Drought, floods, the big challenge for dairy farming, says outgoing DA head
Dealing with the impact of drought and flood on the dairy sector is the "next frontier" for governments and the community, said the outgoing head of the industry's peak body.
David Nation steps down on today, after seven years as Dairy Australia's managing director.
Mr Nation said half the sector's farmers were facing a "difficult operating environment" from either drought or the impact of floods.
"That's immense, when you stop and think about half the whole industry," he said.
"There is a lot of discussion at the government level about what they need to do, with the industry affected to that level.
"We still need to work out, as a country, how we support farms and businesses through extended drought and floods that are much more acute than what you would expect."
He said farmers in Taree, NSW, thought they'd worked out how to deal with a once-in-a-century flood and were prepared for the latest inundation.
"But it was beyond anyone's expectation to prepare for a flood which was half a metre higher," he said.
"There are a whole series of conversations at federal and state levels about what they have to do.
"We are talking about the extreme impact on farm businesses.
"I think this is one of the next big frontiers to work out how a really important industry needs the support of community and government when situations are this extreme."
He said he didn't think anyone had a "clear-eyed" solution as no one had yet come to terms with it.
"I think it's reasonable that we have to think about a way of setting up, in advance, support to be there when industry really needs it," he said.
Mr Nation joined DA in 2018 after extensive experience across the dairy industry, including serving as DairyBio and DairyFeedbase co-director and Dairy Futures CRC chief executive.
At a Dairy Farmers Victoria conference, in Melbourne in April, Mr Nation lamented the lack of trust in the industry.
He said one of the highlights of his time at the helm was a focus on raising profitability.
"We really did advocate for setting a profit target," Dr Nation said.
"We got a wide industry agreement [that a] $1.50 a kilogram Milk Solids [milk price] is a threshold to say you really need that level to grow and invest."
He said when he started in the role, only 22 per cent of farmers were reaching that level of profitability.
"The run of good years up until last year lifted that number up to 72pc," he said.
Profitable farmers were likely to stay in the industry and encourage others to remain, or enter, the sector.
DA played a role in increasing profitability, although issues such as climate and milk prices were outside its control.
"We have really worked on making sure we have really strong markets," he said.
"In the really difficult years with COVID and political challenges with China, the value of exports to that country continued to go up.
"The depth of our relationships was just so important, in that time."
These relationships would also be highly important in a time of global uncertainty over such things as the tariffs being imposed by the US president.
Flagship programs like 'Our Farm Our Plan' were also instrumental in raising profits.
"I still meet farmers who talk about how much they have got out of that program," Mr Nation said.
"We have built a lot of tools that really focus on the farm business operations."
DA had also helped farmers make better decisions on capital investment.
Mr Nation said the milk pool hadn't dropped every year - "there have been years where it's grown, there are years where it's dropped".
"Over a longer term, the industry is smaller," he said.
"Half the change in the milk pool, between the turn of the century and now, are changes in the Murray-Darling Basin.
"They are really big changes, somewhat because of water rules."
Some NSW and Queensland coastal farmers had exited the industry, but there had been expansion in Tasmania, parts of South Australia and western Victoria.
"It's really important to have a balanced perspective about the dairy industry, but then it's also really important to realise we are in a very different place from where we were 10 years ago."
Then, the industry, globally, was under a lot of pressure because of the amount of milk being produced.
The trajectory of increased production had dropped away in NZ, China and Europe.
"The demand for dairy is there, and that demand is coming off a very low base," he said.
Domestic consumption had held up, and export demand was growing.
"I would still say, if you are going to choose an industry to be part of, the dairy industry is one of the best to choose," he said.
Mr Nation said once he finished with DA, he would set up his own advisory business to work with farmers, industry and government.