We asked dairy farmers to review 2023 and they said it was a 'memorable' year

Sarah Chant, Warrion, milks 270-head of Jersey cows, after increasing her herd this year to follow the milk season prices.

She said they had needed to buy in more feed, but managed to avoid high fertiliser costs with having good volcanic soil.

"Last year, we had lots of rain through the spring, which sounds great, but we didn't make very good quality silage and the cows were cold or spring," she said.

"So we've actually had better production this year with less rain, it was a dry spring, but last year was just too hard on the cows with the weather."

Ms Chant said she took over her parents' farm after her father died when she was in her early 20's, and has been managing the farm for about eight years.

She said her plans for 2024 included installing robotic calf feeders to reduce physical labour and lifting.

"It's hard to get reliable employees, so we're trying to put infrastructure in to take that out," she said.

"We've put cup removers in this year which has made a massive difference, and we had a pivot put in last year as well.

"Everything's going up that little bit but milk prices are too so I feel it's balancing it out."

Meanwhile, Dairy Australia board member and dairy farmer Karen Moroney, Mitta Valley, said her main challenges on-farm included high input costs, particularly around energy fuel, and interest rate rises.

"Flooding impacts on our farm created challenges around pasture and herd management, cow health and the need to repair fences and re-sow pasture damaged by the flood waters," she said.

"[It] affected our ability to obtain good silage quality and quantity in spring '22 due to the effects of the flooding and on-going 'wet' we experienced.

"This year our energy costs have gone through the roof, with fuel costs not far behind."

She said she had noticed farm numbers steadily decreasing since 2015, but the average farm size continued to grow.

Ms Moroney said milk production dropped another five per cent in the 2022-23 production year, compared to the year prior, despite "historical farmgate milk prices".

She said Victoria had the biggest decline with common factors including high input costs, labour availability, floods and industry exits.

But Ms Moroney said several dairy farmers were able to achieve solid profits across the past two production seasons.

She said on her farm they had continued to expand their enterprise and transition to the next generation, and would continue exploring reliable and cost-efficient energy options headed into 2024.

"Living in a high rainfall area of north-east Victoria and having experienced favourable conditions particularly in the last three years, it has given us the ability to cut and store silage and hay two years in advance of immediate needs," she said.

"Positivity is the key, instead of seeing the challenges in a negative light look for the opportunities in them."

Dairy Australia's economics, insights and data department head and dairy analyst John Droppert, west Gippsland, said milk production had been constrained enough throughout May and June to maintain the high farmgate prices in 2023-24.

But he said continuing input cost pressures among feed, fertiliser and many overheads remained challenging.

He said main challenges included workforce attraction, labour shortages, cost pressures and beef prices declining.

"Demand for export dairy heifers also contracted sharply, causing significant disruption to farms geared towards supplying this market," he said.

Mr Droppert said the 2023 weather was "much more favourable" for dairy farmers, with timely rain to end the year and more on-farm feed production.

"For milk processors, high farmgate prices and rising costs put pressure on margins as global markets continued to soften," he said.

"Those with strong exposure to the Australian domestic market have seen some level of mitigation as prices increased in line with broader inflationary pressures.

"Increasing import penetration risks eroding these domestic market margins however."

He said farmers were well-placed headed into 2024, but faced risks with new season milk prices and input cost volatility.

"Milk processors will enter the new year keen to optimise their infrastructure and product mix in the current market, and looking to improve margins where possible," Mr Droppert said.