Dairy News aUsTraLia february 2016 DAIRY NEWS AUSTRALIA MAY 2016
18 // markets 14 // AROUND THE REGIONS
New South Walesto dairy Western Australia Price slump not unique Investing in people Sam on a mission
tHe world economy has veered into some difficult and dangerous waters, suggesting 2016 will be a long hard year of slow recovery in prices SAM NICHOLSON is on a in global food commodity markets – mission to inspire more young including dairy. “Hire for character train for skills,” people to join the dairy industry. AS The MANY dairy farmers would already perfect storm has struck. Steve said. “It’s a bit of a mantra.” The recently-appointed know, managing cows is a lot easier than Major food and oilseed commodity When it came time to redesign his dairy DairyNSW Young Dairy Network managing people. prices are at low points in the cycle and calf shed, Darren also kept staff com(YDN) coordinator wants to attract But as Steve Stanley from Team Smart with inventories high. It’s not just food fort top of mind. a new generation of farmers to an told the large crowd at WA’s Dairy Innoof course, oil and other major metal “If there’s good people to be had out industry with a bright future. vation Day last month, it is possible to get commodities are at prices not seen for there, we want to be the point of differ“There are so many opportunities great performance from your people – proabout a decade. ence and whereageNDa they end up.” for a variety of jobs in this industry vided aredemand preparedside, to make it a priority, Onyou the China, the fresh Local beef farmer Paul O’Meehan – you don’t just have to be a milker and perhaps seek out professional advice. largest growth economy in the world, sTeve speNcer said he was six years into a program that putting cups on,” he said. Darren Merritt, from Elgin Dairies, has the brakes on. changed how he managed staff, and that Sam (pictured) hopes has This been working with Steve for the past year started with little regular reviews of values, procedures and Australia can follow the lead of 8change months. in OPEC’s production stance, the supposed break-even costs of operations had transformed his business. New Zealand where he spent the He has five casual milkers working for and little hope for collaboration given production of crude oil for most major “I don’t see myself as the boss, I see past year studying agriculture at him said setting core values as aand team, exporters. newand tensions between Saudi Arabia myself as the coach of a footy team,“ he Massey University, after winning for everyone to work by, had made a signifHistorically, there has long been Iran. said. a Dairy Australia Farm Business icant difference. The outlook suggests a sustained a close correlation between crude He said having an independent mediManagement scholarship. The staff, which includes the couple’s This points to a bigger worry, that Low oil prices have combined producers. petroleum glut, unless there is a strong oil prices and the prices for major Hemisphere ator – such as an HR consultant – had “I was inspired by the of sanctions to weaken the Russian the world economy will be adversely three children, also developed a key motto Low oil prices can be a friend to amount dairy with surge in demand – which I’ll come back food commodities, including dairy stopped any becoming too perinvolvement young people haveeconomy, in for the farm: No compromise. No excuses. ingredients and have made a bad financial affected by the slowing of China – more producers. anddiscussions feed grains. to later. sonal and had instead created a culture of the industry in New Zealand,” Sam No exceptions. than the economists at the IMF and Cheap fuel can lower the costs of situation far worse in Venezuela. On the demand side it makes sense This is playing out like a “game feedback for everyone said. “Whencase you’ve got everyone working The effect in these dairy markets will World Bank are currently suggesting. milk production, reducing equipment weak economic activity reducesin the theory” study. The OPEC cartel in – constructive “Thecommodity study helped to youngand people butpredict, he adds that Metal business. are cost our offuture the sameadirection, just ticks,” prices me are low be uneven hard to as the costs as people well as the for fuel and can weaken some and energy“Young started price wareverything to dominate the demand understand more of the science there are good models, such as share “Everyone, including me, has a chance farmers and the ones with new Darren said. dependence on oil, production costs, largely because construction activity fertiliser. global energy market in the third food markets. behind the farming and then farmingfood andbuying lease farming, get a grilling, gets put through the ringer Lowideas. to doalso everything He also longer hires “the first person to industrial outputsystem in China have government activities which and and crudeWeoilneed prices make we While the trends lines move quarter ofno 2014, signalling their intent put what I learned in the classroom can provide pathways. a bit,” Paul said. can to get them involved.” that comes down the driveway”. to increase production and drive uncannily together, it doesn’t mean oil biofuel production less attractive, the financial states of oil economies stalled. “You can start as a relief milker into “Wethe talkchanges about all the things we want Sam, 23,more is one two YDN is he too fussed if that low-cost person has is behind Lowpractice.” metal commodity markets can vary significantly. potentially ensuring feedof supplies in dairy and grain outNorcompeting alternate says there’s a and confident vibe and eventually buy your own cows the person to stop doing, start doing and coordinators in New South Wales dairy experience; fitting into the team and several developed developing But the developing world including harm Sam which helps support margins, even technologies (such as shale oil) and prices. about dairy in New South Wales, and build equity. I want to create continue doing.” and covers the mid-coast and the right attitude mattered most. Dairy prices have slumped low due when dairy prices fall. This has certainly MENA has a number of large dairy economies, weakening investment renewable production using corn and thoughand farmers stilldown have to to affect cope awareness these different trickling that are alsoof oil importers whose activity case forregions. Northern Hemisphere buyers to excessive supply from abundant grass been theHunter soybeans. with environmental challenges and pathways,” he said. The part-time YDN job connects economies should benefit from lower household sentiment and discretionary So much for the planet! This is about growth, low feed grain prices and the suppliers. price volatility. The YDN job was advertised him with the broader farming spending. However, low oil prices have mixed fuel and energy costs. short-term painful price competition loss of a couple of big buyers from the “Overall it’s quiteAustralia positive,”ishea whileoil Sam was inmeanwhile New Zealand and Post-mining-boom community and he is still heavily Weak prices also effects on dairy markets. to knock out rivals, and ensure a finite global market. said. he was so keen that he flew home for involved in his family’s lease farm In the developed EU and US ensure low prices for palm oil, used good example of this. Grains and oilseeds markets are energy resource remains the dominant “The Trade with Agreements with parents, Geoff improves and Megan,widely at anasinterview. The US Free is another, analysis a competitor and substitute cheap fuel well-supplied due to good weather in economies, choice for industry and consumers. with key export markets, the “It’s a great personal Lansdowne near Taree. suggesting that low oil prices are likely Prices have been driven to levels most major regions – our enemy El household budgets, freeing up a bit for dairy ingredients. westernisation of diets and the development opportunity and a In his YDN role, Sam promotes So on balance – what does the to hurt rather than help that economy not seen since 2004, well below Nino tends to be kind to many Northern more cash for dining out. many learning curve Legendairy they household stay lowerincomes longer, indespite futuregreat hold for oil prices andfor the me,” globalhe if rising We’vethe alreadyindustry’s seen US food service Asian countries will create many said. communications initiative via social lower costs of running SUVs and road grow strongly in 2015 soaking up more economy? opportunities Sam grew up theindicator 300ha leased networks and organising fleets. and there are a lot One important buton odd of transport cheese media and milk. The question is of resources to help are farmers to family farm and loved the freedom social and educational events that So dairy commodities not alone whether it can keep that growth rate economic conditions is the Baltic Dry improve their business and their and connection to the land and develop and build the capacity of as bottom-dwellers – most hard and soft Index of shipping costs. surging in 2016. profitability.” cows. young farmers improving The prices are at historic lows, index has long been a forward commodity Lower fueldairy costs can by improve On reasons the home front, things are “When you’re a dairy farmer their knowledge, skills, confidence – including some that economic prospects for countries indicator of the fortunes of the world for many looking good for the farm which you have a sense of being part of and leadership abilities. dependent on fuel imports, lowering economy, and is now the lowest since are interrelated. a mixed herd 220 cows. is a community,” “The objective is to attract The unwinding of of this situation its inception in 1985. he said. “You get milks overall costs ofmain manufacturing and “We’ve had a good spring attached to the land around you and retain young people in the dairy This largely reflects the slowing the same for them as it is for dairy.and transport, including shipping and more aroundwill Christmas has set and in youand build industry,” he said. Dairyrain demand be stimulated outa relationship of China as with it improving the affordability of dairy of trade up a good season. It should progress the cows and nurture them from “A lot of people just think a dairy transitions to a consumer-led economy with more affordable food and imports. to an ideal season,” Sam said. early age. one. farmer up there at a ridiculous consumer goods. from an a trade-driven On the othergets hand, are risks time Sam’s ultimate is to own “When I was at school I’d help and milks cows, but there’s a lot Low milk prices dream will eventually It also reflects the build-up of for dairy demand, as low oil prices a farm, following in his dad after school and on the holidays more to it than that. Programs like will slow can harm the economies in some capacity with the promise that China discourage production, supplyparents’ footsteps butwill expanding with new something kepttwo-way up when trade) I went to and Legendairy and the Young stockpiles reduce to normal (and -its hunger Ifor major oil-producing regions whichDairy ideas and technologies. boarding school and when I studied Network show how attractive the levels. are also large dairy importers, such as would just keep growing. “I sobering want toreality always open to Agricultural Business Management industry is.”East, North Africa The forbe dairy is that The index suggests the demand side those in the Middle Steve and Darren opportunities,” he said. at Charles Sturt University in Sam says the capital costs of speaking to the audience (together known as MENA), Russia and of the oil market will be sluggish for these effects may take all of 2016 to at Dairy Innovation Day. Source: getting into dairy can scare some develop and then some.Dairy Australia someOrange. time. Venezuela.
worth the effort
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