Key points:
An inquiry into the NSW dairy industry has recommended more training and support for young farmers
Farmers told the inquiry they feared the industry is becoming too expensive
Superannuation funds or foreign investment were suggested as potential sources of new funding

The NSW Legislative Council inquiry that began in December 2019 looked at the long-term sustainability of the dairy industry in New South Wales.

There were common themes in the 80 submissions, including fears about an ageing dairy sector, flow-on impacts from drought, water costs and depressed milk prices.

The inquiry held hearings in November 2020 and February 2021.

There were seven recommendations in the inquiry’s report that was handed down last week.

Young farmer support

Many of the recommendations fall outside of the state government’s jurisdiction including developing a collective bargaining platform for farmers, investigating a floor price and extending the levy on $1 per litre milk.

Others included that the NSW Department of Primary Industries should establish a dedicated unit to provide advice and support to new dairy farmers entering the industry.

The recommendation has been backed by the Chairman of the Hunter Dairy Development Group, Scott Wheatley.

“The age of farmers is increasing, and a number of farmers are getting out so, it is something we really need to really investigate, or in the next few years, there won’t be too many farms left,” he said.

“Milk consumption is increasing or remaining static at the very worst and so we do need to maintain an industry particularly in this state to help some of the shortfalls in Queensland and to maintain production in NSW.

Mr Wheatley said the recommendation was good in theory, but in reality, high set-up costs could be too much of a barrier.

“To get a dairy that is viable nowadays, you need many, many millions of dollars,” he said.

“That is sort of a hindrance to most young farmers entering the industry. If they do have plans to buy their own farm, they probably need to do some education and look at other avenues rather than farm ownership.”

Foreign investment, super funds could help

Mr Wheatley said because of the cost barriers, other investment streams would be needed to give young farmers a head start.

“We really do need a higher milk price and also to encourage investment whether it be from foreign ownership or even super funds teaming up with young farmers,” he said.

“This is probably something the state government could assist with that, is putting some young people in touch with people who do have some investment dollars.”

During better days in the Hunter Valley, there were more than 1,000 dairy farmers across the region supplying a number of local milk processors.

In 2010 there were only 150 farmers left and Mr Wheatley said that had shrunk to just over 40.

He said of the farmers that are left, skyrocketing land prices could prove to be too tempting for them to stay.

“The price of land in our area is increasing rapidly so that is something I know a lot of farmers are weighing up,” he said.

“It is whether they stick it out and work their 60 or 80 hours a week or just sell everything and just retire. It is a pretty enticing aspect of our businesses at the moment.”

Training needed to fund dairy pathway

Families that were part of dairy dynasties were among those to lodge submissions to the inquiry.

Fifth-generation dairy farmer Pat Neal shared his concerns.

“Young people see how hard their parents are working on a dairy farm for little return, with money tied up in assets and debt, which consequently creates a lot of stress, he said.

“We need the young people to be in the industry, but we have got to provide a vision of how this is a successful industry.

“Unless you are going to inherit the farm and you have got that backing behind you, getting into dairying is very difficult.”

The inquiry also recommended additional funding for dairy specific traineeships, subsidised university degrees and TAFE programs.

The prospect of not acting came with a warning.

Committee members were told that with fewer young farmers entering the industry, the state might find itself unable to meet the demand for milk.

The inquiry was held towards the end of some of the most challenging years for farmers, and submissions particularly recalled the industry during 2018-19 when input prices skyrocketed.

The outlook has changed in 2021, according to the state government-appointed Fresh Milk and Dairy Advocate, Ian Zandstra, who told the inquiry that the industry was now on a good trajectory and farmers are feeling more positive.

“We had some very tough years of performance for those two or three years,” he said.

“We are bouncing back now, very much so in terms of farming.

“Prices have picked up. Homegrown feed is available, we are getting good seasons, and fodder is readily available.”

“The terms of trade in that sense are very favourable, and farmers are positive.”