Regional Round-up  is a monthly newsletter providing an overview into the environmental and business conditions affecting farmers and rural businesses in the Goulburn Valley and North East Victoria.

Dairy

Both Fonterra and Murray Goulburn have announced price reductions. In both cases the cut is retrospective and will apply to milk supplied from the 1st July 2015.

Murray Goulburn is expecting the price to be between $4.75 and $5.00 per Kg and will pay $5.47 for the remaining months. The balance of the shortfall is to be recovered from suppliers from milk proceeds over the next 3 years.

Fonterra has dropped the milk price to $5.00 for 2015/16. Fonterra will only pay $1.91/kg for the remaining milk supplied to the end of the financial year to correct the “overpayment” for milk supplied for the last 10 months, with an additional $2.5/kg to autumn calving farms. Suppliers can apply for a loan with Fonterra at 3.95% to assist with cash flow difficulty to be repaid over three years.

RFCs will be meeting with Milk Factories seeking further detail on how the above schemes will work as well meeting with banks to understand how they might accommodate Dairy Farmers to adjust to the milk price drop.

There has been an increase in inquiries from dairy farmers seeking RFC Services as a consequence of the milk price drop and in anticipation of next year’s price drop. As previously reported, demand for the service has been steadily growing since Christmas and the latest milk price drop will see a further increase in demand. Pre-milk price drop dairy farmers have been selling HRW and higher than usual cow numbers in an attempt to reduce growing trade debt; however little consideration is given to the long term viability of the farm when taking such action.

 

Cropping/Sheep

Sowing is going full steam ahead. Recent rainfall will be a massive relief for most croppers. The outlook is also positive for grain farmers however more rainfall will be needed to fill soil profile to ensure average yield potential.

 

Beef

April rainfall was negligible; however, about 20mls of rain fell in the Upper Murray on 1 May and up to 40mls in other beef producing areas. There was enough rain to get some runoff into dams. Follow-up rain is needed and is probable, with forecasts for next weekend.

The weather outlook for May is positive at this point with a 50% chance of La Nina.

The heat has come off cattle prices with dry conditions persisting in April and is down 10% from February highs. This will no doubt change almost immediately with recent rain and predictions for more to come.

Producers with no short term cash flow issues will now retain stock for longer if further rain eventuates whilst others will sell in the hope prices will again go up.

 

Irrigation

Storage levels in Lake Eildon are at 30% against 56% last year. The Hume is holding 18% (against 20% LY) and Dartmouth 43% (against 75%LY). GMW resources storage levels website.

High reliability water share determinations remain unchanged and low or nil allocations for the opening of the 2016/17 seasons reman the likely outlook.