The Perfect Storm – Weather Update

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.

This is an update.

Thankfully, our heifers are not destined for Russia this time. This means we don’t need to figure out what we have to do with them.

Sadly, another export company has a lot of heifers already in quarantine ready for shipment to Russia and as far as I can tell, forward contracts to honor.

Our buyer said not to expect a phone call from him for a while. He has different markets and can soak these heifers up.

Personally, I’m not that upset with this. I loose sleep and am prone to bursting into tears randomly for weeks every time we send heifers away.

But the impact on the whole dairy industry is still to be felt.

We also need to take into account what will happen to the beef industry, as this effects the value of our cull cows. Its of particular concern for us as the local abattoir is Russian certified (or whatever it needs to be to export to Russia). It is also another export destination closed. Already Brazil is ramping up production and making deals to fill the void. They can also supply grain and dairy products too. Thank you Colin Bettles for this link.

And my worry that the ARA’s will discover Australia exports’ dairy cattle is happening. I’ve thought for a while now dairy would be the next big thing for them to try to dismantle once the pig and chicken industries were destroyed. Could be happening earlier than I expected.

And I feel I should explain the WMP issue too.

The farm gate pricing is directly linked to World Milk Price. Its all business. A good blog on how our milk prices are decided can be found here. Marian is a great dairy advocate worth a follow too!

The lack of rain – still an issue!

Really, there isn’t much we can fix here! All we can do is weather the storm the best we can!

 

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…..