WEBVTT 00:00:11.720 --> 00:00:15.060 Breaking free from the chains of the past Where 00:00:15.060 --> 00:00:18.820 truth moves faster than a Holstein calf No law 00:00:18.820 --> 00:00:21.660 waiting on some printed page We're charting new 00:00:21.660 --> 00:00:25.300 ground in the digital age From genomic codes 00:00:25.300 --> 00:00:29.120 to robot facts We cut through the noise, no hold 00:00:29.280 --> 00:00:32.460 them back not your daddy's dairy news tonight 00:00:32.460 --> 00:01:02.850 we're sparking Welcome to another episode of 00:01:02.850 --> 00:01:05.109 the Bullvine Podcast, where we cut through the 00:01:05.109 --> 00:01:07.950 noise and get real about what's going on today 00:01:07.950 --> 00:01:10.950 in dairy farming. Today, we're digging into the 00:01:10.950 --> 00:01:13.469 rollercoaster ride Australia's dairy industry 00:01:13.469 --> 00:01:17.489 has been on since deregulation in 2000. Massive 00:01:17.489 --> 00:01:21.849 farm exits, giant herds, wild price swings, and 00:01:21.849 --> 00:01:23.829 what it all means for us here in North America. 00:01:24.230 --> 00:01:27.230 Grab your coffee, get comfortable, and let's 00:01:27.230 --> 00:01:29.909 dive right in. Welcome back to the Deep Dive. 00:01:30.280 --> 00:01:32.379 the show that digs deep into the topics that 00:01:32.379 --> 00:01:35.060 matter to dairy producers. That's right. Today, 00:01:35.159 --> 00:01:38.780 we're doing a deep dive into a really, really 00:01:38.780 --> 00:01:40.859 thought -provoking article from The Bullvine. 00:01:41.159 --> 00:01:44.799 It's all about what happened when Australia deregulated 00:01:44.799 --> 00:01:47.659 its dairy industry. Yeah, and it's a story with 00:01:47.659 --> 00:01:50.280 some really stark lessons, I think, for dairy 00:01:50.280 --> 00:01:52.000 farmers pretty much everywhere, but especially 00:01:52.000 --> 00:01:54.319 here in North America. Absolutely. This isn't 00:01:54.319 --> 00:01:56.379 just, you know, abstract economic theory we're 00:01:56.379 --> 00:01:58.319 talking about. No, not at all. It's about real 00:01:58.319 --> 00:02:02.140 numbers. actual farms, and frankly, the incredible 00:02:02.140 --> 00:02:04.659 human cost that comes with these huge sweeping 00:02:04.659 --> 00:02:07.700 policy changes. The insights from Australia's 00:02:07.700 --> 00:02:09.659 experiment, it's been what, a quarter century 00:02:09.659 --> 00:02:12.740 now? They should really make anyone involved 00:02:12.740 --> 00:02:15.740 in dairy production just pause and think. And 00:02:15.740 --> 00:02:18.360 the article, it draws on sources like the Alvarez 00:02:18.360 --> 00:02:20.719 report, that's the big government study on deregulation. 00:02:21.039 --> 00:02:23.979 So it's well -grounded stuff, it's compelling, 00:02:24.139 --> 00:02:25.979 and honestly, pretty sobering. We're going to 00:02:25.979 --> 00:02:28.240 break it all down. Okay, so the stage is set. 00:02:28.539 --> 00:02:30.919 Let's really peel back the layers here. We need 00:02:30.919 --> 00:02:33.500 to understand the ripple effects, right? From 00:02:33.500 --> 00:02:37.699 the cold, hard cash farmers were, or maybe more 00:02:37.699 --> 00:02:40.780 accurately, weren't making to the massive shifts 00:02:40.780 --> 00:02:44.560 in market power. And then the profound, often 00:02:44.560 --> 00:02:47.680 really heartbreaking impact it had on entire 00:02:47.680 --> 00:02:50.580 communities. It's a story that directly informs 00:02:50.580 --> 00:02:53.259 your choices for anyone listening. It helps us 00:02:53.259 --> 00:02:55.039 understand the future of dairy. It doesn't matter 00:02:55.039 --> 00:02:57.860 if you're shipping milk in Wisconsin or Alberta. 00:02:58.639 --> 00:03:01.340 Exactly. We want you to walk away from this deep 00:03:01.340 --> 00:03:04.520 dive with a much clearer picture of the potential 00:03:04.520 --> 00:03:07.099 consequences, the ripple effects of these kinds 00:03:07.099 --> 00:03:09.639 of policy decisions. Precisely. What we're looking 00:03:09.639 --> 00:03:13.110 at here is. It's a potent case study. It gives 00:03:13.110 --> 00:03:15.330 invaluable foresight into the challenges, the 00:03:15.330 --> 00:03:17.810 dynamics that can pop up when a heavily regulated 00:03:17.810 --> 00:03:20.669 industry suddenly shifts gears, goes more towards 00:03:20.669 --> 00:03:22.789 an open market. It's about being prepared. Yeah, 00:03:22.849 --> 00:03:24.729 understanding the levers at play so you're not 00:03:24.729 --> 00:03:27.689 just caught completely off guard by these unintended 00:03:27.689 --> 00:03:31.289 consequences. Okay, so let's dive in. Section 00:03:31.289 --> 00:03:35.930 one, the shocking bottom line. We have to start 00:03:35.930 --> 00:03:38.210 with the number that, honestly, the article's 00:03:38.210 --> 00:03:41.599 author says keeps them up at night. $2 .46 an 00:03:41.599 --> 00:03:44.159 hour. Yeah. That's what some Australian dairy 00:03:44.159 --> 00:03:46.520 farmers were effectively earning during the worst 00:03:46.520 --> 00:03:49.400 times right after deregulation hit in 2000. And 00:03:49.400 --> 00:03:51.479 it's crucial to understand that wasn't like a 00:03:51.479 --> 00:03:54.020 paycheck they got. No, not at all. It was a calculation, 00:03:54.240 --> 00:03:56.520 right? Right. Based on a brutal combination of 00:03:56.520 --> 00:03:59.099 things. Think about it. They crunched the actual 00:03:59.099 --> 00:04:02.319 number. The milk prices just tanked. The relentless 00:04:02.319 --> 00:04:05.520 rise in input costs, fuel, feed, vet bills, everything. 00:04:05.819 --> 00:04:08.099 All of it. And then those brutal 70 -hour weeks. 00:04:08.569 --> 00:04:11.129 Every dairy farmer listening knows exactly what 00:04:11.129 --> 00:04:13.069 that feels like. Oh, yeah. And when you factor 00:04:13.069 --> 00:04:16.610 all that in, for way too many farms, that's what 00:04:16.610 --> 00:04:18.250 their incredible hard work actually amounted 00:04:18.250 --> 00:04:20.430 to. It's a gut -wrenching figure. It really is. 00:04:20.430 --> 00:04:23.810 It encapsulates that immense, just unrelenting 00:04:23.810 --> 00:04:26.329 financial pressure they were under day in, day 00:04:26.329 --> 00:04:28.990 out. It's not just a statistic. It's desperation. 00:04:29.329 --> 00:04:31.470 And what really stands out here, I think, is 00:04:31.470 --> 00:04:33.569 that this number isn't just some anecdote someone 00:04:33.569 --> 00:04:37.220 told. No. It's a stark illustration. backed by 00:04:37.220 --> 00:04:40.579 data, of the pressure you face when a regulated 00:04:40.579 --> 00:04:44.079 system just shifts, like overnight, to pure, 00:04:44.100 --> 00:04:47.620 unfiltered market forces. The Abrams Report, 00:04:47.860 --> 00:04:49.959 that's the Australian Bureau of Agricultural 00:04:49.959 --> 00:04:52.620 and Resource Economics and Sciences, their main 00:04:52.620 --> 00:04:55.399 government research group, it really drives this 00:04:55.399 --> 00:04:58.839 home. It uses hard data to show the profound, 00:04:59.060 --> 00:05:02.639 often devastating challenges that real farm families, 00:05:02.699 --> 00:05:04.779 real communities were facing. It highlights how 00:05:04.779 --> 00:05:06.860 fast the economic ground can shift under your 00:05:06.860 --> 00:05:09.560 feet. Totally. And how utterly unprepared so 00:05:09.560 --> 00:05:11.779 many operations were for such a drastic, sudden 00:05:11.779 --> 00:05:14.810 change. This isn't theory. This is the lived 00:05:14.810 --> 00:05:17.569 painful reality for thousands of farmers. They 00:05:17.569 --> 00:05:19.850 were forced to confront this, well, untenable 00:05:19.850 --> 00:05:22.050 financial situation almost overnight. Yeah, the 00:05:22.050 --> 00:05:24.470 immediate impact was just this brutal recalculation, 00:05:24.470 --> 00:05:26.949 wasn't it? Is my farm even viable anymore? Exactly. 00:05:27.050 --> 00:05:28.970 It forced so many to think about walking away 00:05:28.970 --> 00:05:31.029 from the industry they love, the life they knew. 00:05:31.230 --> 00:05:33.110 So what does this really mean for you listening 00:05:33.110 --> 00:05:34.870 now? This isn't just a number from down under. 00:05:35.050 --> 00:05:37.410 No, it's a crucial warning, I think, for any 00:05:37.410 --> 00:05:39.870 system that's debating price supports or, you 00:05:39.870 --> 00:05:41.970 know, major market changes. It immediately sets 00:05:41.970 --> 00:05:44.709 the stage for why this whole story is so critical 00:05:44.709 --> 00:05:47.029 for Canadian farmers, especially with all the 00:05:47.029 --> 00:05:49.050 ongoing discussions around supply management 00:05:49.050 --> 00:05:51.970 here in North America. And for our U .S. listeners, 00:05:52.069 --> 00:05:54.310 too, right, who are already dealing with their 00:05:54.310 --> 00:05:58.129 own volatile markets. Australia's quarter century 00:05:58.129 --> 00:06:01.310 experiment. It offers some really sobering insights 00:06:01.310 --> 00:06:04.009 about what can happen when you let pure market 00:06:04.009 --> 00:06:07.610 forces just run completely unchecked. Imagine 00:06:07.610 --> 00:06:10.569 working 70 hours a week, pouring your life savings, 00:06:10.670 --> 00:06:13.089 your whole life into your farm, only to find 00:06:13.089 --> 00:06:15.490 out you're earning less than minimum wage. It's 00:06:15.490 --> 00:06:18.110 unthinkable. This isn't some distant problem 00:06:18.110 --> 00:06:20.509 on another continent that has zero bearing on 00:06:20.509 --> 00:06:23.610 your farm. It's a potential preview, a glimpse 00:06:23.610 --> 00:06:25.990 into the kind of financial vulnerability that 00:06:26.029 --> 00:06:28.490 can emerge. Understanding that baseline financial 00:06:28.490 --> 00:06:31.209 hit helps us grasp all the cascading effects 00:06:31.209 --> 00:06:34.019 that came next right across the industry. Yeah, 00:06:34.079 --> 00:06:36.899 it really frames the whole story of what happens 00:06:36.899 --> 00:06:39.800 when that economic floor is just pulled out from 00:06:39.800 --> 00:06:42.459 underproducers, leaving them totally exposed 00:06:42.459 --> 00:06:45.579 to every single market swing. And it also fundamentally 00:06:45.579 --> 00:06:47.579 challenges that assumption, doesn't it? That 00:06:47.579 --> 00:06:49.980 deregulation automatically leads to better outcomes 00:06:49.980 --> 00:06:51.740 for everyone involved. Right. Consumers might 00:06:51.740 --> 00:06:53.819 see lower prices on the shelf initially anyway, 00:06:53.959 --> 00:06:56.019 and we'll get to that. Yeah, we will. But the 00:06:56.019 --> 00:06:58.500 article makes it crystal clear that the true 00:06:58.500 --> 00:07:01.810 cost. The often hidden cost is borne disproportionately 00:07:01.810 --> 00:07:05.550 directly by the producers. That $2 .46 figure 00:07:05.550 --> 00:07:08.610 just speaks volumes about the utter unsustainability 00:07:08.610 --> 00:07:11.290 of that kind of system for the primary producers. 00:07:11.589 --> 00:07:13.829 And it makes you ask, well, who really does benefit 00:07:13.829 --> 00:07:16.170 from such a radical shift in how the market works? 00:07:16.470 --> 00:07:19.230 The immediate impact was that brutal reevaluation, 00:07:19.529 --> 00:07:21.970 forcing countless farms to face an impossible 00:07:21.970 --> 00:07:25.029 choice, try to operate on margins that just weren't 00:07:25.029 --> 00:07:27.490 sustainable or walk away. Okay, so moving on 00:07:27.490 --> 00:07:29.759 from that initial shock. Yeah. The earnings hit. 00:07:30.160 --> 00:07:32.660 Maybe the most striking transformation the article 00:07:32.660 --> 00:07:35.800 covers is just the sheer scale of farm consolidation. 00:07:36.399 --> 00:07:38.519 Yeah, the numbers here are truly eye -opening. 00:07:38.560 --> 00:07:41.180 It absolutely brings home that phrase we hear 00:07:41.180 --> 00:07:44.459 all the time in ag, get big or get out. Definitely. 00:07:44.800 --> 00:07:49.060 So back in 2000, Australia had nearly 13 ,000 00:07:49.060 --> 00:07:51.439 dairy farms. Just think about that number for 00:07:51.439 --> 00:07:54.060 a second. A really thriving network of producers. 00:07:54.459 --> 00:07:58.560 13 ,000, wow. Today. Just over two decades later, 00:07:58.740 --> 00:08:02.759 they're down to roughly 4 ,500. 4 ,500. That's 00:08:02.759 --> 00:08:06.600 a 65 % drop. It's massive. 65%. We're talking 00:08:06.600 --> 00:08:09.839 about more than 8 ,000 farm families who, in 00:08:09.839 --> 00:08:12.000 many cases, had to walk away from farms that 00:08:12.000 --> 00:08:13.819 had maybe been in their families for generations. 00:08:13.879 --> 00:08:16.540 It wasn't just a small adjustment. It was a wholesale 00:08:16.540 --> 00:08:19.649 exodus. A devastating pruning of the industry. 00:08:20.230 --> 00:08:22.589 Imagine the cumulative knowledge lost, the family 00:08:22.589 --> 00:08:25.610 legacies just gone, the countless hours of labor 00:08:25.610 --> 00:08:27.329 that simply disappeared from the sector. Now, 00:08:27.370 --> 00:08:29.490 zooming out a bit, proponents of deregulation, 00:08:29.569 --> 00:08:31.670 they'd argue this is just market efficiency doing 00:08:31.670 --> 00:08:34.230 its job, right? That's the argument, yeah. Resources 00:08:34.230 --> 00:08:35.909 are being reallocated to the most productive 00:08:35.909 --> 00:08:38.009 uses. It streamlines the industry, makes it more 00:08:38.009 --> 00:08:41.070 competitive globally, supposedly. And, to be 00:08:41.070 --> 00:08:43.370 fair, the article does note that the farms that 00:08:43.370 --> 00:08:45.470 did survive became dramatically more productive. 00:08:46.190 --> 00:08:48.690 Often, probably, out of sheer necessity. Right. 00:08:48.769 --> 00:08:52.049 The data backs that up. Average herd sizes went 00:08:52.049 --> 00:08:55.169 from, what, about 168 cows before deregulation? 00:08:55.269 --> 00:08:58.129 Yeah, pretty modest. To a significantly larger 00:08:58.129 --> 00:09:01.870 534 cows today. That's a huge jump. Three times 00:09:01.870 --> 00:09:04.409 bigger. And individual farm milk production, 00:09:04.490 --> 00:09:06.750 that saw an incredible increase too, up by a 00:09:06.750 --> 00:09:09.850 remarkable 570 % since the late 70s, although 00:09:09.850 --> 00:09:11.929 that's a longer time frame. Okay, so that definitely 00:09:11.929 --> 00:09:14.409 paints a picture of, you know, individual farms 00:09:14.409 --> 00:09:17.029 becoming super efficient, driving output per 00:09:17.029 --> 00:09:20.870 cow, per acre. But then this is a huge, but there's 00:09:20.870 --> 00:09:23.350 a crucial paradox here. that the article really 00:09:23.350 --> 00:09:25.450 digs into. This is where it gets fascinating. 00:09:25.730 --> 00:09:28.070 Right. Despite all this individual consolidation 00:09:28.070 --> 00:09:30.370 and efficiency farms getting three times bigger, 00:09:30.529 --> 00:09:33.389 cows producing way more milk per head, everyone 00:09:33.389 --> 00:09:37.029 adopting the latest tech, you know, robotic milking, 00:09:37.049 --> 00:09:39.210 advanced herd health software. All the bells 00:09:39.210 --> 00:09:41.750 and whistles. Despite all that, total milk production 00:09:41.750 --> 00:09:44.649 in Australia actually fell. It dropped by 26 00:09:44.649 --> 00:09:47.870 % from its peak. Fell by a quarter. So you have 00:09:47.870 --> 00:09:50.289 these farms, three times bigger, cows producing 00:09:50.289 --> 00:09:53.559 more all the latest gear. And yet the country 00:09:53.559 --> 00:09:57.039 as a whole is producing a quarter less milk than 00:09:57.039 --> 00:09:59.519 25 years ago. That's not just a minor blip in 00:09:59.519 --> 00:10:02.039 the stats, is it? No. It challenges the whole 00:10:02.039 --> 00:10:06.059 idea that this efficiency led to an overall healthier, 00:10:06.120 --> 00:10:08.740 more robust industry. It suggests that just scaling 00:10:08.740 --> 00:10:11.620 up isn't automatically a sign of growth. It could 00:10:11.620 --> 00:10:13.639 actually be a symptom of a shrinking industry 00:10:13.639 --> 00:10:16.679 where individual farms are just forced to become 00:10:16.679 --> 00:10:19.700 hyper intensive simply to stay afloat. And that 00:10:19.700 --> 00:10:21.759 raises the important question, is that truly 00:10:21.759 --> 00:10:24.860 efficiency? Or is it an industry contracting, 00:10:25.000 --> 00:10:27.539 forcing individual operations to become hyper 00:10:27.539 --> 00:10:30.299 intensive just to survive in a much tougher, 00:10:30.340 --> 00:10:32.600 much more volatile market? The article really 00:10:32.600 --> 00:10:34.720 leans towards the latter, doesn't it? It strongly 00:10:34.720 --> 00:10:36.720 suggests it. It points out this isn't necessarily 00:10:36.720 --> 00:10:39.059 a sign of a healthy growing industry, but more 00:10:39.059 --> 00:10:41.639 a symptom of one that's shrinking. where only 00:10:41.639 --> 00:10:43.960 the most aggressive, the most capitalized, the 00:10:43.960 --> 00:10:46.580 most efficient individual farms can actually 00:10:46.580 --> 00:10:49.379 stay solved. And when total output falls, even 00:10:49.379 --> 00:10:52.059 though individual productivity is way up, it 00:10:52.059 --> 00:10:55.460 tells you that the rate of farms exiting, it 00:10:55.460 --> 00:10:58.440 just far outpaced the growth of the ones left 00:10:58.440 --> 00:11:01.139 behind. Exactly. And it could also imply, you 00:11:01.139 --> 00:11:03.679 know, an increased reliance on external inputs, 00:11:03.899 --> 00:11:07.029 maybe a greater strain on resources. As these 00:11:07.029 --> 00:11:10.669 bigger operations push for maximum output in 00:11:10.669 --> 00:11:12.789 this high -pressure cooker environment. It's 00:11:12.789 --> 00:11:15.029 a really critical distinction to make when you're 00:11:15.029 --> 00:11:18.450 analyzing the results of deregulation. It highlights 00:11:18.450 --> 00:11:21.330 a potential long -term fragility, maybe, rather 00:11:21.330 --> 00:11:24.429 than real robust growth. Okay, so after consolidation, 00:11:24.769 --> 00:11:26.690 what really gets me about the Australian story, 00:11:26.889 --> 00:11:29.230 and the article hammers this home, isn't just 00:11:29.230 --> 00:11:31.190 the falling farm numbers. It's what happened 00:11:31.190 --> 00:11:33.309 to the power dynamics all along the supply chain. 00:11:33.529 --> 00:11:36.919 Yes. This is huge. The article emphasizes that 00:11:36.919 --> 00:11:39.460 when you remove price, supports those government 00:11:39.460 --> 00:11:41.559 -backed minimums that give farmers at least some 00:11:41.559 --> 00:11:43.759 baseline. A safety net. And you dismantle the 00:11:43.759 --> 00:11:45.580 marketing boards, which often handled collective 00:11:45.580 --> 00:11:47.720 bargaining and managed supply for producers. 00:11:48.139 --> 00:11:50.899 You don't just magically create a perfectly balanced 00:11:50.899 --> 00:11:53.659 free market where everyone competes fairly. No, 00:11:53.659 --> 00:11:56.620 you create a vacuum. Exactly. There is no longer 00:11:56.620 --> 00:11:59.539 a strong collective voice for the farmers. Individual 00:11:59.539 --> 00:12:02.419 producers are left pretty vulnerable. And that 00:12:02.419 --> 00:12:05.789 vacuum. As Australia showed so wickedly, it gets 00:12:05.789 --> 00:12:08.649 filled fast by whoever has the most leverage. 00:12:08.889 --> 00:12:11.529 Leading to this massive imbalance of power that 00:12:11.529 --> 00:12:13.970 just completely shifted the playing field. And 00:12:13.970 --> 00:12:16.090 this vacuum you mentioned, it quickly became, 00:12:16.210 --> 00:12:18.370 well, a feeding ground for the big players with 00:12:18.370 --> 00:12:21.710 market dominance. We saw this rapid, really alarming 00:12:21.710 --> 00:12:24.309 concentration of power in a very short space 00:12:24.309 --> 00:12:26.929 of time. The article highlights that by 2015, 00:12:27.190 --> 00:12:29.730 just five major processors names like Murray 00:12:29.730 --> 00:12:33.460 -Goldburn, Fonterra Australia, Parmalat, Warrnambool 00:12:33.460 --> 00:12:36.539 cheese and butter and Lyondarian drinks. They 00:12:36.539 --> 00:12:39.460 controlled a staggering 79 % of the national 00:12:39.460 --> 00:12:42.220 milk supply. 79%. That's an enormous amount of 00:12:42.220 --> 00:12:43.820 buying power in just a handful of companies. 00:12:44.019 --> 00:12:45.860 And at the same time, on the retail side, you 00:12:45.860 --> 00:12:48.360 had two supermarket chains, Kohl's and Woolworths, 00:12:48.360 --> 00:12:50.460 becoming totally dominant. They accounted for 00:12:50.460 --> 00:12:53.039 roughly 65 % of all grocery sales in the country. 00:12:53.279 --> 00:12:55.240 So you've got this incredible imbalance, right? 00:12:55.399 --> 00:12:59.200 A few huge consolidated buyers on one side and 00:12:59.200 --> 00:13:01.600 a fragmented, numerous group of producers on 00:13:01.600 --> 00:13:04.840 the other. It just set the stage for major price 00:13:04.840 --> 00:13:07.840 disruptions. And it left farmers with very little 00:13:07.840 --> 00:13:10.240 bargaining power. Basically none. It became a 00:13:10.240 --> 00:13:13.340 classic David and Goliath situation. Only David, 00:13:13.440 --> 00:13:16.059 in this case, often got completely crushed. And 00:13:16.059 --> 00:13:19.759 then came the infamous $1 milk wars. That's what 00:13:19.759 --> 00:13:21.659 Aussie farmers call it. Yeah, that term really 00:13:21.659 --> 00:13:24.919 stuck. In 2011, Kohl's, one of those big supermarkets, 00:13:24.980 --> 00:13:27.830 made this dramatic move. They dropped the price 00:13:27.830 --> 00:13:29.929 of their private label milk, their store brand 00:13:29.929 --> 00:13:33.450 stuff, to just $1 per liter. Just a buck. Yeah. 00:13:33.490 --> 00:13:36.029 And predictably, Woolworths, their main rival, 00:13:36.250 --> 00:13:39.009 matched it almost immediately. Of course. And 00:13:39.009 --> 00:13:41.230 the retailers, naturally, claimed they were absorbing 00:13:41.230 --> 00:13:43.809 the discount themselves. They framed it as, you 00:13:43.809 --> 00:13:45.970 know, a win for consumers, a gift to Australian 00:13:45.970 --> 00:13:48.299 families. Yeah, we're looking out for you. The 00:13:48.299 --> 00:13:50.200 article points out what we all intuitively know 00:13:50.200 --> 00:13:52.919 happens in these situations. Those artificially 00:13:52.919 --> 00:13:55.659 low retail prices, they inevitably flow back 00:13:55.659 --> 00:13:58.440 down the chain. They hit the processors and ultimately 00:13:58.440 --> 00:14:01.299 they hit the farmers when new supply and pricing 00:14:01.299 --> 00:14:03.820 agreements get negotiated. It's a classic squeeze 00:14:03.820 --> 00:14:06.360 play. The pressure just moves inexorably downwards, 00:14:06.559 --> 00:14:09.480 forcing producers to accept lower and lower prices 00:14:09.480 --> 00:14:11.779 for their milk, even while their own costs are 00:14:11.779 --> 00:14:14.090 often rising. The impact was immediate and it 00:14:14.090 --> 00:14:16.350 was severe. The article documents this really 00:14:16.350 --> 00:14:18.870 clearly. Yeah. The Queensland Dairy Farmers Organization, 00:14:19.049 --> 00:14:21.169 for example, they actually tracked it. They formally 00:14:21.169 --> 00:14:24.529 documented that 185 of their members collectively 00:14:24.529 --> 00:14:29.929 lost more than $767 ,000 in just the first seven 00:14:29.929 --> 00:14:34.809 months of that price war alone. $767 ,000. Just 00:14:34.809 --> 00:14:37.610 like that. To put that in perspective, that's 00:14:37.610 --> 00:14:40.919 an average loss of over $4 ,000 per farm. just 00:14:40.919 --> 00:14:43.120 in half a year. For farms already struggling 00:14:43.120 --> 00:14:45.559 at that $2 .46 an hour level we talked about, 00:14:45.679 --> 00:14:47.919 that's devastating. It's not a small hit. It's 00:14:47.919 --> 00:14:50.019 a knockout blow for many individual operations. 00:14:50.279 --> 00:14:52.600 It pushed many who were already on the brink 00:14:52.600 --> 00:14:54.940 right over the edge into bankruptcy or forced 00:14:54.940 --> 00:14:57.519 sales. It really highlights that just saying, 00:14:57.600 --> 00:15:00.549 let the market decide. doesn't automatically 00:15:00.549 --> 00:15:03.230 lead to perfect competition or fair outcomes 00:15:03.230 --> 00:15:06.330 for everybody. Instead, it can lead to these 00:15:06.330 --> 00:15:09.529 big, powerful players using their leverage to 00:15:09.529 --> 00:15:12.539 just squeeze everyone else down the chain. especially 00:15:12.539 --> 00:15:15.179 the primary producers who usually have the least 00:15:15.179 --> 00:15:17.500 market power. It's a critical lesson, isn't it, 00:15:17.500 --> 00:15:20.360 about market structure and the unintended, often 00:15:20.360 --> 00:15:23.620 brutal consequences of just letting deregulation 00:15:23.620 --> 00:15:26.679 run wild. It fundamentally changed who held the 00:15:26.679 --> 00:15:30.039 cards in the Australian dairy industry. And spoiler 00:15:30.039 --> 00:15:32.519 alert, it wasn't the farmers. Okay, so we've 00:15:32.519 --> 00:15:34.480 talked about the money, the consolidation, the 00:15:34.480 --> 00:15:36.659 power shifts. But we often discuss structural 00:15:36.659 --> 00:15:39.080 adjustment in agriculture. It's just numbers 00:15:39.080 --> 00:15:41.039 on a spreadsheet, right? It's an abstract economic 00:15:41.039 --> 00:15:43.379 concept that just sorts itself out neatly. But 00:15:43.379 --> 00:15:45.779 the article really forces us to confront the 00:15:45.779 --> 00:15:48.539 profound human costs behind those stats. Every 00:15:48.539 --> 00:15:51.639 single one of those 8 ,000 farm exits, that shocking 00:15:51.639 --> 00:15:55.019 65 % drop that represents a family giving up 00:15:55.019 --> 00:15:56.980 not just their income, but often their entire 00:15:56.980 --> 00:15:59.720 way of life. It's generations of knowledge built 00:15:59.720 --> 00:16:03.279 up, family history tied to the land, deep community 00:16:03.279 --> 00:16:06.820 connections, a whole... rural identity, all just 00:16:06.820 --> 00:16:09.460 disrupted. Often permanently. It's the breaking 00:16:09.460 --> 00:16:11.860 of a heritage. And this raises that really important 00:16:11.860 --> 00:16:14.259 question about the social fabric of rural areas. 00:16:14.539 --> 00:16:17.379 The article gives this incredibly vivid and frankly 00:16:17.379 --> 00:16:20.639 poignant example of Strathmerton in Victoria. 00:16:20.940 --> 00:16:24.519 It's a tiny town, maybe 300 people. Its entire 00:16:24.519 --> 00:16:27.340 existence, its social life, its economy, it was 00:16:27.340 --> 00:16:29.360 all built around a baguette cheese processing 00:16:29.360 --> 00:16:31.580 plant. It had been the cornerstone of that community 00:16:31.580 --> 00:16:34.620 for decades, providing stable jobs, a sense of 00:16:34.620 --> 00:16:37.980 purpose. Right. Then in 2022. Vega announces 00:16:37.980 --> 00:16:40.980 they're closing the plant. Reason given. Operational 00:16:40.980 --> 00:16:44.059 efficiencies. 300 jobs. Gone. Just like that. 00:16:44.100 --> 00:16:46.019 Almost overnight. And the immediate ripple effect 00:16:46.019 --> 00:16:48.320 was just devastating. The local primary school 00:16:48.320 --> 00:16:51.259 enrollment dropped from 110 kids down to 58 almost 00:16:51.259 --> 00:16:53.679 instantly as families with no work just packed 00:16:53.679 --> 00:16:55.899 up and left, looking for opportunity elsewhere. 00:16:56.200 --> 00:16:59.539 Wow. Half the kids. The town bakery, which relied 00:16:59.539 --> 00:17:02.039 heavily on the factory workers buying lunch and 00:17:02.039 --> 00:17:05.150 bread every day. It faced closure. It's just 00:17:05.150 --> 00:17:08.470 this chilling picture of a community being systematically 00:17:08.470 --> 00:17:11.529 hollowed out. Its lifeblood just drained away. 00:17:11.730 --> 00:17:14.549 One longtime resident of Strathmerton, they told 00:17:14.549 --> 00:17:16.710 reporters it felt like a death warrant for an 00:17:16.710 --> 00:17:19.170 entire rural community. That's powerful language. 00:17:19.509 --> 00:17:22.049 And what's really sobering is that this isn't 00:17:22.049 --> 00:17:24.250 some isolated incident, you know, a one -off 00:17:24.250 --> 00:17:26.769 tragedy we can just dismiss as unique. No, the 00:17:26.769 --> 00:17:28.609 article makes it very clear. It's a pattern. 00:17:29.049 --> 00:17:31.869 It's a painful story repeated across rural Australia 00:17:31.869 --> 00:17:34.910 in dairy communities, in Queensland, New South 00:17:34.910 --> 00:17:37.190 Wales, other regions that lost their processing 00:17:37.190 --> 00:17:39.559 plants. When those plants, which are often the 00:17:39.559 --> 00:17:42.160 biggest employers, the main economic anchors, 00:17:42.240 --> 00:17:44.680 when they shut down, the whole local economy 00:17:44.680 --> 00:17:46.960 just starts to crumble. Schools lose students. 00:17:47.119 --> 00:17:50.440 Local businesses close up shop. The very social 00:17:50.440 --> 00:17:52.779 networks that hold a community together just 00:17:52.779 --> 00:17:55.960 start to fray. It's not just economic loss. It's 00:17:55.960 --> 00:17:58.640 social and psychological devastation that leaves 00:17:58.640 --> 00:18:01.740 these really lasting scars. And the social and 00:18:01.740 --> 00:18:03.619 economic spiral that follows these closures, 00:18:03.740 --> 00:18:07.099 it's incredibly hard to reverse. Yeah. Young 00:18:07.099 --> 00:18:09.490 people. They see no future there, no vibrant 00:18:09.490 --> 00:18:12.869 community life. So they leave. Essential services 00:18:12.869 --> 00:18:16.150 schools, health care, local shops, they disappear 00:18:16.150 --> 00:18:17.869 because there just aren't enough people left 00:18:17.869 --> 00:18:20.230 to support them. It creates this negative feedback 00:18:20.230 --> 00:18:23.589 loop. Property values collapse, making it tough 00:18:23.589 --> 00:18:25.410 for those who are left to even sell and move 00:18:25.410 --> 00:18:28.150 on if they wanted to. They get trapped in a declining 00:18:28.150 --> 00:18:31.130 area. It's just such a stark reminder that... 00:18:31.390 --> 00:18:34.210 agricultural policy the decisions made way up 00:18:34.210 --> 00:18:36.990 the chain they have consequences that ripple 00:18:36.990 --> 00:18:40.049 far far beyond the farm gate they impact the 00:18:40.049 --> 00:18:42.710 very social and economic structure of the communities 00:18:42.710 --> 00:18:44.910 that support the industry it's not just about 00:18:44.910 --> 00:18:47.430 farms it's about the infrastructure the spirit 00:18:47.430 --> 00:18:50.849 the very fabric of rural life and when that unravels 00:18:50.849 --> 00:18:53.430 like it did in so many aussie dairy regions it 00:18:53.430 --> 00:18:56.700 takes decades, maybe forever, to rebuild that 00:18:56.700 --> 00:18:59.500 lost social capital, that economic vitality. 00:18:59.539 --> 00:19:01.299 You know, it's important to say it wasn't all 00:19:01.299 --> 00:19:03.400 doom and gloom on every single farm. And the 00:19:03.400 --> 00:19:05.220 article does acknowledge some really impressive 00:19:05.220 --> 00:19:08.319 achievements. Right. Australian dairy farmers, 00:19:08.519 --> 00:19:11.859 despite facing these immense pressures, showed 00:19:11.859 --> 00:19:14.079 remarkable resilience, incredible innovation. 00:19:14.319 --> 00:19:16.940 They were forced to adapt or die, basically. 00:19:17.140 --> 00:19:19.640 And many adapted with impressive speed. Individual 00:19:19.640 --> 00:19:22.589 farm productivity gains. They are remarkable. 00:19:22.789 --> 00:19:25.410 Average annual milk production per cow, it jumped 00:19:25.410 --> 00:19:29.289 significantly, right? From around 3 ,340 liters 00:19:29.289 --> 00:19:33.109 back in the mid -80s to over 6 ,240 liters today. 00:19:33.289 --> 00:19:35.670 It's a big increase. And they embraced precision 00:19:35.670 --> 00:19:38.849 ag. They put in automated milking systems, adopted 00:19:38.849 --> 00:19:40.950 advanced herd management software. These are 00:19:40.950 --> 00:19:43.509 all tools and practices that North American farmers 00:19:43.509 --> 00:19:46.230 are also using. And in some areas, maybe Australia 00:19:46.230 --> 00:19:48.529 was even ahead for a while. It shows that incredible 00:19:48.529 --> 00:19:51.180 drive to just survive and optimize. when your 00:19:51.180 --> 00:19:53.400 back's against the wall. But what's fascinating 00:19:53.400 --> 00:19:55.859 here is that while those individual farms got 00:19:55.859 --> 00:19:57.500 dramatically more efficient, more productive, 00:19:57.740 --> 00:20:00.720 this didn't translate into a stronger, more resilient 00:20:00.720 --> 00:20:03.140 industry overall. We saw that with the total 00:20:03.140 --> 00:20:05.160 milk production numbers falling. Right. Instead, 00:20:05.279 --> 00:20:07.059 production got really geographically concentrated, 00:20:07.279 --> 00:20:09.720 didn't it? Just in a few key regions like the 00:20:09.720 --> 00:20:13.140 Murray -Darling Basin in Tasmania. Exactly. And 00:20:13.140 --> 00:20:15.869 while that might seem efficient on paper... you 00:20:15.869 --> 00:20:18.430 know, leveraging regional strengths, it actually 00:20:18.430 --> 00:20:21.390 makes the entire national supply incredibly vulnerable 00:20:21.390 --> 00:20:24.349 to localized shocks. Like regional droughts, 00:20:24.349 --> 00:20:26.609 which Australia gets plenty of. Or changes in 00:20:26.609 --> 00:20:28.650 water policy that can hammer feed availability 00:20:28.650 --> 00:20:31.329 or even disease outbreaks that get concentrated 00:20:31.329 --> 00:20:33.390 in specific areas. It's like having these super 00:20:33.390 --> 00:20:35.150 efficient engines, but they're all clustered 00:20:35.150 --> 00:20:37.990 in one place running on the same fuel line. Yeah, 00:20:38.049 --> 00:20:41.029 efficient individually, but incredibly fragile 00:20:41.029 --> 00:20:43.890 as a whole system when any single point of failure 00:20:43.890 --> 00:20:46.440 pops up. This concentration creates a systemic 00:20:46.440 --> 00:20:48.839 risk that just wasn't there when the industry 00:20:48.839 --> 00:20:51.039 was spread more widely across the country. Puts 00:20:51.039 --> 00:20:53.599 all their eggs in fewer baskets, basically. And 00:20:53.599 --> 00:20:55.740 this leads directly to another critical point 00:20:55.740 --> 00:20:58.700 the article highlights, the debt trap. Oh, yeah, 00:20:58.720 --> 00:21:00.859 this is huge. Post deregulation, there was just 00:21:00.859 --> 00:21:03.819 an explosion in farm debt. The average debt per 00:21:03.819 --> 00:21:06.769 dairy farm more than doubled in real terms. It 00:21:06.769 --> 00:21:10.609 skyrocketed from about $346 ,000 in 99 -2000 00:21:10.609 --> 00:21:17.190 to over $861 ,500 by 2014 -15. Over $860 ,000 00:21:17.190 --> 00:21:19.769 average debt. And the article notes it's just 00:21:19.769 --> 00:21:22.690 kept climbing since then. That is a massive increase 00:21:22.690 --> 00:21:25.210 in leverage for individual farms, putting them 00:21:25.210 --> 00:21:27.430 in a much, much more precarious financial spot. 00:21:27.630 --> 00:21:30.109 Can you imagine the psychological weight of carrying 00:21:30.109 --> 00:21:32.609 that kind of debt, especially when your income 00:21:32.609 --> 00:21:35.089 stream is bouncing all over the place? Totally 00:21:35.089 --> 00:21:38.029 unpredictable. It's a constant nagging worry. 00:21:38.230 --> 00:21:40.509 It affects every single decision you make on 00:21:40.509 --> 00:21:42.769 the farm. And it raises that important question, 00:21:42.849 --> 00:21:45.970 doesn't it? When is debt good debt? Typically, 00:21:46.029 --> 00:21:49.109 we think of good debt as investment in productive 00:21:49.109 --> 00:21:52.630 assets that will generate future income, boost 00:21:52.630 --> 00:21:57.210 efficiency, you know, new barns, better equipment. 00:21:57.769 --> 00:21:59.950 land improvements. Right. Things that pay for 00:21:59.950 --> 00:22:02.029 themselves over time. But in Australia, farms 00:22:02.029 --> 00:22:04.170 basically had to get bigger, more capital intensive 00:22:04.170 --> 00:22:06.650 just to have a chance of surviving in that new 00:22:06.650 --> 00:22:09.190 hyper -competitive volatile market. But the very 00:22:09.190 --> 00:22:11.269 market volatility they were trying to adapt to 00:22:11.269 --> 00:22:14.029 made it incredibly risky to take on the huge 00:22:14.029 --> 00:22:16.329 debt needed for that expansion and those upgrades. 00:22:16.589 --> 00:22:20.940 It created this profound catch -22. You couldn't 00:22:20.940 --> 00:22:22.799 really compete without investing and taking on 00:22:22.799 --> 00:22:25.440 debt, but investing was increasingly dangerous 00:22:25.440 --> 00:22:28.039 because of the unpredictable market. So for many 00:22:28.039 --> 00:22:30.319 farmers, that debt wasn't a strategic investment 00:22:30.319 --> 00:22:32.779 for growth. It was more like a necessary and 00:22:32.779 --> 00:22:35.140 often crippling burden just to keep their heads 00:22:35.140 --> 00:22:38.019 above water. Yeah, often leading to foreclosures, 00:22:38.039 --> 00:22:40.599 forced sales when the market inevitably turned 00:22:40.599 --> 00:22:43.069 south again. And tying into all this, the article 00:22:43.069 --> 00:22:45.670 touches on these really significant regional 00:22:45.670 --> 00:22:49.289 differences in how deregulation played out. That's 00:22:49.289 --> 00:22:51.150 right. Queensland dairy farmers, for instance, 00:22:51.309 --> 00:22:53.730 they'd previously been protected by these milk 00:22:53.730 --> 00:22:56.670 premiums, essentially higher stable prices for 00:22:56.670 --> 00:22:58.609 fresh milk they supplied to the cities. Right. 00:22:58.710 --> 00:23:00.930 A different market focus. They got hit especially 00:23:00.930 --> 00:23:03.470 hard. Their farm numbers just plummeted by over 00:23:03.470 --> 00:23:07.079 80 percent. From 1 ,300 farms down to just 240, 00:23:07.539 --> 00:23:10.160 New South Wales saw similar devastation. 80%. 00:23:10.160 --> 00:23:13.059 That's almost wiped out. In contrast, Victorian 00:23:13.059 --> 00:23:15.579 farmers, who were already more focused on the 00:23:15.579 --> 00:23:18.259 export and manufacturing milk market, they initially 00:23:18.259 --> 00:23:20.680 saw some benefits, or at least weathered the 00:23:20.680 --> 00:23:22.839 storm better. They were already kind of geared 00:23:22.839 --> 00:23:25.059 towards global markets, lower cost structures, 00:23:25.240 --> 00:23:27.440 which made them somewhat more resilient to the 00:23:27.440 --> 00:23:29.819 immediate shockwaves. And if we connect this 00:23:29.819 --> 00:23:32.000 to the bigger picture, what does it tell us? 00:23:32.319 --> 00:23:34.819 It demonstrates pretty clearly, I think, that 00:23:34.819 --> 00:23:39.160 a one size fits all policy just never works in 00:23:39.160 --> 00:23:41.799 a diverse agricultural landscape like Australia 00:23:41.799 --> 00:23:44.880 or Canada or the U .S. for that matter. Queensland 00:23:44.880 --> 00:23:47.000 and New South Wales farmers, they had built their 00:23:47.000 --> 00:23:49.119 businesses around a totally different market 00:23:49.119 --> 00:23:52.480 structure. Often smaller herds focused on supplying 00:23:52.480 --> 00:23:55.180 fresh milk locally under a regulated system. 00:23:55.769 --> 00:23:57.789 When the rules of the game changed literally 00:23:57.789 --> 00:24:00.170 overnight with deregulation, they couldn't just 00:24:00.170 --> 00:24:02.589 pivot and suddenly become large -scale export 00:24:02.589 --> 00:24:05.170 -focused operations. Their land base, their existing 00:24:05.170 --> 00:24:07.869 barns, their management style. It was all wrong 00:24:07.869 --> 00:24:10.329 for the new reality. Left them with little competitive 00:24:10.329 --> 00:24:13.279 advantage. Exactly. This raises that important 00:24:13.279 --> 00:24:15.940 question about how these broad sweeping policies 00:24:15.940 --> 00:24:19.140 impact very diverse farming operations differently. 00:24:19.380 --> 00:24:22.180 It really underscores the need to consider regional 00:24:22.180 --> 00:24:24.400 nuances when you're thinking about major policy 00:24:24.400 --> 00:24:27.160 changes. It's a powerful argument for frameworks 00:24:27.160 --> 00:24:29.059 that actually allow for regional adaptation, 00:24:29.420 --> 00:24:30.779 isn't it? Something the Australian experience 00:24:30.779 --> 00:24:33.640 really lacked, tragically. Okay, maybe the most... 00:24:34.450 --> 00:24:37.589 troubling long -term consequence of Australia's 00:24:37.589 --> 00:24:39.569 deregulation. And this is something that should 00:24:39.569 --> 00:24:42.369 really send chills down the spine of anyone thinking 00:24:42.369 --> 00:24:45.549 about the future of dairy anywhere. It's a demographic 00:24:45.549 --> 00:24:48.789 crisis. Yeah, this is scary. Less than 6 % of 00:24:48.789 --> 00:24:51.269 Australian dairy farmers today are under the 00:24:51.269 --> 00:24:55.029 age of 35. Less than 6%. That is simply not sustainable 00:24:55.029 --> 00:24:57.450 for any industry, let alone one as demanding 00:24:57.450 --> 00:25:00.640 as dairy. It's an industry just aging out without 00:25:00.640 --> 00:25:02.940 attracting the vital young blood it needs to 00:25:02.940 --> 00:25:05.700 continue to innovate. It's a profound warning 00:25:05.700 --> 00:25:08.400 sign for any ag sector that hopes to stay vital. 00:25:08.519 --> 00:25:10.660 If there's no new generation of farmers, well, 00:25:10.759 --> 00:25:12.900 who's going to produce our food? And what stands 00:25:12.900 --> 00:25:16.240 out here is the direct link back to the debt 00:25:16.240 --> 00:25:18.640 trap and the price volatility we were just talking 00:25:18.640 --> 00:25:21.079 about. Makes sense. With those mounting debts, 00:25:21.299 --> 00:25:24.380 the sheer scale of investment you need just to 00:25:24.380 --> 00:25:26.740 get into dairy farming now, plus those unpredictable 00:25:26.740 --> 00:25:30.430 prices. Young people increasingly look at dairy 00:25:30.430 --> 00:25:33.950 farming and see, well, a dead end. Even kids 00:25:33.950 --> 00:25:36.569 from established farm families, right, who've 00:25:36.569 --> 00:25:38.970 grown up watching their parents struggle with 00:25:38.970 --> 00:25:41.549 all that uncertainty, they often decide it's 00:25:41.549 --> 00:25:44.400 just not worth the immense risk. endless hard 00:25:44.400 --> 00:25:47.119 work for such an uncertain reward. Who wants 00:25:47.119 --> 00:25:49.359 to inherit that kind of burden? It also directly 00:25:49.359 --> 00:25:52.839 feeds into a severe hired labor shortage. Farms 00:25:52.839 --> 00:25:55.160 are perpetually squeezed on their margins, so 00:25:55.160 --> 00:25:57.180 they struggle to offer the kind of job security 00:25:57.180 --> 00:25:59.720 or competitive wages that would attract and keep 00:25:59.720 --> 00:26:02.180 skilled workers. It becomes this vicious cycle 00:26:02.180 --> 00:26:04.279 of disincentive leading to an ever shrinking 00:26:04.279 --> 00:26:07.019 pool of potential farmers and laborers. And this 00:26:07.019 --> 00:26:08.940 is where we really need to step back and appreciate 00:26:08.940 --> 00:26:10.960 what we have here in Canada. Yeah, the contrast 00:26:10.960 --> 00:26:13.079 is stark. The article points out that our supply 00:26:13.200 --> 00:26:15.140 management system, despite all the criticisms 00:26:15.140 --> 00:26:19.160 it gets, it protects against these exact scenarios. 00:26:19.779 --> 00:26:22.220 While there's always debate and scrutiny around 00:26:22.220 --> 00:26:24.900 supply management, you know, the system with 00:26:24.900 --> 00:26:27.660 production quotas, producer pricing, import controls 00:26:27.660 --> 00:26:29.480 to stabilize the market, when you look at it 00:26:29.480 --> 00:26:32.000 next to the Australian story, its benefits become 00:26:32.000 --> 00:26:34.529 incredibly clear. Our farm numbers in Canada, 00:26:34.650 --> 00:26:36.769 they've been relatively stable over the years. 00:26:36.809 --> 00:26:39.150 There have been gradual, manageable change and 00:26:39.150 --> 00:26:42.730 consolidation, sure, but not a catastrophic 65 00:26:42.730 --> 00:26:46.029 % crash like Australia saw. That stability allows 00:26:46.029 --> 00:26:48.869 for a much more orderly evolution of the industry, 00:26:48.990 --> 00:26:51.890 doesn't it? Not this brutal forced contraction. 00:26:52.210 --> 00:26:55.029 It lets generational transfers happen more smoothly. 00:26:55.289 --> 00:26:56.950 And if we connect that to the bigger picture, 00:26:57.130 --> 00:26:59.670 Canada's stability allows farmers to actually 00:26:59.670 --> 00:27:01.829 plan for the future because they have predictable. 00:27:02.299 --> 00:27:04.480 milk prices. That predictability is absolutely 00:27:04.480 --> 00:27:07.319 crucial. It lets you make rational, long -term 00:27:07.319 --> 00:27:09.460 decisions about expanding your herd, undertaking 00:27:09.460 --> 00:27:12.119 major barn upgrades, and critically, planning 00:27:12.119 --> 00:27:14.559 for succession. The article gives that great 00:27:14.559 --> 00:27:17.279 example of the Ontario farmer who's confidently 00:27:17.279 --> 00:27:21.440 investing in a new robotic milking system, expanding 00:27:21.440 --> 00:27:23.799 his quota as his share of the national production, 00:27:24.000 --> 00:27:26.559 and bringing his son into the operation. That's 00:27:26.559 --> 00:27:29.220 a true generational transition, ensuring the 00:27:29.220 --> 00:27:31.960 farm continues, grows into the future. That type 00:27:31.960 --> 00:27:34.519 of long -term planning, that generational continuity, 00:27:34.920 --> 00:27:37.619 it becomes incredibly difficult, maybe impossible, 00:27:37.799 --> 00:27:41.420 under Australian -style price volatility. When 00:27:41.420 --> 00:27:43.880 your future income stream is constantly in doubt, 00:27:44.119 --> 00:27:46.980 banks get wary, and the next generation gets 00:27:46.980 --> 00:27:49.680 understandably hesitant to commit. And the technology 00:27:49.680 --> 00:27:51.940 factor plays a huge role here, too, which might 00:27:51.940 --> 00:27:54.460 seem counterintuitive to some people. Yeah, you'd 00:27:54.460 --> 00:27:56.380 think that intense competition would drive faster 00:27:56.380 --> 00:27:58.960 innovation, push farmers to adopt tech quicker, 00:27:59.059 --> 00:28:01.319 right? Be on the cutting edge. But the article 00:28:01.319 --> 00:28:03.579 suggests the opposite actually happened in practice. 00:28:03.720 --> 00:28:05.920 When farmers are constantly worried about just 00:28:05.920 --> 00:28:09.200 covering costs next month or next quarter, they 00:28:09.200 --> 00:28:11.819 become incredibly conservative with big long 00:28:11.819 --> 00:28:14.069 -term investments. They might adopt things with 00:28:14.069 --> 00:28:16.769 a quick short -term payback, sure, but not those 00:28:16.769 --> 00:28:19.970 deep, transformative capital projects that need 00:28:19.970 --> 00:28:22.869 significant upfront cash and take years to show 00:28:22.869 --> 00:28:26.890 a return. The risk is just way too high. Exactly. 00:28:27.329 --> 00:28:29.230 Canadian farmers, because they have that price 00:28:29.230 --> 00:28:31.509 stability from supply management, they can take 00:28:31.509 --> 00:28:34.049 a much longer view. They can invest in significant 00:28:34.049 --> 00:28:38.259 technologies, robots. precision feeding, comprehensive 00:28:38.259 --> 00:28:41.200 herd management software that might take three, 00:28:41.339 --> 00:28:44.099 four, maybe five years to fully pay off. And 00:28:44.099 --> 00:28:46.299 they can do it feeling confident that their revenue 00:28:46.299 --> 00:28:48.559 stream will likely be there to support the investment, 00:28:48.759 --> 00:28:50.940 handle the debt repayment. The Australian experience. 00:28:51.920 --> 00:28:53.980 Conversely, it showed that only the farms that 00:28:53.980 --> 00:28:56.859 had significant capital reserves before deregulation 00:28:56.859 --> 00:28:59.339 even hit could really afford to take those kinds 00:28:59.339 --> 00:29:01.980 of risks. Which put smaller or less capitalized 00:29:01.980 --> 00:29:04.619 farms at a severe disadvantage and probably held 00:29:04.619 --> 00:29:07.809 back industry -wide innovation overall. It raises 00:29:07.809 --> 00:29:10.230 that important question, doesn't it? How stability, 00:29:10.509 --> 00:29:13.750 rather than just raw hyper competition, can actually 00:29:13.750 --> 00:29:16.650 enable and foster innovation over the long haul, 00:29:16.789 --> 00:29:19.509 leading to a more robust, more technologically 00:29:19.509 --> 00:29:21.789 advanced industry that really benefits from those 00:29:21.789 --> 00:29:25.150 advancements. And one final key point from the 00:29:25.150 --> 00:29:28.130 article that highlights Canada's approach. Our 00:29:28.130 --> 00:29:30.549 supply management system. With its provincial 00:29:30.549 --> 00:29:33.509 marketing boards, it also recognizes regional 00:29:33.509 --> 00:29:35.950 differences. Right. It allows for adaptation 00:29:35.950 --> 00:29:38.869 to local conditions, local market dynamics, while 00:29:38.869 --> 00:29:40.950 still keeping those national principles and overall 00:29:40.950 --> 00:29:43.529 stability. It's not perfect. Nobody claims it 00:29:43.529 --> 00:29:45.970 is. But it acknowledges that dairy farming just 00:29:45.970 --> 00:29:48.490 isn't the same everywhere across a huge country, 00:29:48.630 --> 00:29:50.950 which is a lesson Australia learned the hard 00:29:50.950 --> 00:29:53.390 way with its uniform top -down deregulation. 00:29:53.839 --> 00:29:56.059 Okay, so after all that really deep discussion, 00:29:56.220 --> 00:29:58.039 what's the key takeaway for a farmer listening 00:29:58.039 --> 00:30:00.859 today? How can you take these, frankly, sobering 00:30:00.859 --> 00:30:03.220 lessons from Australia and actually apply them 00:30:03.220 --> 00:30:05.259 to your operation, whether you're in Canada's 00:30:05.259 --> 00:30:07.480 stable system or dealing with volatile U .S. 00:30:07.480 --> 00:30:09.759 markets? Yeah, this raises the important question. 00:30:09.880 --> 00:30:11.759 What can you actually do with this information 00:30:11.759 --> 00:30:14.559 on your farm right now, regardless of where you 00:30:14.559 --> 00:30:16.940 are? Okay, let's break it down. Actionable insights. 00:30:17.279 --> 00:30:21.230 First, calculate your real hourly wage. Don't 00:30:21.230 --> 00:30:22.750 just look at the bottom line on your tax return. 00:30:22.910 --> 00:30:25.390 Take your net farm income from last year and 00:30:25.390 --> 00:30:28.269 divide it by the total hours. And be honest here, 00:30:28.309 --> 00:30:29.990 the total hours you and your family truly put 00:30:29.990 --> 00:30:32.849 into the operation. Everything. Milking, feeding, 00:30:33.069 --> 00:30:35.750 fieldwork, bookkeeping, fixing stuff. Every single 00:30:35.750 --> 00:30:38.470 hour that keeps the lights on. Exactly. This 00:30:38.470 --> 00:30:40.829 gives you a brutally honest baseline. It helps 00:30:40.829 --> 00:30:42.890 you make decisions about labor efficiency, maybe 00:30:42.890 --> 00:30:45.390 income diversification. If that number makes 00:30:45.390 --> 00:30:47.829 you really uncomfortable, well, that's a powerful 00:30:47.829 --> 00:30:50.430 motivator for change. Good point. Number two. 00:30:50.799 --> 00:30:53.359 Stress test your operation. Don't wait for a 00:30:53.359 --> 00:30:56.220 crisis to hit you. Run the numbers. Model what 00:30:56.220 --> 00:30:58.539 would happen to your cash flow if, say, milk 00:30:58.539 --> 00:31:00.799 prices dropped 20 % for six months straight. 00:31:01.000 --> 00:31:04.819 Or if your feed costs suddenly jumped 30%. The 00:31:04.819 --> 00:31:07.500 Australian survivors, the article implies, had 00:31:07.500 --> 00:31:10.119 already built financial cushions. They had contingency 00:31:10.119 --> 00:31:12.180 plans because they'd lived through shocks before. 00:31:12.599 --> 00:31:15.000 Right. Understanding your vulnerabilities before 00:31:15.000 --> 00:31:17.500 they smack you in the face is absolutely paramount 00:31:17.500 --> 00:31:20.099 to surviving them. Okay, what else? Invest in 00:31:20.099 --> 00:31:22.640 flexibility. Try to prioritize technologies, 00:31:23.079 --> 00:31:25.579 management practices that let you adjust relatively 00:31:25.579 --> 00:31:28.500 quickly to changing conditions. Maybe that means 00:31:28.500 --> 00:31:30.700 looking at variable cost feed systems instead 00:31:30.700 --> 00:31:33.859 of locking into fixed infrastructure or actively 00:31:33.859 --> 00:31:36.220 diversifying your income streams. So you're not 00:31:36.220 --> 00:31:38.759 entirely dependent on that milk check. Maybe 00:31:38.759 --> 00:31:41.240 it's a small on -farm processing venture, selling 00:31:41.240 --> 00:31:43.980 direct, maybe custom field work for neighbors. 00:31:44.240 --> 00:31:47.319 Agility is key in any market, really, but especially 00:31:47.319 --> 00:31:50.099 volatile ones. Makes sense. Build relationships 00:31:50.099 --> 00:31:52.720 beyond the farm gate. This is crucial. Whether 00:31:52.720 --> 00:31:54.559 it's fostering strong relationships with your 00:31:54.559 --> 00:31:56.779 processor, keeping open lines of communication 00:31:56.779 --> 00:31:59.500 with your banker, or forging solid connections 00:31:59.500 --> 00:32:01.640 with other farmers, maybe through co -ops or 00:32:01.640 --> 00:32:04.359 just informal networks, your social capital becomes 00:32:04.359 --> 00:32:07.420 absolutely vital in turbulent times. The article 00:32:07.420 --> 00:32:09.900 mentioned Australian farmers connected to co 00:32:09.900 --> 00:32:12.539 -ops or those with strong, trust -based processor 00:32:12.539 --> 00:32:15.519 relationships often fared better than the isolated 00:32:15.519 --> 00:32:18.190 ones. Yeah, those networks can provide essential 00:32:18.190 --> 00:32:21.210 support, vital information, maybe even a bit 00:32:21.210 --> 00:32:23.490 of market leverage when things get tough. Good 00:32:23.490 --> 00:32:26.470 one. What's fifth? Document everything. And I 00:32:26.470 --> 00:32:29.710 mean, beyond just what you need for taxes. Keep 00:32:29.710 --> 00:32:32.109 incredibly detailed records specifically for 00:32:32.109 --> 00:32:35.029 strategic planning. Understanding your cost structure 00:32:35.029 --> 00:32:37.769 down to the cents per liter or per hundredweight 00:32:37.769 --> 00:32:40.369 gives you real power. Power in pricing negotiations, 00:32:40.609 --> 00:32:42.869 right? Yeah. And it informs every major investment 00:32:42.869 --> 00:32:45.170 decision you make. You can't manage what you 00:32:45.170 --> 00:32:47.619 don't measure. And you definitely can't negotiate 00:32:47.619 --> 00:32:50.440 effectively without hard data backing you up. 00:32:50.579 --> 00:32:52.680 Okay, and finally. Regional strategy matters. 00:32:53.059 --> 00:32:56.220 A farm in PEI faces different challenges and 00:32:56.220 --> 00:32:58.319 opportunities than one in Alberta or Wisconsin 00:32:58.319 --> 00:33:01.160 or California. Tailor your risk management, your 00:33:01.160 --> 00:33:03.240 investment strategies to your specific regional 00:33:03.240 --> 00:33:05.880 conditions, climate, local processing infrastructure, 00:33:06.440 --> 00:33:09.960 local market dynamics, labor availability. Don't 00:33:09.960 --> 00:33:11.900 just assume a one size fits all approach will 00:33:11.900 --> 00:33:13.859 work for your farm because the Australian experience 00:33:13.859 --> 00:33:16.740 showed it certainly doesn't work for an industry. 00:33:17.279 --> 00:33:20.880 OK, those are great operational strategies. But 00:33:20.880 --> 00:33:23.180 specifically from the article's key takeaways, 00:33:23.440 --> 00:33:26.619 thinking bigger picture, what truly made the 00:33:26.619 --> 00:33:28.680 difference for those Australian farms that did 00:33:28.680 --> 00:33:31.539 manage to survive, maybe even thrive in that 00:33:31.539 --> 00:33:33.579 incredibly challenging environment? What were 00:33:33.579 --> 00:33:35.859 the big shifts they made? What's really compelling 00:33:35.859 --> 00:33:38.200 here is that the survivors didn't just get bigger, 00:33:38.279 --> 00:33:41.319 they got smarter. especially in how they manage 00:33:41.319 --> 00:33:43.819 their herds and their resources. Okay, like how? 00:33:44.059 --> 00:33:47.000 Scale smart, not just big. Yes, they average 00:33:47.000 --> 00:33:51.559 534 cows per farm, way up from 168. But their 00:33:51.559 --> 00:33:53.880 success wasn't just about having more cows. It 00:33:53.880 --> 00:33:56.000 came from leveraging tools like genomic testing, 00:33:56.140 --> 00:33:58.880 using DNA to predict an animal's future performance. 00:33:59.180 --> 00:34:01.829 Right, identifying the best animals early. Exactly. 00:34:01.910 --> 00:34:04.289 That helped them improve feed conversion, how 00:34:04.289 --> 00:34:06.670 efficiently cows turn feed into milk by maybe 00:34:06.670 --> 00:34:10.170 15 -20%. The lesson for you listening now is 00:34:10.170 --> 00:34:13.110 clear. Start screening your replacement heifers 00:34:13.110 --> 00:34:16.289 using genomics. Identify those genetically superior 00:34:16.289 --> 00:34:18.730 animals that will be more efficient, healthier, 00:34:18.929 --> 00:34:21.050 and ultimately lower your costs in the long run. 00:34:21.170 --> 00:34:23.510 Makes sense. What else? Price volatility is real. 00:34:23.880 --> 00:34:26.420 Remember that stat, farmers losing 19 cents per 00:34:26.420 --> 00:34:29.219 liter overnight when markets crashed. This just 00:34:29.219 --> 00:34:31.820 hammers home the need to build in a significant 00:34:31.820 --> 00:34:34.699 buffer. How do you do that internally? Focus 00:34:34.699 --> 00:34:37.159 on robust feed efficiency programs like we just 00:34:37.159 --> 00:34:40.000 mentioned, but also genetic selection for resilience 00:34:40.000 --> 00:34:42.440 traits in your herd. Things like disease resistance, 00:34:42.860 --> 00:34:44.940 better reproductive efficiency. These are like 00:34:44.940 --> 00:34:46.900 your internal shock absorbers helping insulate 00:34:46.900 --> 00:34:49.460 you, at least partially from those external price 00:34:49.460 --> 00:34:52.559 swings. Okay. Technology. Tech pays off. The 00:34:52.559 --> 00:34:55.079 article showed that farms actively using things 00:34:55.079 --> 00:34:57.420 like precision feeding systems and comprehensive 00:34:57.420 --> 00:35:00.659 genomic data saw improved profitability, maybe 00:35:00.659 --> 00:35:03.239 8 -12 % annually. And that's not just about pumping 00:35:03.239 --> 00:35:05.800 out more milk. No, it's about optimizing your 00:35:05.800 --> 00:35:09.079 inputs, minimizing waste, identifying potential 00:35:09.079 --> 00:35:11.480 health issues before they become really expensive 00:35:11.480 --> 00:35:14.699 problems. Consider investing in good herd management 00:35:14.699 --> 00:35:17.420 software. Get into genetic testing this season. 00:35:17.719 --> 00:35:19.960 These aren't just expenses. They're strategic 00:35:19.960 --> 00:35:22.820 investments in your farm's future viability and 00:35:22.820 --> 00:35:25.320 profitability. Good point. What about the people 00:35:25.320 --> 00:35:28.059 side? Youth crisis hits hard. We talked about 00:35:28.059 --> 00:35:31.860 that 6 % under 35 number in Australia. Succession 00:35:31.860 --> 00:35:33.960 is a huge issue that can cripple an industry, 00:35:34.159 --> 00:35:37.079 leading to a loss of innovation, a loss of vitality. 00:35:37.179 --> 00:35:39.630 So what's the action point? Use stable planning 00:35:39.630 --> 00:35:41.590 tools, things like genomic breeding programs 00:35:41.590 --> 00:35:44.730 to show genetic progress, clear financial structures 00:35:44.730 --> 00:35:47.449 to create attractive, genuinely viable succession 00:35:47.449 --> 00:35:49.989 opportunities for the next generation. You need 00:35:49.989 --> 00:35:52.369 to show them a clear path to a sustainable future, 00:35:52.550 --> 00:35:54.889 not just a future of endless struggle and uncertainty 00:35:54.889 --> 00:35:57.210 like maybe their parents faced. Okay, last one. 00:35:57.349 --> 00:36:00.480 Market power matters. When just five processors 00:36:00.480 --> 00:36:03.440 controlled almost 80 % of the milk volume, farmers 00:36:03.440 --> 00:36:05.599 inevitably got squeezed on price and contract 00:36:05.599 --> 00:36:08.280 terms. This just underscores the critical need 00:36:08.280 --> 00:36:10.320 for collective action. Like joining co -ops. 00:36:10.440 --> 00:36:12.440 Yeah, join cooperative purchasing groups to get 00:36:12.440 --> 00:36:15.659 better deals on inputs. And crucially, leverage 00:36:15.659 --> 00:36:18.920 your detailed genetic data, your production data, 00:36:19.099 --> 00:36:21.460 to negotiate better contracts with your processor. 00:36:21.929 --> 00:36:25.369 Data is power in those negotiations. It lets 00:36:25.369 --> 00:36:27.150 you prove your farm's value, your efficiency. 00:36:27.409 --> 00:36:29.789 Those are great points. The Australian experience, 00:36:29.929 --> 00:36:32.690 it really shows us what we stand to lose if we're 00:36:32.690 --> 00:36:34.949 not careful with our dairy policies wherever 00:36:34.949 --> 00:36:37.570 we are. It also highlights something really important. 00:36:38.170 --> 00:36:41.150 Once you dismantle those regulatory frameworks 00:36:41.150 --> 00:36:43.929 that provide stability, that offer some degree 00:36:43.929 --> 00:36:46.639 of protection for producers, Rebuilding them 00:36:46.639 --> 00:36:48.780 is incredibly difficult. Yeah, the processors, 00:36:48.900 --> 00:36:50.960 the retailers who benefited from deregulation, 00:36:51.119 --> 00:36:53.579 they have very little incentive to give up their 00:36:53.579 --> 00:36:56.619 newfound market power. It makes re -regulation 00:36:56.619 --> 00:36:59.719 a really challenging uphill battle. We saw that 00:36:59.719 --> 00:37:01.719 with Australia's attempt at partial re -regulation 00:37:01.719 --> 00:37:03.960 with their 2020 dairy code. It's a much weaker 00:37:03.960 --> 00:37:05.820 framework than what they had before, wasn't it? 00:37:05.880 --> 00:37:08.500 And it only came after immense damage was already 00:37:08.500 --> 00:37:11.139 done. This whole deep dive, it just reinforces 00:37:11.139 --> 00:37:14.199 the design of agricultural policies. It has consequences 00:37:14.199 --> 00:37:17.000 that ripple far, far beyond the farm gate. It 00:37:17.000 --> 00:37:19.139 impacts not just individual farm profits, but 00:37:19.139 --> 00:37:21.719 the entire social fabric of our rural communities. 00:37:21.980 --> 00:37:24.679 It fundamentally reminds us that stability, sustainability, 00:37:25.000 --> 00:37:27.599 sometimes they matter more than just chasing 00:37:27.599 --> 00:37:30.019 short -term raw efficiency figures. It's not 00:37:30.019 --> 00:37:32.500 about abstract economics textbooks or theoretical 00:37:32.500 --> 00:37:36.050 models. It's about... Real farms, real families, 00:37:36.170 --> 00:37:38.849 real communities. Understanding this story helps 00:37:38.849 --> 00:37:40.909 us protect what works and fight for policies 00:37:40.909 --> 00:37:44.889 that support a viable future. So here's a final 00:37:44.889 --> 00:37:46.610 thought for you to chew on, something to mull 00:37:46.610 --> 00:37:49.769 over after our deep dive today. Which aspect 00:37:49.769 --> 00:37:52.469 of Australia's dairy struggles, the massive farm 00:37:52.469 --> 00:37:55.110 consolidation and loss of farms, the crushing 00:37:55.110 --> 00:37:57.230 weight of mounting debt that pushed so many to 00:37:57.230 --> 00:37:59.889 the brink? or the devastating community collapse 00:37:59.889 --> 00:38:02.050 and the social unraveling we talked about, which 00:38:02.050 --> 00:38:03.849 of those do you think poses the biggest potential 00:38:03.849 --> 00:38:05.750 threat to North American dairies in the years 00:38:05.750 --> 00:38:08.210 ahead? Which of these warnings resonates most 00:38:08.210 --> 00:38:09.989 strongly with your concerns for the industry 00:38:09.989 --> 00:38:12.250 right here? And that's all the time we have for 00:38:12.250 --> 00:38:14.969 today's Deep Dive. For more articles and insights, 00:38:15.269 --> 00:38:18.949 be sure to visit www .thebullvine .com. Don't 00:38:18.949 --> 00:38:20.969 forget to subscribe wherever you get your podcasts. 00:38:21.369 --> 00:38:23.469 Thanks for listening. Thanks for tuning in to 00:38:23.469 --> 00:38:26.880 The Bullvine Podcast. Hopefully these lessons 00:38:26.880 --> 00:38:29.179 from Australia's dairy journey give you some 00:38:29.179 --> 00:38:32.539 fresh insights for your own farm's future. Remember, 00:38:32.739 --> 00:38:35.280 it's never just about the numbers. It's about 00:38:35.280 --> 00:38:37.679 the people, the communities, and the smart moves 00:38:37.679 --> 00:38:41.280 we make every day. Until next time, keep your 00:38:41.280 --> 00:38:44.139 cows happy, your milk flowing, and your passion 00:38:44.139 --> 00:38:45.699 strong. Catch you soon.