Dairy

Dairy businesses suffering after price cut

by
July 18, 2017

Hit hard . . . Dairy equipment businesses have been hit by the milk price cut.

Dairy businesses across the Goulburn Valley have suffered from last year’s milk price clawback.

Many dairy farmers have postponed or cancelled plans for upgrades on their properties until the prices improve or the uncertainty is resolved.

Some farmers are telling dairy equipment suppliers their banks have refused to fund an expansion or improvement.

Numurkah business ND Services managing director Golly Keane said it had been hard for the family business, which he runs with his two sons.

‘‘It’s been devastating. It’s been the same as it has been for dairy farmers. Our business has dropped off by 20 per cent, we had to reduce staff by 20 per cent and our accounts receivable has blown out by several hundred thousand dollars,’’ Mr Keane said.

‘‘We are a family company ... It puts all sorts of pressures on that you don’t need.’’

Despite it hurting sales at Easy Dairy Automation Systems, managing director David Chandler was looking at the positives.

‘‘When the news was announced last May, we immediately let off two staff numbers. It was one of these things that had to be done. We set what we believed would be our targets, we contacted suppliers and our new projections were far below an average trading year,’’ Mr Chandler said.

‘‘We used it (the slow times) as an opportunity. We had time on our hands to improve efficiencies, research and development and business development. When it (the industry) turns we will be better than we were before this.

‘‘We have managed the business very well over the last 12 months and invested in it for the future. We will be in a better position to react in down times and we are now ready to employ again.’’

Despite Mr Chandler’s optimism, his business took a major hit.

‘‘We expected our business would do 50 per cent of a normal year — 2012-13 was a bad year and we benchmarked similar to that year and it turned out it was,’’ he said.

‘‘We did better than our projections. Other areas improved even though sales were down.’’

When it comes to improvements to his business’ bottom line, Mr Chandler said he expected some improvement but how much was unknown.

‘‘We are not seeing improvement yet. I think we will but only a small improvement as a lot of farmers are still running under the cost of production,’’ he said.

Dairy Technology Services manager Malcolm Fenn said there had been a slow-down since the price cuts last year.

‘‘Smaller upgrades are just not happening,’’ he said.

His company installs milk harvesting and effluent handling equipment on farms and he said this calendar year was shaping up as worse than last.

‘‘Last year we had a major project which kept us going but this year we have fewer jobs on the go,’’ he said.

Mr Fenn said farmers were saying that banks were not prepared to provide the funds until the situation improved.

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