The Perfect Storm

I found out late – for me  – tonight that Vladimir Putin has placed trade sanctions on us. The article in question can be found here.

This has me very worried. Not in the least because we recently sent some of our dairy heifers to Victoria for export to Russia. I’ll get to that later.

As I am discovering, it’s really hard to pinpoint how much of the dairy we export goes to Russia. I have searched all the usual places and can’t find anything definitive.

I do know we have been sending heifers to Victoria to be sent to Russia and China for the last 12 months to help pay the bills. It means for a while we’ll be short of pure bred Holstein replacement heifers. But we do have some very good crossbreds to take their place.

But what of this market now? I guess the next few days may just change a lot of the earning capacity of all dairy farms.

If there are less export opportunities, a few things will happen.

Firstly, the record highs we’ve all been paid recently for our heifers will obviously finish.

Secondly, cow prices could drop. Good news for those wanting and able to expand, not so good if you’ve budgeted for the high cow price.

Thirdly, it will affect the people who have set themselves up for heifer rearing and raising.

Fourthly, the heifers don’t get on the boat until the export company has the full load sourced and any blood tests are done and the heifers need to be housed and fed. People have set themselves up for this as well.

And lastly, animal rights activists will now become acutely aware we export live dairy cattle.

I did have plans to try to follow some of our heifers on their journey, but time constraints have stopped me.

So why am I worried? We sent some heifers to Victoria for export about two weeks ago. Possibly, they are still in Australia. As far as I can tell, bringing them home is not as option due to the Johnes (pronounced yoknees) disease issue. You can read more about that here if you have time.

This comes on top of news this week that the World Milk Price (WMP)  has dropped rapidly. That can be seen here.

For the first time in years, we have been getting a decent farm gate price for our milk. Its meant we can finally see the light at the end of the tunnel.

If WMP drops, our processor drops the farm gate price. Simple as that.

And to top it all off, we are still in the drought we had last year. And there is no end in sight. I have heard it will be March next year before we get any decent rain. And that doesn’t guarantee the drought broken, just rain. The Bureau of Meteorology site is here. These are the rainfall deficiency maps.

There’s a lot going against us as an industry right now. I still believe there is a bright future in dairy. We just need to ride this storm out.

I think we are in for some interesting times.

Better go find that life jacket…..

6 thoughts on “The Perfect Storm

  1. I thought of you as soon as I heard about Putin’s sanctions. I gather you don’t want to dwell on it, but I would be really interested in knowing your thoughts on live exports. I’m not an activist, but it is something that concerns me. I don’t know enough about it to make any kind of informed comment – can you tell me more? xo

    Like

  2. […] I published a post the other day explaining, among other things, how the trade sanctions placed on Australia by Russia will effect us. If you missed it, here it is. […]

    Like

  3. I wonder how Russia plans on feeding its population? what happens if your heifers haven’t left Australis yet?
    Milk price seems to be going down already! I know we were promised volatility but weren’t expecting it quite yet.
    Was just reading an article that fertiliser prices are likely to go through the roof – phosphorus comes from Russia I think!

    Like

    • I think Brazil is going to attempt to fill the void. Which could be interesting.

      I know Australia had to jump through so many hoops to gain the live and boxed beef market.
      We have a fairly long list of medications we have to be careful using due to their extraordinarily long withholding period as our abs has (had?) Russian contracts.

      There’s two blogs there!

      Our heifers are fine thankfully! There are heifers ready to go to Russia, but they’ll be soaked up by other markets.

      The next 12 months is going to be interesting for agriculture. The world is on the cusp of change. Scarily so.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s