Profits rise for Victorian farmers but costs are close behind

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Profit results from the 2022-23 Victorian Dairy Farm Monitor Project.

With average milk price increases of about 30 per cent, Victorian dairy farmers are enjoying better returns, but input costs were also on the increase in the past financial year.

The annual Dairy Farm Monitor Project has reported its survey farms enjoyed the second highest profitability in 17 years.

Average milk prices increased to $9.77/kg of milk solids, but variable costs, mainly for grain and fodder, impacted farm margins.

Severe flooding and wet seasonal conditions in the spring, particularly in northern Victoria, influenced supply and demand of purchased feed.

Higher labour use at higher rates was the greatest contributor to the highest overhead costs in 15 years.

A partnership between Dairy Australia and Agriculture Victoria, the Dairy Farm Monitor Project collects and analyses financial and production data from dryland and irrigated dairy farms in south-western Victoria, Gippsland and northern Victoria.

It tracks 80 dairy farm businesses, and participants represent a distribution of farm size, feeding systems and herd sizes.

The project noted that all regions had seasonal challenges, most markedly in northern Victoria with severe flooding in October 2022 hampering fodder making, which in turn significantly increased fodder costs.

At a statewide level, total nutrient application on the milking area decreased slightly in 2022-23, however the reduction was seen in nitrogen and potassium products.

The cost of fertiliser application was still limiting fertiliser use, but floods and wet conditions had a greater impact on the ability to apply fertiliser in comparison to historical use levels.

Ninety-six per cent of all participants recorded a profit.

On a statewide level, the average pasture harvested was the lowest observed on the milking area since 2011-12.

Many participants were challenged with sourcing high-quality fodder and grain at elevated prices, dampening the profits received by businesses.

Interest and lease costs increased due to higher interest rates on increased borrowings, funding land purchases and major capital improvements.

Dairy Australia’s research and innovation general manager Greg Jarman said the Dairy Farm Monitor Project was 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.

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.

South-west Victoria

South-west Victorian participants received the highest average milk price in 17 years, leading to the second-highest gross farm income received.

Challenging seasonal conditions were managed well, resulting in higher average home-grown feed production.

Despite the higher input prices and inflationary pressures, profits were the second highest in 17 years.


Average EBIT was the second highest in 17 years in Gippsland, due to a substantial increase in average milk price.

Climatic conditions were variable across the region, resulting in a large increase in costs, particularly purchased concentrates, silage and fertiliser.

The Macalister Irrigation District enjoyed good growing conditions and irrigation water availability resulting in increased profits in the district.

Total variable costs and total cash overhead costs in Gippsland were the highest in 17 years.

Northern Victoria

Higher income, supported by the record milk price, more than offset the increase in costs and northern Victoria recorded its highest profits (EBIT per kilogram of milk solids) in 17 years.

Total costs increased in 2022-23 and were the third highest in Dairy Farm Monitor history.

The very wet spring 2022 conditions and flood impacts hampered fodder conservation and significantly increased feed costs.

The average number of cows milked increased slightly, while there was a six per cent decrease in milk production per cow.

Greater quantities of purchased concentrates were fed with lower quantities of home-grown feed.

The 2022-23 Dairy Farm Monitor report is available on the Agriculture Victoria website.