A NEW report has found Victorian dairy farmers enjoyed one of their most profitable 12 months in the past 17 years, with 96 per cent of Gippsland farmers reporting a positive return on assets despite costs reaching their highest level in 17 years.
Agriculture Victoria has released the 2022-2023 Dairy Farm Monitor, an annual survey tracking 80 dairy farm businesses statewide.
Agriculture Victoria sector development and services executive director, Dougal Purcell, said the report showed that in 2022-2023, milk price increased by 33 per cent to $9.77 per kilogram milk solids – the highest on record in 17 years – helping to offset rising feed costs and overheads including labour.
A total of 1027 dairy businesses in Gippsland produced 1.82 billion litres of milk in 2022-23, accounting for 35 per cent of Victoria’s milk production and 22 per cent of Australia’s milk output.
In Gippsland, the average milk price rose by 35 per cent to $9.63/kg MS. A total of 24 of the 25 Gippsland participants had a positive return on assets. Compared to the previous 2021-22 financial year, average EBIT (earnings before interest and tax) went from $273,000 to $505,000; average net farm income went from $188,000 to $361,000; the average return on total assets went from 4.2 per cent to 6.9 per cent; and the average return on equity went from 6.2 per cent to 12.1 per cent.
Average herd size was up seven per cent to 344 cows; milk solids sold were up two per cent to 481 kg MS/cow, but home-grown feed was down four per cent, with 60 per cent of metabolisable energy consumed.
However, costs for Gippsland dairy farmers also increased: in herd and shed costs were up 11 per cent to $0.71/kg MS; in total feed costs rose by 25 per cent to $4.19/kg MS; and overhead costs were up nine per cent to $2.83/kg MS.
There was a four per cent decrease in homegrown feed (pasture plus conserved) due to wet conditions; and a 0.2 t DM/cow increase in average supplements feed (rose to 3.0 t DM/cow) at higher unit prices.
The highest total ($/kg MS) costs (variable and overhead) were the highest in 17 years. The largest contributors were elevated grain and fodder prices.
The main concerns of Gippsland dairy farm businesses were labour (18 per cent), input costs (18 per cent), climate and seasonal conditions (16 per cent) and pasture fodder (16 per cent). However, three quarters of Gippsland farmers expect business returns to stabilise.
Mr Purcell said it was pleasing to see Victorian dairy farmers come out on top after a year of higher business inputs, wet conditions and flooding.
“We thank the Dairy Farm Monitor project participants for their dedicated support for this initiative, providing such valuable information to industry and government,” he said.
Agriculture Victoria’s Dairy Farm Monitor project is a partnership with Dairy Australia, collecting and analysing financial and production data from dryland and irrigated dairy farms in Gippsland, and in south-western and northern Victoria.
Dairy Australia General Manager for Research & Innovation, Greg Jarman, said farmers were making multiple operational and tactical decisions on a daily, weekly and seasonal basis.
“Some of these decisions can have a lasting impact on the profitability and sustainability of their farm,” he said.
“The Dairy Farm Monitor Project is a valuable source of independent physical and financial data around a wide range of on-farm practices, equipping farmers with essential insights to inform their decision making. This information also ensures that on-farm consultants and industry stakeholders can use reliable, independent and useful information and resources to provide good advice to farmers.”
PROJECT participants represent a distribution of farm size, feeding systems and herd sizes. Farmers use the reports for business decision making, tracking performance of their business over time, making large scale changes and assisting with financial management.
Valued at $2.5 billion, Victorian dairy leads the nation’s exports. The gross value of milk produced in Victoria is worth $2.86 billion and the sector supports almost 13,000 jobs almost half of which are in regional Victoria.
There were about 2773 dairy farm businesses in Victoria that produced 5.14 billion litres or 63 per cent of Australia’s national milk production in 2022-23.