He says weather-related issues have made dairying less profitable in many regions. Lack of rain is forcing farmers to buy water to irrigate farms and pay much higher prices for supplementary feeds.
Unlike New Zealand farmers with their pasture-based systems, Australian dairy farmers supplement pasture with fodder and grain.
In an interview with Dairy News, McNamara said the 2019 season is the most challenging since the 2002 drought.
“Buying water has become expensive and fodder prices have jumped from $250/tonne to around $600/t.
“Unlike NZ we have a higher proportion of fodder and grain in diet for cows and buying extra feed impacts cost structures enormously.”
While production costs soar, milk price improvements have failed to match those increases. As a result, Australian dairy industry is experiencing a drop in the national milk yield this year.
“We understand the pricing pressures supplements are having on farm profitability in a drought and how this impacts the processing sector as well he says.
Norco will pay its 335 farmer shareholders on average A59c/L this year (about A$8/kgMS).
It hopes to hold the price for the rest of the season, improving it next year to help farmers recover.
Norco is one of the top 10 dairy processors in Australia, the last remaining co-op since the purchase of the once-mighty Murray Goulburn Co-op by Canadian company Saputo 18 months ago.
Owned by 335 farmer shareholders, Norco collects milk on a farming belt extending from northern Sydney to Gympie, 160km north of Brisbane, Queensland.
Norco chairman Greg McNamara says there is a growing interest among Australian dairy farmers in supplying a co-op.
“We have a enquiry list; we haven’t moved supply beyond our traditional supply pool between Gympie in Queensland and north of Sydney. We have farmer listings from southern NSW, Victoria and Tasmania. Yes, we’re even getting calls from Tasmania and South Australia.”
McNamara says Norco is looking at expanding its footprint at the appropriate time; adding value is a priority and not growing just for the sake of it.
