The Dairy Farmer

Hi Scott,

I’m a dairy farmer and feel I have been let down by our co-operative, Murray Goulburn. I now have a debt to them that’s been backdated. Should I pay it back or leave and not have to pay it back … you see, the debt stays with the factory and not the farmer.

Paul

Hi Paul,

You’re dead right.As I understand it, it’s not so much a debt, as it is a clawback (via accepting lower milk prices) over the next three years. For most dairy farmers that means producing milk at break-even at best, or a loss at worst.

So if you look at the situation rationally, you could walk away and avoid paying anything back, and avoid the next three years of painfully lower prices. You could sell off your cows, lease out your land (if you can), and get a job in town (if you can). And ride it out.

Yes, that’s a lot of ‘ifs’ and ‘coulds’. But as a hard working farmer, you’d be used to that. You can’t control the milk price, you can’t control the interest rate or terms the bank imposes on you, and you can’t control the weather. The only thing you can control is earning other sources of farming (and non-farming) income.

The $64 million question is, what will the milk solids price do?

No one knows, not even a bunch of overpaid corporate spivs sitting in Murray Goulburn HQ.

Scott