Agriculture Victoria and Dairy Australia’s Dairy Farm Monitor (DFM) Project shows the 80 farm businesses across Victoria recorded the 4th highest average profits in the 16 years of the project. The high average profits were due to a 9% increase in average milk price to $7.37kgMS. Despite the higher average milk price and profits, higher input costs and supply constraints lowered overall farm business margins for the monitored farms in 2021/22.
Dairy farms in Northern Victoria’s irrigation areas had favourable seasonal conditions and lower irrigation costs which offset higher fertiliser, fuel and labour costs. Average EBIT rose to $1.98kgMS, up from $1.76kgMS the year before and gross farm income was the second highest over the 16 DFM years. In Gippsland, dairy farmers in the Macalister Irrigation District also benefitted from the favourable conditions and lower irrigation costs with profits lifting to $2.25kgMS, ahead of the average profit of $1.43kgMS in the region. In the south and west of Gippsland, wet conditions hampered milk and pasture production, adding further to elevated costs. Farm profits averaged $273,000 per farm, the sixth highest in the projects period, although down from $300,000 per farm recorded in 2020/21.
Farms in Southwest Victoria experienced challenging conditions requiring increased used of concentrates, silage, and hay necessary. This along with higher expenditure on labour, repairs and maintenance resulted in the highest costs in 16 years. Despite the 11% lift in milk prices from the season prior, average profits fell to $1.71kgMS, down from $2.04kgMS the year before.
Looking ahead to 2022/23, 87% of farmers in Northern Victoria were the most optimistic about better returns for the current season, compared to 76% of farmers in Southwest Victoria and 60% of farmers in Gippsland.