A Victorian Overview

The DFMP provides farm level data from 75 farms relating to profit and production in Victoria and was produced for the 13th time this year. The 2018-19 financial year was a challenging period for the Victorian dairy industry. Profit was constrained by below average rainfall and high input costs, particularly in irrigation water, grain and fodder. 

Figure 1. Return on total assets across the three Victorian dairy regions shows Northern Victorian had the lowest returns in the 13-year history of the project. Gippsland had lower profits than the previous while south west Victoria had an improvement.

The continued dry seasonal conditions impacted pasture production and contributed to a 23% ($3,26/kg MS) average increase in variable costs. Farmers increased expenditure on homegrown feed, including fertiliser, hay and silage costs. The amount spent on purchased feed costs increased on average, as farms were impacted by historically high prices for irrigation water and concentrates. Concentrate price increased 35% to $514/t DM, the high prices contributed to a reduction in average quantities fed, down from 1.9 t DM/cow to 1.7 t DM/cow. While milk price improved 6% up to $6.13/kg MS on average, compared to $5.81/kg MS in 2017-18, this only partially compensated the increase in other costs.

On average farm EBIT decreased to $83,000 in 2018-19, down from $148,000 in 2017-18. Net farm income also reduced to -$17,000, down from $52,000 the previous year and was the third lowest on record. Decreased average performance influenced RoTA at 1.6% while RoE was down to -2.4% on average. 

Farmer confidence

Following a challenging 2018-19 season, expectations about business profit for the 2019-20 were optimistic. Fifty-nine farmers (86% of responses) predicted their business profit will improve. This was underpinned by strong sentiment (93% of responses) for improved milk price in the coming year and stable or improving milk production. Input costs and seasonal conditions were the most common concerns for farmers in the next 12 months. Milk price was the major concern for surveyed farms over the medium term. 

Further Information

The full report is available at Agriculture Victoria.