AVERAGE EARNINGS by dairy farmers in Victoria plummeted last year, according to a new report that surveys a sample of 75 farms across the state.
Northern Victoria was hit particularly hard, with the worst economic performances in the 13 years the Dairy Farm Monitor Project has been running.
The top performing farms in the project have shown timely decision-making combined with a business analysis approach were key strategies to managing the dry conditions throughout the 2018–19 financial year.
While profits were mixed across the regions, the project reported average earnings before interest and tax were $85 000 in 2018–19, half of the level set the year before.
When interest and lease costs are considered, average net farm income across the state fell to $24,000, the fourth lowest in the project’s history.
Agriculture Victoria’s Farm Business Economist Claire Waterman said there was a significant variation in profitability across the three dairy regions of Victoria.
“The dry conditions have led to a 20 per cent increase in variable costs as a result of higher irrigation water, concentrates and fodder prices,” Ms Waterman said. “Farmers also spent more on making homegrown feed, including fertiliser, hay and silage-making costs.”
Across south west Victoria’s survey results, net farm income improved on the previous year to $27 000 yet remained below the long-term average.
In the north of the state, net farm income fell to –$85,000, the lowest level in the 13-year history of the project.
Across Gippsland, net farm income reduced to –$15 000 with varied seasonal conditions and profitability results.
Despite the increased costs and earlier culling in some regions, herd size among the farmers surveyed remained constant at an average of 357 cows.
Milk price improved 6 per cent to $6.13/kg MS compared to the previous year, partially offsetting the increased costs.
“Following a challenging 2018–19 season, more than 85 per cent of farmers predicted their farm profit will improve for 2019–20 underpinned by strong expectations for improved milk price and stable or improving milk production,” Ms Waterman said.
The report was prepared by Agriculture Victoria, in collaboration with Dairy Australia.
Workshops organised by Agriculture Victoria and held in Echuca and Shepparton last week broke down the statistics from the report and began a discussion about what strategies could be learned from the last year.
Although warned that the future could not be predicted, consultants pointed out there were a number of learnings from the experience of the surveyed farms, including doing farm basics well, early planning, locking in important feed and water decisions and being flexible according to the changing patterns of the season.