A sudden drop in global farmgate milk prices has the potential to rip $100 million out of the state economy next year, according to independent dairy factory Ashgrove Cheese.
Ashgrove owner Paul Bennett said while the factory was insulated somewhat from the reduction in price announced earlier in the month by Murray Goulbourn and Fonterra he was concerned about the immediate and long-term impact on the economy.
The factory was set up about 23 years ago and Mr Bennett said since it had been established it had seen a cyclical drop in price three times. However none as severe as the current predicament faced by Tasmanian farmers.
“There’s a lot of devastated farmers out there, some of them just won’t make it,” he said.
Mr Bennett said the hardest part about the sudden drop in prices was the “abruptness” of the cuts and the lack of communication from the dairy processors.
Ashgrove has been sheltered somewhat by the price cuts because it milks and produces “from the farm to you” on site at its factory at Elizabeth Town.
However all of their excess milk they produce on top of what they need is sold to both Fonterra and Murray Goulbourn.
Mr Bennett said the factory had seen three price cuts in its 23-year history but none as dramatic as the one currently being experienced by the industry.
“In the 1980s Tasmanian dairy farmers were the worst paid in the world, we [the family] thought if we were going to go broke we may as well have a good crack at it,” he said. Foresight by the family forebears and a good bit of luck is what Mr Bennett credits for Ashgrove’s success as an independent producer.
He said when they were established they were one of the only ones out there but also they had been able to produce a niche product in a time when there wasn’t a lot of competition.
Consumers should support branded dairy products and eat more cheese if they wanted to help with the current downturn in prices, whether that be Ashgrove or not, he said. Branded products put more money into the pockets of farming families, which could only help support those communities.