South-west farmers record a top year
Despite a wet spring hampering hay making, the south-west of Victoria enjoyed higher average returns and the highest milk price in 17 years, according to the annual Dairy Farm Monitor Project.
However, total costs were also the highest in 17 years, with feed costs growing by about 30 per cent.
Managing tricky wet conditions left many farms feeling tired by the end of the year and their sentiments dampened the exuberance of the strong financial performance.
Incomes on south-west Victorian participant farms were the highest in 15 years ($/kg MS), accounting for inflation.
The record-high milk price in 2022-23 (highest in 17-year history of DFM) underpinned the high incomes.
A bearish cattle market reduced livestock trading profit relative to 2021-22. Some farms benefited from good prices for export heifer sales earlier in the financial year.
Almost all variable cost categories increased in 2022-23 as farmers managed wet conditions and inflationary pressures (a $0.66/kg MS increase from 2021-22).
Higher purchased feed costs were the greatest contributor to the higher variable costs.
The cost of concentrates increased as farmers paid a higher unit price but kept feeding levels the same.
Farmers relied less on purchased hay and silage, as there were improved seasonal conditions for pasture grazing, and silage was also cheaper per unit.
The amount of fertiliser applied remained relatively similar between years but was more expensive (per unit and application costs), therefore total expenditure increased. Irrigation costs decreased as irrigators used less or zero water.
The very wet spring 2022 conditions hampered fodder conservation.
Bogging of harvesting and baling equipment was a common occurrence for many in the wet conditions.
Most farms conserved less feed than the previous year (14 of the same 24 participating farms). By the end of the financial year, farmers had lower feed inventories on average.
Return on total assets and equity were strong in 2022-23.
An improved profit performance and a modest increase in asset values saw average returns on assets rise to a level not seen since 2013-14.
Higher asset values over the year were common among participants with all but three increasing their total assets under management.
Aided by strong cash flows, many (20 of the 25 farms) made capital purchases for land, buildings, irrigation or milking equipment.
The Dairy Farm Monitor Project is a collaboration between Agriculture Victoria and Dairy Australia.
Now in its 17th year, the project provides industry and government with farm-level data to inform targeted strategy and decision making.