Chasing rain and green paddocks, dairy farmers move south to overcome drought. Simone Smith reports from the Australian state of Victoria.
Sitting atop his quad bike down the paddock, James Dillon is still in awe of his “office” view.
The farm he just moved to is at Ruby, near Leongatha in South Gippsland, Victoria’s east.
“It’s a lot less stressful and worrying, I’ll give it that,” he says of farming in the more reliable rainfall district.
“One of the best bits is actually, where I’m sitting now, I can see Wilson’s Promontory. When I sit out in the paddock, the land isn’t just all flat and you can see that little bit down the road, the change of scenery. It is good for the mind, and that’s part of it. I never really thought about it before, now in a green growth area with rolling hills you think to yourself ‘this is not bad’.”
James is one of many dairy farmers trading the drier and drought areas of Victoria’s northern Victoria, New South Wales Riverina or east Gippsland (far east Victoria) for the greener and lower-cost areas of Victoria’s South and West Gippsland or south west Victoria.
For James, moving meant trading farm ownership for share-faming.
Other northern farmers have bought into the south, although land prices are a lot higher, while leasing has also been an option.
James owned the farm he ran for 13 years as part of a partnership at Waaia near Shepparton in Victoria’s north where his herd shrunk to 240.
Now he’s share-farming 182ha, milking 250 and hoping to boost herd numbers to 350 in the coming years.
Moving nearly 400 kilometres south east, also meant an average annual rainfall gain of about 600mm – from an average of 400mm to 1000mm.
“We’d only had a bit over 200mm in the last 12 months I was there (Waaia),” he says. “We hadn’t had 400mm in total in the last two years up there.”
He started the new milking season on July 1 in South Gippsland, but the decision to uproot was made in February.
“Mr Bank Manager said ‘you will have money until October, you better work out what you will do’,” he explained. “He said ‘you’ve got money to get through autumn, this will be the last lot’.”
At this point, temporary irrigation water prices were about A$500 (NZ$536) a megalitre – up from A$80-A$100 (NZ$86-NZ$107) a megalitre at the same time in 2018 but less than the A$550-A$600/megalitre ($NZ590-644) it’s making now.
Hay and grain prices were also high due to ongoing drought in large parts of NSW and Queensland.
Milk production for July and August in northern Victoria was down 9.4% compared to the same time last year, according to Dairy Australia. Western Victorian milk production was down 7% during this same period with Gippsland only down 0.7%.
This follows a national drop of 5.7% to 8.8 billion litres in 2018-19.
For James, the decision to move from northern Victoria was really easy. He wanted to keep farming and maintain a financial stake in dairy.
“I enjoy it and can’t see myself doing a nine-to-five job,” he said. “I didn’t want to sell up and just go and manage a farm, I’d rather share-farm than manage, having managed before.”
To buy a farm in Gippsland, he would have had to sell his northern Victorian property. He’s since sold the farm, but it didn’t happen fast enough to buy in Gippsland before July 1.
James estimated it cost about A$20,000 (NZ$21,454) to move and he also had to buy more cows, re-sow parts After the first year, he anticipates a lower cost base than farming in northern Victoria, however, supplementary feeding will be required throughout the summer.
“We are paying more in cartage costs for grain and hay, but hoping to offset it by needing less,” he says.
“With less heat stress on cows (in Gippsland) I hope to hold production better. But ultimately, I am a pasture-based farmer that’s what I wanted to get back to.”
As more farmers exit the northern Victorian and NSW Riverina dairy industry, James believes the money in the community will dry-up as well.
“If you take my million dollar turn-over out of the local economy, multiply that a few times by the (farmers) who have just given up… it adds-up,” he says. “Besides the banks’ money, most of my money stayed local. Once farms are (sold) outside of dairy you don’t anticipate the same level of money coming back into the community and the only ones who realise that are the businesses who deal with the farmer. For example, (in northern Victoria) I went from having to wait for a week to 10 days to get a motorbike serviced to them being able to do it the next day. Business has dropped-off that much.”
James is not the only dairy farmer moving south. Within a 20-minute drive of his new farm there are three others from the north of the state with another two farming a little further away.
Gippsland real estate agents report an increased interest in farms in South and West Gippsland from dairy farmers in northern Victoria or the drought-declared region of East Gippsland.
SEJ Real Estate Leongatha and Warragul agents Irene Walker and Miranda Pike say enquiries from dry regions lifted 20% in the past 18 months, but not all resulted in sales.
“Dairy farmers inquiring are very deflated and grasping at hope for greener pastures,” Irene says. “These calls often lead to very considered conversations, the irrigation water issues, high grain prices and lack of rainfall are clearly taking a toll, not just financially but on their mental health.
“Most realise very early on in the conversation that the land here is too pricey for them to relocate and they shift their focus to exiting the industry rather than relocating.
“This is the situation in West Gippsland, whereas in South Gippsland it is getting harder to get a big enough parcel of land that can milk 300-plus cows without being too steep.”
Inquiries for farms in South and West Gippsland haven’t pushed the price higher, as land values rose during the past decade anyway, Miranda says.
Interest from northern Victoria and East Gippsland “confirmed to locals that the value is there, in their properties” but the added market competition has dampened their enthusiasm to buy more land.
Competition for West and South Gippsland farmland is also coming from Melbourne investors as the city expands, Miranda says.
“It has been very good for those long-established South and West Gippsland farmers retiring as they have realised very good investments in their farms,” she says.
Dairy Australia has anticipated a 3% to 5% drop in national milk production this season to 8.1-8.3b litres as the drought and high costs continue to bite.
THE FIGURES
Variable and overhead costs 2018-19 season:
Gippsland (eastern Victoria): A$5.96kg MS
Northern Victoria: A$7.26kg MS
South west Victoria: A$6.29kg MS
Earnings before interest and tax 2018-19 season:
Gippsland (eastern Victoria): A$0.51kg MS
Northern Victoria: A$-0.45kg MS
South west Victoria: A$0.71kg MS
Percentage of feed imported (as a per cent of total ME):
Gippsland (eastern Victoria): 34%
Northern Victoria: 40%
South west Victoria: 32%
*Season constrained by dry/drought seasonal conditions and high input costs (grain, fodder and high irrigation water costs). Gippsland (eastern Victoria) includes the shires of East Gippsland and Wellington which are drought declared. There’s no drought in the south west Victorian dairy region.
Source: Dairy Farm Monitor Project 2018-19
