Australian dairy productivity peaked in 2010/11, but has since declined, with an average annual growth rate of -0.04% from 2011 to 2022/23 according to ABARES analysis. Prior to the peak productivity averages 2%, partly due to increased mechanisation and technology adoption and the removal of farm supports, which led to consolidation. While the productivity  benefits of deregulation improved the  average performance and competitiveness of Australian dairy farms faster than it would have occurred it was a “one-off”..

Farm size is a key factor influencing productivity, with larger farms generally experiencing higher productivity. Since 1990, Australian dairy farms have significantly increased in size, and larger farms have been less affected by the productivity slowdown.

ABARES says the next decade is likely to see continued exits from the dairy sector—particularly low productivity businesses. Future productivity gains are expected to come from innovations, greater scale, and the ongoing consolidation of the industry.