On 22 December 1999, an overwhelming 89% of Victorian dairy farmers voted to accept the de-regulation package that was offerred to them. And as Victoria accounts for 60% to 65% of Australian milk production this was significant news - although not unexpected - for farmers and associated players in the other states (the plan is for deregulation to take place across Australia on 1 July 2000).
Milk de-regulation means that fewer farmers with larger herds will produce the same amount of milk or more while many of the small inefficient farmers will go out of business when the price support mechanisms and milk quotas that have protected them from competition vanish.
This news is so important that we decided to give you a peep into the future of a de-regulated dairy industry that will need Fodder King lucerne hay in order to markedly increase milk productivity. Not many people realise that the dairy industry is the third biggest rural industry in our country after beef and wheat. 1997/98 on-farm value was about $3 billion and ex-factory output about $7 billion.
In Australia the average herd size is only 150 cows. This is tiny compared, for example, with California, where herd sizes of 1,000 to 2,000 are not uncommon - and Saudi Arabia, which has herd sizes greater than 10,000. What's more, the Californian herds have an average milk yield per cow of over 10,000 litres compared to a paltry 5,000 litres here (in Saudi Arabia it is even higher - about 12,000 litres).
Under de-regulation the new bigger farms in Australia will have no choice. To remain competitive, they will have to produce more milk per cow per hectare - make huge increases in productivity. If they are to avoid really major capital investments, their solution is intensive feeding. That equals lucerne hay - which is so high in energy, proteins, minerals, vitamins and fibre - which is where Fodder King comes in (the feed that the other countries use to get their high yields is principally lucerne). One kilogram of lucerne hay will produce an extra litre of milk - simple! And the effect flows through the day after feeding - virtually instant!
And so we can look forward to the domestic demand for fodder increasing significantly over the next decade at least - on a sustainable basis too - as we piggy back on the strongly growing dairy industry. It is a wonderful opportunity for Fodder King and we are poised to make the most of it.
On 29 June 2000, the New South Wales parliament passed the de-regulation bill for New South Wales. Western Australia is still undecided.