Raleigh dairy failure raises questions

27 Apr, 2018 12:03 PM
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Coporate farming on the Bellinger River in northern NSW raised community suspicion. An attempt to build a feed pad to minimise wet weather issues was blocked because people assumed the project was a feed lot.
The corporate business model that relies on short-term cash flow struggles in Australia...
Coporate farming on the Bellinger River in northern NSW raised community suspicion. An attempt to build a feed pad to minimise wet weather issues was blocked because people assumed the project was a feed lot.

Corporate farming is on the nose, with the likes of Gerry Harvey writing down two-thirds of his involvement in big milk while New Zealand owned Raleigh Dairy Holdings on the NSW North Coast near Bellingen has gone belly up in a bid to make a profit from just cents-a-litre production.

Is the small family farm the sensible way forward, or can big dairy perform like the architects of deregulation designed?

A week from next Tuesday, May 8, liquidators working for National Australia Bank will disburse 650 dairy cows from the failed Raleigh Dairy Holdings (RDH). Remaining cows have been culled.

Sometime in the new financial year agents Ray White Rural at Bellingen and Dorrigo will offer the 675 hectares of land, in five lots, including those with existing dairy infrastructure on North Bank Road and across the Bellinger River at Yellow Rock.

The break-up of this landmark property will present an opportunity for the right producer of milk, or more likely, beef. Perhaps the place will go to stud horses and food production will be lost from the valley.

Whatever the case, the loss of such a dairy experiment will provide reflection on the state of an industry that is shrinking into its own shadow.

New Zealand owned RDH burst on the local scene in 2008 with the $12 million purchase of prime alluvial flats and a plan to deliver bulk milk on a scale never before trialled in the Northern Rivers.

Centrally located between Sydney and Brisbane and close to the Norco milk factory at Raleigh, the project seemed full of promise.

Cow numbers on those properties increased from 500 to 1500 and production expanded to 25,000 litres a day, but effluent management became an issue that would, in the end, cost hundreds of thousands of dollars to improve – much of it public money in the form of grants from catchment management authorities and the Department of Primary Industries.

In the end, Raleigh Dairy Holdings was Norco’s biggest single supplier and employed people from throughout the district.

But ambition clashed with a number of factors – environment, residents, local government to name a few.

The way of doing dairy in New Zealand didn’t gel with a community that cut its teeth in the art of public protest long before RDH came to the valley.

“They underestimated the community response,” said Joe Pearce, who helped start the project for New Zealand owners, and later sided with the community against unsympathetic practices.

In some cases, this anger at dairy was justifiable, with effluent being washed into the river after every downpour.

But it wasn’t just dairy that contributed to the e-coli problem that saw oyster growers like John Lindsay lose income for weeks at a time.

“The floods were not so bad because we were closed to harvesting anyway,” he said.

“It was the heavy downpours, say 50mm of rain, that would wash the effluent off the paddocks that caused more of a problem.”

To appease demands from an increasingly frustrated state government, RDH built a new dairy at its Yellow Rock property on the south bank, moving it 40 metres away from the river and up on a hill, installing effluent reticulation and ponds to control the problem.

Raleigh resident Joe Pearce, Mid North Coast Farm Advisory Services, said he proposed to the New Zealand managers that the best way forward would be to build free-stall accommodation for the cows, housed full time under cover and provided with measured feed.

The method, he said, would have created an enterprise that could have retained milking even during extended wet periods, renowned in this part of the coast.

With free stall housing and proper nutrition, the rolling herd average of milk production should have delivered 30 litres from each cow every day, compared to about 20L/cow per day on grass.

Former Raleigh milk factory manager, Ted Vaughan, said his previous experience as a share farmer in the lower valley could be cruel on production.

He ran 110 cows on 162 hectares and managed to have a go in the typically wet environment, but it wasn’t easy.

“When it rains you might not get your tractor out of the shed for three to four months at a time,” he said.

“It would get so wet you couldn’t drive 100 cows up the laneway, never mind 1000. Large-scale operations like Raleigh Dairy Holdings were never going to work. It was a pipe dream."

Dairy services consultant, Bill Hodson, Raleigh, said the trouble with RDH began when they tried to bring New Zealand ways of working to the North Coast.

“That’s where the mistakes started,” he said. “Northern NSW is a lot hotter with humidity and it is a wetter climate.

“They didn’t listen to the people that have lived here. And it didn’t help that the local council and ratepayers are anti-agriculture and anti-business.”

An attempt to build a feedpad to minimise wet weather issues was blocked by the community because people assumed the project was a feedlot.

Norco chairman Greg McNamar says whether a dairy operation is big or small, the key to success seems to be family involvement,

“A strong family interest works better,” he said. “There is a deeper interest.”

The corporate business model that relies on short-term cash flow struggles in the Australian dairy climate, where government support pales in comparison to that of the US, with 15 per cent to 20pc subsidies making up a large part of producers’ profits.

“Corporate-style farms are labour intensive and they pay for every hour worked,” Mr McNamara said.

“On a family farm people work 70 to 80 hours a week and sometimes take nothing for that but a living. They work harder, longer and faster.”

Mr McNamara said Norco’s policy of keeping milk prices stable was designed to minimise volatilty.

“It’s not unusual in farming to have three bad months and then make that up in two good months. You can’t look ahead two years and expect to make profits. In farming the horizon is more like five to 10 years, even 20.”

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