Dairy Australia (DA) has commissioned a research project aimed at improving the understanding of dairy farm productivity and its relationship to profitability. Agricultural economists from Marsden Jacobs Associates and other organisations will explore the change in dairy industry productivity and its key determinants over the past two decades and their implications for industry research, development, and extension.

The project utilises modelling techniques which has not been used to measure productivity in the dairy industry before and found that dairy farmers on average are 91% – 93% technically efficient across Australia, meaning farmers are already using existing technologies. The report reveals that productivity is being shaped mostly by farmers changing their mix of inputs and outputs in response to changing circumstances.

DA farm business data lead Helen Quinn said that the economic research project is expected to progress the Australian dairy plan profitability discussion which highlighted that dairy farm productivity has been flat over the past decade. Quinn said the work would provide insights including a better understanding of productivity at a regional and state level, the impact of climate and how dairy competes with other ag sectors for land, water and other farm inputs. Quinn said the correlation between productivity and profitability was of special interest.