Eight years ago Sue and Mathew Daubney made a decision, which would partly shield them from Western Australia’s milk wars – they began processing their own milk.
The Daubney family had been dairy farming in the South West town of Northcliffe since 1924. But the deregulation of farm-gate milk prices in 2000 – and, subsequently, the price being paid by processors crashing, forced them to look at other options.
The decision was made to reduce the size of the herd, invest in building a processing facility, and embark on the journey to produce Bannister Downs milk as a specialty, high-quality alternative to the cheaper options in supermarkets.
It eradicated the Daubneys’ reliance on farm-gate prices determined by corporate processors in WA – Brownes, Lion and Harvey Fresh.
Eight years on and the Bannister Downs brand is thriving; about 85,000 litres of milk goes through the processing plant a week.
At the retail end, 60 per cent of Bannister Downs’ products are sold to restaurants and cafes, 17 per cent goes through independent retailers and 16 per cent through Coles.
Small export orders and sales to local businesses and schools make up the remaining 7 per cent.
Bannister Downs has kept the processing and farming sides of the business separate, so it’s able to identify that its average farm-gate price for raw milk is about 50 cents per litre.
This is 20 per cent higher than the average farm-gate price paid to dairy farmers in the 2011-12 year.
The diversification into processing has saved the Bannister Downs dairy farm from potential demise.
Ms Daubney told WA Business News many other dairy farmers had not managed to survive on the farm-gate price of recent years – mainly as there had been little increase in prices to offset the steeply rising costs of production.
In 2000, there were 484 registered dairy farmers; there are now estimated to be less than 130 – a reduction Mrs Daubney said was a direct result of low farm-gate prices.
It costs a farmer about 40 cents per litre of milk produced just to provide grain for the cows over summer – leaving them with very little margin to cover the other costs associated with running a dairy farm.
“You can only do that for a certain number of years before you realise how unsustainable it is,” Mrs Daubney said.
She said much of the blame for low farm-gate prices rested with the milk processors as they determined the price paid to farmers without seeking better wholesale prices from retailers such as Coles and Woolworths.
Bannister Downs has been increasing its herd over the past few years and has also agreed to buy all of the raw milk produced from a neighbouring farm to sustain its 30 per cent annual growth.
Any milk it does not need is snapped up by Lion, which has been forced to truck milk from the eastern states to satisfy demand from a growing population in WA.
“Basically, the last litre that we’re making that we send away to Lion we’re losing money on at this time of year – like every other farmer would be,” Mrs Daubney said.
Lion said last week it would increase the farm-gate price to farmers if they produced more milk.
Mrs Daubney’s response was that Lion had left it too late to give farmers immediate relief, because it took more than nine months of planning to increase milk production.
“It’s not just a case of ‘oh ok we’ll just decide to make more milk tomorrow’, it just doesn’t happen that way,” she said.
