response to the victorian government...aug 05, 2011 · knowledge of the dairy industry and farms....

Response to the Victorian Government Parliamentary Inquiry into the capacity of the farming sector to attract and retain young farmers and respond to an ageing workforce

Submission by the Dairy Industry People Development Council on behalf of Dairy Australia and the Australian Dairy Industry Council

5 August 2011

Terms of Reference (a) examine the benefits to the agriculture sector of attracting more young farmers (including youth and early career workers). (b) examine the factors that affect the ability of the agriculture sector to attract and retain young farmers including, but not limited to:

(i) the profitability and business competitiveness of agricultural and other industries; (ii) farming business acumen and recruitment strategies (including diversity); (iii) remuneration packages and opportunities; (iv) career pathways for youth and early career workers; (v) existing models of farm business (ownership and management); and (vi) the factors that influence rural quality of life including, but not limited to:

(A) resource and service access; (B) farm family health; (C) access to skills development and off-farm employment; (D) leadership and other capabilities within the community; (E) partnerships and networks (formal and informal); and (F) the Victorian economy and government policy; and

(c) provide strategies and recommendations that will promote the realisation of the benefits identified above.

Locked Bag 104, Flinders Lane Victoria 8009 Australia t +61 9694 3777 w www.dairyaustralia.com.au

Submission to Parliamentary Inquiry on Farm Sector Workforce Capacity, from Dairy Industry People Development Council, 5 August 2011 2

Executive summary

Dairy is Victoria’s largest rural industry with a gross production value of around $3.1billion. The 2006 ABS Census shows 13,232 people were employed in dairy production and 8,042 were employed in the dairy processing sector in Victoria.

Given the global demand for dairy products there is a potential for the Victorian dairy industry to grow by more than 2% per year for the next decade. This growth (and maintenance) can only happen if young people continue to invest and work in the industry. The perpetual question about this future is how to make the industry attractive to the next generation.

The underlying factors that impact most on this are: farm viability to generate sufficient return to compete with other opportunities in society, dairy farms having working conditions that match those of other jobs on offer, and the need for vibrant communities that provide opportunities for family members, access to amenities and strong service sectors.

The dairy industry has already sponsored research and piloted programs to identify what is needed to maintain a strong farming sector that offers attractive jobs and supports choices for people to move into and out of the industry.

To achieve the vision of a growing and robust industry we require strong leadership and a mature partnership between industry and government.

The industry seeks commitment from the Government to establish a joint industry development plan in collaboration with Dairy Australia, GippsDairy, Murray Dairy, WestVic Dairy, the Victorian Farmers’ Federation, Gardiner Foundation and the dairy companies in order to:

• Address policy barriers • Stimulate collective action • Share information • Coordinate a whole-of-government approach to support the

industry in ways that show returns to tax payers and communities

The strategies and recommendations we wish to explore with the Victorian government include:

1. Support the viability of the dairy farm sector so young people find it an attractive prospect to invest and work there

• Review of the Victorian planning system around agricultural land. • Adaptation of rural finance lending policies. • Support for the Alpine Valleys Dairy Pathways Project. • Productivity advice to smaller farms.

2. Support farmers to set up workplaces that attract and retain talent

• Promotion and roll out of The People in Dairy. • Housing and transport availability for farm workers.

3. Improve the alignment between workforce demand and supply

• Access to relevant Government-held data. • Workforce mapping and alignment. • Support for the In2Dairy program. • Amendments to the skills shortage list. • VET funding eligibility for people changing careers. • Training for management roles. • Business advice specifically for young farmers.

4. Support dairy industry service providers

• Mapping this network and scoping their required support.

5. Build local community capacity, resilience and sustainability

• Support for the Sustainable farm families program and other rural preventative health initiatives.

• Coordination of rural delivery of Government programs such as health, housing, education, transport, infrastructure, planning and community development.


The issue: making dairy farms attractive to the next generation

Given the global demand for dairy products there is a potential for the Victorian dairy industry to grow by more than 2% per year for the next decade. This growth (and maintenance) can only happen if people continue to invest and work in the industry.

Young farmers are the future of the dairy industry. The perpetual question about this future is how to make the industry attractive to the next generation as a place to work and/or invest.

This is not a trivial or easily addressed question; scratch the surface and some deep-seated issues are evident. It is not simply resolved by ‘positive image’ campaigns or training courses. It is primarily rooted in the viability of individual dairy farm businesses.

This opens a number of significant issues such as: affordability of agricultural land (in relation to its agricultural earning capacity RoC) and the difficulty for young people to achieve the capital required to purchase land and have enough equity in the business to manage volatility (this also makes it harder for the current generation to exit), having enterprises of sufficient scale that they can compete with financial returns from other investments, having farm businesses with the capacity to survive in a volatile market (ride out the poor years), and having workplaces that offer decent work and career paths for individuals.

Despite the fact that these are tough issues, the industry has already conducted research and begun to pilot programs to identify solutions. There are great opportunities for interventions by industry and government to make a real difference to the attractiveness of the industry to the next generation.

The strategies and recommendations outlined in this response suggest ways to attract and retain people with the required skills, capacity and motivation to invest and work in dairy farming. This broadens from a narrow definition of farmers as farm owners to include farm employees and share farmers.

* Unless indicated otherwise the data in this submission are drawn from The People Report 2011 in preparation by Dairy Australia.

Two sides of the coin

The dairy industry has two simultaneous but very different stories. It is a major contributor to Victoria’s wealth (our largest rural industry, with exports earning $1.76B per year). It is a strong regional (and urban) employer generating high indirect regional benefits, with an estimate of its regional economic multiplier effect of around 2.51

1 ABARE cited by Dairy Australia

. This profile shows dairy farming to be a vital part of contemporary Victoria.

http://www.dairyaustralia.com.au/Industry-overview/About-the-industry.aspx cited July 11, 2011

Dairy farms in Victoria*

In 2010 there were estimated to be about 5200 dairy farms in Victoria. This has reduced from 6239 in 2006.

REGION 2006 2010 % sharefarming Gippsland 2030 1700 22 West Vic 1768 1500 18 Nth Vic 2441 2000 15

In the 2011 National Dairy Farmer Survey, 98% of herds were family farms and 2% were corporate farms.

http://www.dairyaustralia.com.au/Industry-overview/About-the-industry.aspx�



But at the same time the dairy industry is vulnerable to significant negative influences. Volatility created by exposure to external forces such as changes in water allocation, feed prices and milk prices threaten viability of some dairy businesses and provide a disincentive to many to remain in such a complex and variable environment. The average dairy farm cash income fell from an historical high of $129,310 in 2007-08 to a projected $50,000 in 2009-10 (ABARE 2010).

There is the positive side of the industry and there is also a real picture of struggle for many dairy farms. The next generation is exposed to both these aspects of the dairy industry.

Both aspects of the dairy industry are also reflected in its interaction with government: there are up-beat assertions that the industry should be partnered as a significant generator of wealth, alongside reasonable requests for support through successive periods of difficult environmental and business circumstances. It is important that industry and government see and understand both ‘sides of the coin’. This type of partnership is critical to amplify the dairy and public good outcomes of getting the farm workforce capacity right.

The strategies we suggest in this submission are based on our knowledge of the dairy industry and farms. The recommendations for the roles for government are limited by our current understanding of the possibilities – we don’t know (yet) all the opportunities possible in partnership with government to build the resilience of, and grow, the dairy industry. We do know that there are benefits to both Government and industry to achieve growth in dairy.

The strategies are based on the following understanding of the deep-seated issues we face:

• Farm viability is critical to attracting young people. Dairy farms will only be attractive places for young people if they are able to (i) achieve an acceptable standard of living (ii) invest to counter the declining terms of trade, and (iii) invest to match broader community increases in earning (keep up with opportunities on offer in society).

• Working conditions on dairy farms must match those of other jobs on offer, or young people who start in dairy will not stay. There is clear evidence that it is not attraction, but retention of people that is the more persistent challenge. Flexibility (in work hours and timing), personal growth and development (including career paths) and enjoyable work environments are reported as key conditions that employees valued alongside pay rates that are competitive for farming2

• Vibrant communities are an important factor in retaining a rural workforce. Opportunities for partners and family members often make or break the decision to stay. Access to hospitals, recreation facilities, casual and permanent employment off farm are all needed. An adequate dairy service sector is also important. This is an interdependent relationship - there must be a sufficient number of farms in a district to sustain a viable, well-serviced dairying community.

. Good working conditions are important for farm owners too of course, but sometimes they are traded for wealth creation.

2 Nettle, R.A., Semmelroth, A., Ullah, A., Zheng, C., Ford, R. (2011 in progress) The retention of people in dairy farming – what is working and why? Research report to the Gardiner Foundation, The University of Melbourne


a. Benefits of attracting the next generation to the agricultural sector

Young farmers are the future of the dairy industry. This section considers the benefits of attracting young people to dairy by outlining the contributions of the dairy industry to the economy, employment and regional and community life.

Economic contribution

• Dairy is Victoria’s largest rural industry with a gross production value of around $3.1billion

• Victoria contributes around 60% of production and 85% of national dairy exports.

• In 2009-10 Victoria’s dairy product exports were valued at around $1.76 billion.

• The industry continues to find innovative and efficient ways to maximise milk production. In 1979-80 the average yield per cow was 3,012 litres. This increased to 5,559 litres in 2009-10.3

• Dairy Australia reports significant improvements in operating conditions in 2010-11 driven by global economic recovery and lower than expected global supply, reflected in increasing commodity prices. These benefits were constrained by the high Australian Dollar

4

.

3 Dairy Australia, Australian Dairy in focus, 2010 4 Dairy Australia, Dairy 2011 Situation & Outlook

Employment contribution

• In 2006, around 13,232 people were employed in dairy production and around 8,042 were employed in the dairy processing sector in Victoria. (ABS Census Data, 2006)

• Concurrent with the consolidation of farms and increases in herd size, the majority (70%) of farms now employ people other than family members.

• Dairy farms typically employ 2 – 5 people.

• In addition to its contribution as a direct employer, the dairy industry has a mutually dependent relationship with a network of service providers and dairy processors that employ people who support dairy farm activities.

• In contrast to many other occupations, farming has no qualification-based requirements for entry, however its leaders recognise the inherent value of attracting and developing skilled people and the role that formal skills development plays in attracting and retaining the next generation.

• Global forecasts for milk demand indicate that dairy can continue to be a strong source of regional employment.

Regional and community contribution

• Healthy communities have a balanced demographic. Industries such as dairying that have the capacity to retain or attract back young people are important for communities that have already lost many of their young people to the major regional centres or to the cities.

• Dairy is a strong regional employer. It generates high value output, high indirect regional benefits and employs


significantly more people than many other farming activities.5

• Estimates of the regional economic multiplier effect are around 2.5 for the dairy industry

6

• The interdependencies between dairy farming and other links in the dairy supply chain drive local investment to locate supporting industries and infrastructure (for example dairy processing, input infrastructure such as feed mills, and investment in public infrastructure such as roads and water) close to dairy farming.

. The industry also makes a contribution to communities with extensive volunteerism, and by supporting technical and professional populations.

This profile of the contribution of dairy farming presents a picture of the recent past but does not necessarily indicate the likely future. This picture does not compel young people to take up careers in dairy farming. The very factors that describe the strengths of the industry (for example family ownership, rural location and operation in a fluctuating economic environment) also signal its weaknesses and vulnerabilities. Unless we understand and address these issues, the future contribution of dairy is much less assured.

The dairy industry is well organised and has established a regional network that provides a conduit between individual farmers, the industry, research and development and all tiers of government. Building industry capacity to plan, manage and lead on workforce issues is vital to the ongoing health of dairy and also provides models of engagement that could assist other farming sectors.

5 See O’Toole K, Keneley M, McKenzie M and Hellier P, 2008 Economic impact of the dairy and blue gum plantation industries in South West Victoria 6 ABARE cited by Dairy Australia http://www.dairyaustralia.com.au/Industry-overview/About-the-industry.aspx cited July 11, 2011

Dairy Case Studies

To Tim farm ownership seems impossible ‘I looked at a farm about two years ago. It was $1.8 million. When I spoke to the banks I would have needed to own the herd of cows - which is 200 cows. Today they'd be worth probably $350,000. I needed to own my machinery and still have $600,000 of my own money. Even if I sold my houses and stuff I still wouldn't have had enough money and I still would have had to borrow over a million bucks. I wouldn't have had the turnover to pay it. I did income estimations. In some months, the repayments were more than the milk share. So it just can't happen’

[Tim, 35 y.o., senior farm hand, with previous building trade experience] Farm case study#2, Nettle et al, Retention study

Phil doesn’t see a great future for young people ‘As far as farm ownership is concerned they’ve got to have the burden of deposits and interests taken off the block. I mean, you know, a dairy farm will probably cost you a million dollars now. I mean a kid’s 30 and he’s got $200,000, he’s done damn well but it’s a long way to a million dollars. So they need some financial support and honestly I just – I’m afraid at the moment as much as I love cows and all that, I don’t see a great future for young people. It’s too hard. It is too easy to make your money somewhere else.’ [Phil, retired farmer] Farm case study #3, Nettle et al, Retention study

For Karen and Warwick it was the best decision they ever made ‘A position for a sharefarmer became available on a nearby property. The only requirement for the position was a motorbike – we realised we could do it and decided to give it a go. It was the best decision we have ever made.’ Warwick and Karen took out a loan for a tractor and started to build up the herd. The couple now own half the herd, are working towards full herd ownership. They have recently purchased a commercial rental property for off-farm investment.

[Karen and Warwick, dairy farmers] Career Insight, In2Dairy an employee guide




b. Attraction and retention factors and barriers

Most dairy farms are family owned (98%) and operated (90%). Many dairy farm businesses would need to upscale their enterprise to be financially attractive to future generations. But it’s very expensive for the next generation to raise sufficient capital currently needed to ‘buy in’ to dairy businesses. Large, corporate farms currently only comprise a small proportion of the industry as they require consistent and excellent management to succeed, with the additional complexities of size. In the main it is not an issue of attracting but of retaining the farm workforce (not long ago dairying was described as the ‘employer of last resort’)7

.

This section outlines the economic and employment factors and the aspects of regional and community life that influence the ability of the dairy industry to attracting young people.

Economic factors: Farm profitability, business competitiveness and models of business ownership

• Fluctuating water allocation, feed prices and milk prices contribute to negative perceptions about industry and employment security and are associated with a decline in experienced farm managers, sharefarmers and skilled farmhands.8

• The average dairy farm cash income fell from an historical high of $129,310 in 2007-08 to $88,000 in 2008-09 and was projected to fall to $50,000 in 2009-10 (ABARE 2010).

7 ACIRRT (2004) Dairy Employment for the Future 8 Eastwood, C and Nettle R (2010) Growing dairying in the Murray Irrigation region: Understanding dairy farm workforce needs and challenge

But 2010-11 appears to have been a strong improvement on 2009-10. The Dairy Industry Farm Monitor Project 2010-11 has shown that stronger milk prices (average closing price of $5.64 per kilogram milk solids) and more favourable seasonal conditions (despite locusts and severe flooding in some regions) were more than enough to offset the 6% increase in cost of production in the year. Seventy two of 74 monitor farms across Victoria recorded positive earnings before interest and tax (EBIT), where only 50% did so in 2009-10. This will allow farms to consolidate debt and do maintenance and improvements that have not been possible in the tough years. Confidence is much stronger. The volatility continues.

• At the same time as farm income was falling, income growth in other industries was not. This means that young people have had more economically attractive employment opportunities.


• Declining farm income undermines intergenerational farm transfer as sufficient income is required to sustain at least two farming families over the handover period.

• In the Goulburn Murray Irrigation District (GMID) extended drought conditions as well as changes in water and planning policy have contributed to the current situation where in 45% of farm land, representing nearly 800,000 hectares has been described as being ‘in transition’. This refers to land that is no longer being actively farmed.9

• The national dairy herd size has reduced by 16.5% over the last 5 years.

• Total Factor Productivity growth in dairy in Victoria has been negative for the past two decades10

• In many localities underlying land values have risen faster than the productive value of the land.

and is lower than for wheat or beef industries.

11

• Land planning and subdivision arrangements are critical levers to address farm viability. The proposed review of the Victorian statutory planning regime needs to consider how to protect property values at the same time as supporting farm aggregation. Minimum land size is tightly bound to

This has implications for farm viability and the ability of new entrants to access finance. The industry needs to explore new models of ownership of land, cows and infrastructure to expand choices and options for people to move into and out of dairy without losing dairy farms, so numbers do not fall below a critical threshold.

9 HMC Property Group (2010 )Changing land use in the GMID 2006-2010, Northern Victoria Irrigation Renewal Project and Department of Primary Industries 10 The CIE report in preparation 2011 11 This data is available for GMID. In view of the significant impact that land value has on farming viability, similar data should be collected for all dairying regions.

granting house planning permission. This results in much of the land that would traditionally have been available for dairy being purchased by people seeking rural amenity but who are often not interested in or capable of farming.

• It is possible that efficiency gains on many farms have masked some fundamental weaknesses in the industry. It is likely that dairy is reaching the limits of its resilience.

Employment factors: Job design, pay and career pathways

• Over the past 5 years around 60% of farmers have attempted to fill vacancies and over half reported difficulties finding the right person. One quarter of these farmers said this negatively impacted on farm performance12

• Dairy farms typically employ 2 – 5 people. There are practical limits to the creation of meaningful career pathways in a sector of micro-businesses. The restructuring of farms into larger, more economically viable businesses could support opportunities to design more satisfying job roles that offer structured career development pathways.

.

• The majority of dairy farmers are inexperienced employers. Over the past decades farms have moved from almost total reliance on family to a point where the majority (70%) of farms now employ people other than family members. As the non-family farming workforce grows, farmers need structured support to develop their knowledge and capacity to effectively attract, motivate, reward and retain staff.

12 Dairy Moving Forward 2010: People RD&E strategy


• Traditionally farm growth has relied on farmers being prepared to work long and unsociable hours. Farmers reported an average working week of 68 hours, 50 weeks a year. This is almost double average hours worked in Australia and no longer works for either farmers or potential employees. Long and unsociable hours of work are repeatedly raised as a significant deterrent to young people entering dairy farming.

• Farmers report that although short term labour is not hard to find they are experiencing difficulties recruiting more experienced managers and ‘second-in-charge’ positions. There are suggestions that perceived insecurity of both the industry and the related employment opportunities are exacerbating skill shortages.

• Skill shortages are not assisted by VET rules that disqualify a person from subsidised training if they have previously trained in a qualification at the same level. In one example a farmer wanting to train a young woman interested in entering dairying was unable to get traineeship funding as she had previously trained as a hairdresser. (This is the subject of a separate submission by the DIPDC to the Vocational Education and Training Fee and Funding Review.)

• Low rates of pay and high debt levels (for sharefarmers) have been identified as reasons for leaving dairy jobs.13

13 Eastwood, C and Nettle R (2010) Growing dairying in the Murray Irrigation region: Understanding dairy farm workforce needs and challenge

• At the same time, many young people working on dairy farms are given significant opportunities for wealth creation (for example through building herds or acquiring other assets such as machinery) and have non-monetary rewards for effort such as housing supplied on farms. These are often not as visible as pay rates when comparisons are made with other employment.

• The consequences of not getting people issues right in dairy are highly visible in the form of premature exit of dairy farms, people and investment from the dairy industry. The cost annual of labour turnover alone is at least estimated to be at least $30 million.14

14 Dairy Moving Forward 2010: People RD&E strategy


To assess structural ageing in populations it is necessary to have time-series data for relatively long periods. The dairy industry’s own National Dairy Farm Survey (of owner-managers) has been run annually since 2004, so provides some recent data. Analysis over much longer periods is possible on census datasets, but the most recent census is currently 2006. It is very likely that significant changes have happened in the last 5 years, and will only be clear once the 2011 census has occurred.

The graphs below have been supplied by Neil Barr, DPIV.

• There is a dramatic change in the age profile of dairy farmers over the period 1981 to 2006 – a shift in the shape of the curve to the right. “Where have all the young farmers gone?” There is ample anecdotal evidence that with each low swing (drought, flood, GFC) young people leave not to return. The uncertainty of rewards mean that dairy does not stack against the other opportunities on offer.

Dairy Industry

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15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85+

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ers

1981 1986 1991 1996 2001 2006

• Census data on the age profile of entrants to farming 1976 – 2006 shows persistent declines in the numbers of young people attracted to farming. The number of 20 year old entries has fallen by two thirds. In contrast, there is no decline in the number of people entering over the age of 55.

• These figures present particular risks to dairy. Unlike industries such as beef, dairy is not an attractive option as a transition to retirement. It relies on attracting younger entrants. The average age of entrants to dairy was approximately 35 compared to beef where average age entry was over 45.

• These age effects are even more marked for women, many of whom enter farming as part of a partnership. The decline in the number of young women entering farming drives a gender imbalance in farming communities, further detracting from farming as a career choice for young men.

• Median age at exit shows that from 2001 farmers leaving the industry were older. There may have been some ‘delayed exits’ during the drought.

30.0

35.0

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1981 1986 1991 1996 2001 2006

Medi

an A

geMedian farmer age Median Entry age Median Exit Age


The age distributions of owner-managers and employees are quite different

(ABS Census Data 2006)

Regional and community factors

• Although farm aggregation means there will be fewer people working in dairy, the industry relies on sustaining local infrastructure to support strong local communities that are creative and attractive places for people to live and work.

• Sixty percent of dairy industry employees live in communities of fewer than 5,000 people. There are 270 of these communities in Victorian dairy regions. Many of these towns are threatened by declining infrastructure, uncertain access to water and other resources, loss of essential

services such as health, education and transport and fierce competition from other industries for young workers.

• The poor and patchy nature of telecommunications technology that supports mobile phone and internet access is a particular deterrent to young people.

• Housing shortages and lack of public transport present other logistical challenges for young people wanting to move to rural areas to take on farming work.

• Although the industry has invested in mixed mode vocational training (including e-learning), lack of communications infrastructure can present a challenge. The need to travel to distant locations for facilitated delivery and assessment is a deterrent to participation in training.

• The dairy industry relies on a complex network of service providers to supply, advise, educate and support on-farm activities. The quality and sustainability of these services and related infrastructure depends on maintaining a critical mass of dairy businesses at a regional level. While critical to the ongoing viability of dairy, little is known about the operating needs of this network of industries and service providers. Mapping this network to understand more about attitudes and expectations of working with dairy and identify ways to ensure ongoing support of the dairy sector needs to be done at an industry and regional level.

• There is a shortage of new graduates in agricultural science (Australian Council of Deans of Agriculture). Analysis of job advertisements from April 2006 – March 2009 revealed demand for graduates of around 5,000/year compared to expected graduate completions of around 800/year.15

15 Pratley quoted in Dairy response to the National Food Plan issues paper


Strategies for a sustainable dairy industry

Attracting young people to agriculture and specifically to dairy will require much more than communicating the opportunities. It depends on having viable and sustainable farms that can offer rewarding jobs and careers.

Dairy continues to drive exports in this state. Its economic contribution is particularly impressive given the tough conditions it has recently endured which include a decade of drought, shrinking land availability and soaring land prices, limited and unpredictable water allocations, volatile milk prices and ongoing climate change with associated extreme weather events. The ingenuity and innovation of the sector has worked to offset this environment and is reflected in the steady increase in milk yield per cow and per hectare.

Sitting alongside this picture of a highly efficient industry are concerns that it is coming close to the limits of its resilience. Whether the future sees the industry expand to meet the positive market outlook set up by strong global demand for milk will in part be underpinned by a deliberate and well coordinated government strategy.

The government has an historic opportunity to review policy settings to underpin a viable agricultural sector. Land values are a key factor that underlies farm viability issues. Spiralling land prices frustrate efforts to return land to dairy and attract new people into the sector. Much of this is driven by the purchase of farming land by baby boomers who may have little interest or ability to continue dairy farming given that it is not an industry to retire to. The exit from the land of this cohort will open up opportunities to amalgamate farms into viable farm sizes. Some commentators suggest this trend may already have started. Appropriate planning regimes will be critical to facilitating this development.

The dairy industry has already sponsored research and piloted programs to identify what is needed maintain a strong farming sector that offers attractive jobs and supports choices for people to move into and out of the industry. For example:

• The People in Dairy (Dairy Australia) provides farmers with the tools, processes and support to design and manage their farms as appealing places to work.

• The Workforce planning and action for the Australian dairy industry project (Gardiner Foundation, University of Melbourne Rural Innovation Research Group, GippsDairy) worked in the Baw Baw Shire to establish a model for mapping the local and regional workforce context, identifying farm needs, engaging key stakeholders and implementing an action plan to meet identified needs. This model has been used to establish a successful regional intervention (In2Dairy in Western Vic).

• The Alpine Valleys Dairy Pathways Project (Murray Dairy) is seeking to explore models of ownership that reduce land being lost from dairying.

The industry has also invested in a strategic partnership with the VET sector to drive increased participation in accredited training and take leadership in changing the industry’s culture around the value that it brings. Through the National Centre for Dairy Education Australia (NCDEA) it has constructed a framework that supports structured skills development and promotes career paths. The number of Student Contact Hours has risen steadily each year since the NCDEA was established in 2006.


The industry has a clear goal to double its output by 205016

• Address policy barriers

and a vision for how to support and sustain a growing and robust industry. Achieving this vision requires strong leadership and a mature partnership between industry and government in order to:

• Stimulate collective action • Share information • Coordinate a whole-of-government approach to supporting the

industry in ways that provide returns to tax payers and communities

16 National Food Plan Issues Paper – Dairy industry response


Strategy Issues/Case studies/Lessons Roles for government 1. Support the viability of the dairy farm sector so young people find it an attractive prospect to invest and work there.

More flexible pathways into dairy business ownership Where urban and/or lifestyle (‘amenity’) demands for land compete with agriculture, land values exceed the point at which most agricultural operations can provide adequate return on capital invested. Overall wealth creation is satisfactory for the current generation of farm owners (while they are benefiting from the capital appreciation of their land) but expansion is more difficult and new entrants struggle to meet the equity criteria required to get a start. As farmers look to scale back or exit dairying (it is not a retirement activity), land often transfers out of dairy production. This presents a significant threat to the continuation and growth of the industry. The Alpine Valleys Dairy Pathways Project (Murray Dairy) is seeking resources to explore models of ownership that increase choices and options for people to move into and out of dairying without land being lost from dairy farming. The project also seeks to explore ways to build local community engagement to support dairy growth. This is a pilot approach which will provide insights for dairying in all regions.

The statutory planning regime is the primary lever that shapes land use and development. Review of the Victorian planning system should specifically address the issue of agricultural land use and include consideration of options to protect property values at the same time as supporting farm aggregation or expansion. Innovative schemes such as market trading of development rights could provide a vehicle to protect both the economic and viability interests of farmers. New models of farm and asset ownership also have implications for access to finance. Government can support implementation of these models through its rural finance lending policies and by educating the wider financial sector about new models. With support the Alpine Valleys Dairy Pathways Project would provide an excellent opportunity to road-test new dairy business ownership models.

Productivity improvements on lower income farms. The majority of dairy farmers have been doing it tough through dry years and with increased input costs (in 2009-10 the average farm cash income will be well below the 10-year mean of $91,000). Most extension efforts have occurred with the larger farms and top performers. Arguably the smaller, lower income farms are an important target for support to improve productivity (although they may be less likely to seek information). Smaller farms also represent an entrance opportunity that larger farms don’t.

Government could target advice and support to smaller sized, lower income farms which are likely to require low investment options to maintain and improve farm performance.


Strategy Issues/Case studies/Lessons Roles for government 2. Support farmers to set up workplaces that attract and retain talent

Dairy farms offering flexible, appealing work arrangements Farmers report an average working week of 68 hours, 50 weeks a year. This is almost double the average hours worked in Australia. Long and unsociable hours of work are repeatedly raised as a significant deterrent to young people entering dairy farming. Design of jobs, engagement, reward, performance appraisal and teamwork are all important in setting up appealing work arrangements, but many farmers are inexperienced employers. The In2Dairy project in Western Victoria identified that for many potential entrants to dairy careers at the assistant farmhand level, poor access to transportation and suitable housing close to farms was a significant barrier. This was especially so for disadvantaged job seekers.

The People in Dairy (Dairy Australia) is a program designed to provide farmers with the tools, processes and support (through better skilled advisers) to design and manage their farms as appealing places to work. Government could assist industry to further promote and roll out The People in Dairy across Victoria. State and Local Governments could collaborate to explore innovative ways of ensuring housing and transport are available for farm workers. A stepped-down Travel Allowance for Australian Apprentices, commencing farm trainees who have to travel more than 30km to work each day, would be very helpful. It could be structured in the same way as the living-away-from-home allowance currently payable.

3. Improve the alignment between workforce demand and supply

Understanding workforce demand and supply There is a paucity of current, local information about workforce demand and supply in dairy. To be meaningful this information needs to be collected and applied at local community level. The Workforce planning and action for the Australian dairy industry project (Gardiner Foundation, University of Melbourne Rural Innovation Research Group, GippsDairy) worked in the Baw Baw Shire to establish a model for mapping the local and regional workforce context, identifying farm needs, engaging key stakeholders and implementing an action plan to meet identified needs. This model has been used to establish a successful regional intervention (In2Dairy in Western Victoria).

Government holds many datasets that would make important contributions if they were available to industry. Implementation of workforce mapping and alignment, as part of initiatives to build community capability and to better match workforce demand and supply, would be very helpful.


Strategy Issues/Case studies/Lessons Roles for government

Systemic employment support models The industry and the formal labour market and associated programs have relatively little experience in working together. In2Dairy: assistant farm hands pathway is an overarching pilot project that develops that interaction. It supports new trainees (in Western Victoria) to enter the industry, supports the farms they work on to be ‘employee ready’ and provides a model of ongoing brokering and mentoring of the employment relationship.

To be effective, job placement initiatives need to take a systemic approach to address issues of employee work readiness and employer capability to manage employees. This requires more tailored support that combines traditionally separate areas such as training and employment. The industry would like to continue In2Dairy program in the Western Victoria and extend it to Gippsland and Northern Victoria. Assistance from government would make this possible.

Acknowledgement of skills shortages in the sector. Vocational funding, including support for employers, is increasingly being targeted at industries that have acknowledged skills shortages. Five percent of farmers report in the 2011 Dairy Farmer Situation and Outlook survey that labour is their greatest challenge with fifteen percent, including farmers who belong to the “growing sector”, nominating it amongst their greatest challenges. Farm hands (entry level) and farm managers (highest training level) are reported to be in most short supply.

It would be very helpful if Skills Victoria included: Agriculture, “Dairy farm workers and managers” on the skills shortage list for eligibility to State and Commonwealth programs.

Promotion of career opportunities The industry needs schools, careers teachers and parents to have a balanced and informed view of the dairy industry and the opportunities that it presents. Promoting Dairy Careers (WestVic Dairy) is a regional dairy initiative to coordinate careers information to schools. Cows create careers (Dairy Australia, all regions) specifically promotes career and development opportunities in the dairy industry to secondary school students by curriculum-based activities and work experience placements. Later-year entrants (young ‘career changers’) often become very successful dairy farmers, but there are no current methods of attracting this cohort.

School curricula, supported by systemic programs and resources, describe the value of agriculture production as a worthy and essential enterprise in balance with environmental conservation values. Potential models for attracting career changers to the dairy industry could be investigated in partnership with programs committed to supporting regional development and small business development with other stakeholders.


Strategy Issues/Case studies/Lessons Roles for government Building skill depth

Historically many farmers have sent their sons or daughters off-farm after completing their secondary schooling to work in other industries. This may be a form of risk management (have something to fall back on if farming is not profitable), because the farm is not of sufficient scale to support additional wage earners or partners, or to provide a balance of social development. Consequently many young people do return to farming have qualifications in unrelated areas. Many of the skills that are essential to dairy farming are learned in the workplace and through short courses. Current policy is focused on providing full qualifications. As farmers recover from drought many draw on options to fill immediate gaps such as casual and back packer labour. While effective to fill short term gaps, this strategy entails high turnover with associated costs. Farmhands are not particularly hard to find if operating within reasonable proximity of major centres but farmers report difficulties recruiting more experienced managers and ‘second-in-charge’ positions. The industry has developed a career path to take individuals from entry to management/ownership; however the process of gaining skills on farm and through short courses is both a strength and a weakness. Participation in training on a part-time or ad hoc basis does not develop individuals with the skills to the depth and breadth or within the timeframe of structured full-time programs. Given the pending retirement of the baby boomers, there is a looming gap in the number of people well advanced on the management development pathway. Young farmers need to build business skills (in addition to technical farming skills) to succeed in dairy business ownership.

Skills acquisition for career changers would be easier if VET eligibility requirements were adjusted. Funded training programs should support and reinforce training in skill sets. More training opportunities for management roles would be very helpful. Consideration could be given to Commonwealth and State aligned funding-specific strategies such as Management Cadetships to train potential farm managers (as proposed by Agrifood Skills Australia17

).

Government could provide business advice specifically for young farmers who need to build business acumen.

17 Agrifood Skills Australia 2011 Environmental Scan of the agrifood industry.


Strategy Issues/Case studies/Lessons Roles for government 4. Support dairy industry service providers

The dairy industry relies on a complex network of service providers to supply, advise, educate and support on-farm activities. The quality and sustainability of these services and related infrastructure depends on maintaining enough dairy farms.

Little is known about the operating needs of the network of industries and services that play this critical role in supporting a dynamic and growing dairy industry. Mapping of this network (at industry and regional levels) to better understand their attitudes and expectations of working with agriculture could significantly support and sustain regional farming.

5. Build local community capacity, resilience and sustainability

Enhancing health and safety in farming families Sustainable farm families (National Centre for Farmer Health, DPIV) is an acclaimed program that promotes health and safety for farmers and their families (all commodities, not just dairy). This has demonstrated significant gaps/shortfalls in farmer health in comparison to the general Victorian population.

Continuity of the Sustainable farm families program, and other preventative health initiatives designed for rural target audiences is very important. Agricultural medicine should be embedded in all existing rural health services.

Supporting local community resilience Vibrant and engaging local communities are essential for attracting and retaining young farmers and their partners on dairy farms. Improved coordination and focus is required at all levels of government to support viable regional communities that manage the expansion of residential amenity alongside viable farming communities. This should not be primarily focused on areas that are deemed to be ‘disadvantaged’ but include all small rural communities. The Gardiner Foundation has invested in a pilot program Strengthening Small Dairy Communities which partners with Local Govt (South Gippsland Shire) to provide targeted infrastructure and skills to increase community capacity.

Where industry initiatives are supported by mainstream Government programs across the breadth of health, housing, education, transport, infrastructure, planning and community development it is likely that outcomes will be greatly enhanced.

Letters of support

1. Murray Goulburn Cooperative Ltd

2. WestVic Dairy

3. University of Melbourne Rural Innovation Research Group

WestVic Dairy Inc. PO Box 67

Terang VIC 3264 t: 03 5592 2477 f: 03 5592 1342

e: [email protected]

Advancing the dairy industry in Western Victoria

3 August, 2011 Dr Pauline Brightling Dairy Industry People Development Council Dairy Australia, Level 5, IBM Centre, 60 City Road, Southbank, Victoria, 3006 Dear Pauline Re: Response to the Victorian Government Parliamentary Inquiry into the capacity of the farming sector to attract and retain young farmers and respond to an ageing workforce. I am writing to offer support from our organisation with regard to the submission by the Dairy Industry People Development Council on behalf of Dairy Australia and the Australian Dairy Industry Council. As a dairy industry regional not for profit development agency focused on providing research, development and extension services to local dairy farmers we acknowledge the importance of attracting and retaining young farmers to our dairy industry, which delivers a third of the economic activity in the Great South Coast region. There are approximately 1500 dairy farmers in western Victoria and at the last census 5991 people were directly involved in dairy in this part of Victoria. Attraction and retention of staff is vital to the sustainability and growth of our industry with the region currently producing 2.1 billion litres of milk a year, and with a regional dairy industry strategic plan “Down the Track” goal of 3 billion litres by 2020. WestVic Dairy supports that understanding, fostering and managing workforce capacity has emerged as an issue of high priority for the dairy industry in Western Victoria and Australia. We look forward to the response from the Victorian Government Parliamentary Inquiry Best Wishes

Executive Officer WestVic Dairy

response to the victorian government...aug 05, 2011 · knowledge of the dairy industry and farms....

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