NORTHERN Victorian dairy farmers have emerged as the shining light in the latest results of the Department of Primary Industries’ (DPI) Dairy Industry Farm Monitor Project.
DPI’s project, which compared the profitability and productivity of 74 farms across three Victorian dairying regions, discovered returns in Northern areas lifted seven fold year-on-year to $1.52 per kilogram of milk solids.
Daniel Gilmour, who helped to coordinate the results for DPI, said the results showed promise, but northern producers were still catching up after 12 long years of severe drought.
“I see this as a catch up year for most farmers,” he said.
“This is one good year on the back of two bad years, where many people made losses.
“It’s going to take another 12 months of good returns, before we start to a really strong dairy industry again.”
He said farmers were now looking at paying off debt, as well as attending to repairs and maintenance.
The whole farm average net profit in the north was $120,184, which followed a loss of -$34,868 in 2009-10.
“Northern dairy farmers have got excellent water security and they are looking at promising allocations for next couple of years,” he said.
Overcoming devastating floods, over 90 per cent of northern farmers now intend to increase milk production in the next 12 months, as well as over 50pc of farmers in the south-west and Gippsland.
Looking at Northern, Gippsland and South-west regions, there was an extensive jump in profitability and confidence.
The saving grace for Victorian dairy farmers this year had been a radically improved milk price.
“Milk price compared to last season has risen 25 per cent,” Mr Gilmour said.
“In 2009-10 the average was $4.46kg/MS and this time it was $5.64.
“That’s combined with better seasonal conditions, where dairy farmers have been able to conserve plenty of feed.”
The survey found earnings before interest and tax across the three regions had risen from $0.65kg/MS or $507 a hectare in 2009-10 to $1.73kg/MS or $1260/ha in 2010-11.
Gippsland was also a stand-out performer in the project.
Mr Gilmour said earnings before interest and tax among participating farms in Gippsland jumped from $0.80 per kilogram of milk solids or $713/ha to $1.96kg/MS or $1582/ha.
“Gippsland have had a cracking year in terms of profitability,” he said.
“They are now having troubles with wet soils though.”
He said about 85pc of farmers in this region were expecting returns to improve or stay the same.
Frank Tyndall, who runs the Macalister demonstration farm at Maffra, said the property had been reaping rewards from better milk prices, but had also experienced its fair share of challenges.
The 73ha farm, which milks 300 cows, collected plenty of summer rains and this had played havoc with irrigation.
“Most farmers around here would agree that it was tricky to grow grass as well as we normally do,” Mr Tyndall said.
“Although we did get that lovely summer - which helped areas of Gippsland where there isn’t irrigation - it caused problems in the Macalister region.”
Mr Tyndall said many farmers also had to deal with facial eczema in their herds.
Over in the south-west, earnings before interest and tax rose from $0.91kg/MS or $622/ha to $1.71kg/MS or $1022/ha.
The top 25pc of farms from the project ranked according to earnings before interest and tax per hectare recorded impressive profits of $2.31ka/MS and a return on asset of 9.5pc.
Overall the survey found the 2010-11 financial year was the best for dairy farmers since 2007-08.
The results were described by the Minister for Agriculture and Food Security Peter Walsh this week as a positive sign for the dairy industry.
“They are a testament to the resilience of the state’s dairy producers in the wake of a dramatic fall in milk prices, prolonged drought, low water allocations, locusts and devastating floods earlier this year,” he said.
Dairy Australia’s Ian Halliday agreed and said the result’s reflected a good improvement in profitability on Victorian farms following years of challenging seasons.
“These results just go to show how resilient, adaptable, strong and savvy our Victorian farmers are after year on year of dry conditions, low milk prices and rising costs where many made a loss,” he said.
“It really is testament to those who can turn their businesses around - many will now be able to consolidate, reduce debt and attend to essential farm maintenance.”
