How did 2020-21 stack up for dairy farmers in Victoria?

panoramic view of dairy farm with cows in a paddock and 3 farmers walking down a track

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The 2020-21 Dairy Farm Monitor report is now available online. This information provides an important snapshot of how dairy farm businesses have performed over the past financial year and the longer-term. 

So how did the year stack up for dairy farmers in Victoria?

Compared with the previous year, average earnings before interest and tax (EBIT) improved by $0.18/kg milk solids (MS) in 2020-21 to $1.86/kg MS. While the average Gippsland EBIT was lower, improved performance in the North and South West lifted the state-wide average performance in 2020-21. Positive increase in EBIT was seen on 75 of the 80 surveyed farms.

Average returns in 2020-21 were the highest since 2013-14, and were welcomed across the sector after the challenging seasonal conditions and financial pressures experienced over the past decade. Positive livestock trading conditions, increased fodder reserves and lower costs helped offset a 5% decrease in milk price. Many farmers made debt repayments, and upgrades to assets (such as tracks, laneways and equipment) which had been on hold for several years. 

Seasonal conditions in 2020-21 were characteristic of average rainfall and temperatures. Participating farms received more than their long-term average rainfall, however the timing of the rainfall and location of farms resulted in differing outcomes for participants. See the approximate locations of the participating Dairy Farm Monitor Project (DFMP) farms in 2020-21 in Figure 1. Carryover effects from a favourable 2020 winter helped to support increased quantities of pasture harvested in spring 2020, except in those areas that were too wet. 

As a whole, Victoria produced 5.65 billion litres of milk in 2020- 21, which accounts for 64% of Australia’s total milk production. This was an increase of 1.4% compared to the previous year. Victorian dairies contributed $2.06 billion to Victoria’s food and fibre exports, with the largest consumers being China ($678 million) and Japan ($297 million). China remains the major destination for Victoria’s dairy exports, as much of Victoria’s dairy products are sold on the global market, and as a result returns to Victorian dairy farmers are strongly connected to global commodity prices. 

Graphic of map of Victoria with coloured icons representing the approximate locations of dairy farm monitor participant farmsFigure 1. Distribution of participant farms in 2020-21 across Victoria. Source: 2020-21 Dairy Farm Monitor Report. 

Northern Victoria

Northern Victoria experienced a ‘brilliant autumn’ preceding the 2020-21 season which had a positive impact on participating farms’ performance. Annual rainfall was 91% of long-term average with wet conditions in spring 2020, and good rainfall in January and March 2021. Temperatures remained mild, particularly over the summer months. 

Average EBIT was $1.76/kg MS in 2020-21; a 44% increase from the previous year. Lower milk price was offset by increases in income from livestock trading and lower variable costs, while improved settings for homegrown feed production and lower grain and fodder prices resulted in an 18% reduction in feed costs. Farmers used their extra cash flow on repairs and maintenance and employed labour. Returns on total assets (ROTA) and equity increased to 6.0% and 7.5%, respectively. Many participant farmers have modified their risk strategy and focused on trying to set up greater resilience in their business.

Reflecting the trend of higher priced water and lower rainfall, the pasture feedbase in Northern Victoria has changed in recent years from mainly perennial to annual pastures. Directly grazed pasture accounted for an average of 37%of total metabolisable energy (ME) with a range of 12% to 69%. The average fertiliser use on the milking area was 167 kg/ha (compared to 132 kg/ha in 2019-20).

South West 

The carryover effect from good seasonal conditions experienced in early winter 2020 helped increase pasture production into spring 2020. The favourable seasonal conditions for the remainder of 2020-21 resulted in continued good pasture and crop growth. Homegrown feed increased this season, and more than half of the participants in the South West grazed and conserved more pasture than the previous year.

Average EBIT was $2.04/kg MS in 2020-21; a 12% increase from the previous year. Milk price was lower, but farms benefited from higher livestock prices as well as reducing their variable costs. This was achieved through a combination of lower feed prices and reduced expenditure on homegrown feed costs. The growth in land values constrained the average ROTA result which decreased from 5.8% in 2019-20 to 5.5% in 2020-21. 

Half of the South West farms harvested greater quantities of homegrown feed, contributing to an average increase in total homegrown feed removed in 2020-21 compared to 2019-20. Lower rates of nitrogen fertiliser were applied in 2020-21 while some farmers applied lime for the first time in several years. 


Variable seasonal conditions across dryland Gippsland reduced the ability to effectively graze pastures, harvest hay and silage. There were considerable periods of wet and dry conditions at crucial times in the season. Good water availability in the Macalister Irrigation District (MID) enabled participants to maximise direct grazing of pasture this season.

Average EBIT for Gippsland participant farms was $1.78/kg MS in 2020-21; a 14% decline from $2.07/kg MS in 2019-20. Participants employed a range of management strategies to maximise income and reduce costs despite a reduced milk price, higher herd and shed costs and higher overhead costs. In 2020-21, farms achieved on average a ROTA of 5.4%, the fifth highest in the 15-year history of the project.

The climate variability experienced by Gippsland participant farms in 2020-21 impacted significantly on their ability to directly harvest pasture and optimally apply fertiliser. Gippsland participants sourced on average 66% of their ME requirements from homegrown feed. Total pasture harvested on the milking area by direct grazing and conservation decreased for the average (9.3 t DM/ha) and for the top performers (11.2 t DM/ha).

Further Information

The Dairy Farm Monitor Project is jointly-funded between Agriculture Victoria and Dairy Australia. 

Read the full 2020-21 Dairy Farm Monitor report at the Agriculture Victoria website.

Find out more about the Dairy Farm Monitor Project.

Read our Glossary of Terms article or take a look at our quick eLearn to learn more about some of the key financial terms used in farm business management. 

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