Dairy farmers have faced a 70 per cent profit loss across the 2015-16 season, an annual report reveals.
The most comprehensive survey of the state’s dairy farms showed a perfect storm of lower milk prices, low rainfall, high water and feed costs and reduced pasture growth contributed to the decline.
The Victorian Dairy Farm Monitor report found the region had second-largest average-profit fall (measured as return on assets) when compared to Gippsland and Northern Victoria.
South-west dairy extension officer Michele Joliffe said the annual report – funded by Agriculture Victoria and Dairy Australia – came as no surprise with 40 per cent of those surveyed not recording a positive return for last season.
“The farmers are truly aware of it,” she said.
“Most of them realised they had an increase of 81 per cent in fodder purchases having been through a disappointing spring.”
The data showed an average whole-farm earnings before interest and tax fell to $70,804 at the close of the financial year – a seventy per cent decrease compared with the previous year and the third lowest in a decade.
A key contributor to the low was found to be fall of the average milk price that declined 11 per cent to $5.40 per kilogram of milk solids (kg MS). Three of four farmers expect their business returns to keep deteriorating as a result.
Ms Joliffe said despite losses, farmers were hopeful for a positive turn-around.
“All indicators we’re getting at the moment are showing it’s going to be a good spring,” she said.
“They’re not having to purchase as much feed and feed will be at a cheaper price.”
The report also showed the decisions to buy fodder early in the season, to cull under-performing cows at higher livestock prices, to use long-term fodder reserves, and buy extra fodder to make up for lower pasture all helped to minimise losses.
“Our farmers are trying to maintain cattle at a good level so when things turn around they’re able to capitalise on that,” she said.
"People are looking forward to a good spring.”
