According to the 2020/21 Dairy Farm Monitor Victorian dairy farmers had the most profitable financial year in more than a decade.
The report analysed 80 farms, finding average earnings before interest and taxes (EBIT) on farms rose to $422,000 in 2020/21 from $346,000 in the prior year. In northern Victoria better seasonal conditions and reduced irrigation costs helped farmers to their best financial return in 15 years, while for farmers in the south-west profits dipped due to big land value increases. In Gippsland, farms had lower profits as pasture growth was impacted by tough seasonal conditions.
Widespread rain, which has filled water catchments across the region was an advantage for the industry in northern Victoria, meaning the allocation market has eased off. But while water prices are lower, the costs of fertiliser and chemicals has increased steadily over the years which is impacting margins. The cost of seed is up 3% on the year before in line with the CPI, while the price of fertiliser is up 35% in the same period.