Low profitability, dry seasonal conditions and high purchased feed prices have led to a number of Queensland dairy farmers ceasing production, according to a new report.
Compiled by the Queensland Department of Agriculture and Fisheries, the survey of 55 dairy farms found a number of factors continued to put downward pressure on milk production.
Milk production in the state fell by 47 million litres in 2019-20 to 311 million litres, representing 3.5 per cent of Australian production.
Queensland's annual milk production has fallen by more than 100 million litres since 2016-17.
The report, Balancing dairy production and profits in northern Australia, examined four business traits — liquidity, profitability, solvency and efficiency.
A third consecutive year of drought conditions took its toll on profitability, yet there were improvements from 2018-19.
Earnings before interest and tax (EBIT) per cow was $246, up from $113 per cow the year prior, while return on assets managed increased from 0.6 per cent to 1.3 per cent.
Drought conditions have seen feed prices rise consistently since June 2017, with sorghum prices up $75/tonne, barley up $70/tonne and wheat up $105/tonne over the three-year period.
In 2019-20, feed-related costs represented more than 60 per cent of milk income.
The top 25 per cent of producers are achieving higher EBIT per cow through higher production, selling more litres of milk for more, lower farm working expenses and better labour efficiency than the remaining seven per cent, according to the report.
On average the top quarter of farmers produced 1491 litres per cow more, selling 1.09 million litres of milk and having 104 more cows than the rest of the surveyed dairy farms.
This translated to a higher income of 2¢/litre, with farm working expenses 1.6¢/litre lower than the remaining 75 per cent.
To read the full report, visit: www.daf.qld.gov.au