Bigger farms pay dividends
DAIRY farms around South Gippsland are becoming larger as many of the region’s smaller farms are consolidated into single enterprises.
“For quite a while now there has been a trend of consolidation of smaller farms into much larger enterprises,” Burra Foods milk supply officer Reno Tomaino said.
He said consolidation has varying impacts on the industry, depending on a number of factors.
“For example, dairy farms with less than 130 cows are becoming less viable due to continually increasing overhead costs,” he said.
“Consolidation becomes a viable option as it generally means lower production costs.”
Mr Tomaino said consolidation of farms with more than 250 cows can have the opposite impact on production costs.
“But it can mean there are increased employment opportunities, as larger farms tend to have higher labour units per cows milked,” he said.
Large scale dairy farmer Les Bland from Welshpool said he started with 100 acres and has since grown the business.
Formerly known as Bland Dairies, the family business now milks 3000 cows, produces 26 million litres of milk and employs around 20 staff across four farms in the Foster area.
Mr Bland said he was lucky to get his start, however even with 100 acres, he was twice refused finance.
“It was just persistence that finally enabled us to take the next step,” he said.
Since then, Mr Bland and the rest of his family have worked together to build and enhance the business.
“The final step was for the four children to step up into the management of the properties. We have four normal farms now,” he said.
Mr Bland said without big farms getting bigger, a lot of farms would be unable to produce sufficient quantities of milk to remain viable.
He said he does not think large scale operations are inhibitive for the industry, rather a way to move the industry forward.
“What is detrimental to the industry is the incapacity of the system to help young people get started on dairy farms,” he said.
“There is a willingness from young people to become dairy farmers. They just need someone to facilitate their journey.”
Mr Tomaino said in South Gippsland it takes a $10,000 to $11,000 per cow investment to enter the dairy industry.
“Banks require around 40 percent equity before providing finance, hence the larger farms get, the harder it becomes for individuals to enter the industry,” he said.
“It could however mean better opportunities for people looking to share farm.”
Leongatha South dairy farmer Max Jelbart said in the early ’70s, there would have been around five, 350 cow operations along the Koonwarra-Pound Creek Road.
He said each of those farms would have had around two staff and produced one million litres of milk per year.
“Now, on one farm we milk 1000 cows, employ 14 to 18 staff and produce 8.5 million litres of milk per year,” he said.
“Consolidation is a natural progression; it is just going to happen.”
Mr Jelbart said if anything, consolidation of dairy farms leads to an increase in production.
Mr Tomaino said Burra Foods has not lost many suppliers due to consolidation, however in some cases it may have impeded some recruitment opportunities.
He said consolidation does not seem to impact negatively on milk supply.
“Burra Foods has a good number of enterprising milk supply partners who have increased production significantly over the years purely through consolidation,” he said.
“A growing industry is a healthy one, so any initiatives to grow milk production and fresh investment in the industry at farmgate we view positively.”
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