cent drop just eight weeks ago — Mr Humphris said his trust in MG had been misplaced and his support of now departed chief executive Gary Helou, ill-judged.