"> Returns improve for Victorian dairy farmers - eDairyNews-EN
Returns for Victorian dairy farmers have improved after one of the worst years in the past decade.
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From the Victorian Dairy Farm Monitor Report.

The Victorian Dairy Farm Monitor, which records the performance of dairy farms in the three main dairy regions, has reflected the cyclical nature of the industry as it moves towards recovery in 2019-20.

Most of the farms surveyed recorded a profit for the last financial year, but some were still impacted by the tough years prior to 2019-20.

Dairies showed resilience and innovation to lower costs and with a 17 per cent increase in milk price, average earnings before interest and tax was $1.68/kg of milk solids or $346,000 per farm.

Dairies in the south-west and Gippsland regions lifted milk production by sourcing relatively cheaper feed or capitalising on greater pasture availability.

Northern Victorian farms budgeted for high water prices and many chose to purchase fodder in favour of irrigating, which lowered costs and contributed to the better performance.

Most participant farms across all regions are expecting profits and milk prices to either remain stable or increase in 2020-21.

In 2019-20, average earnings before interest and taxes (EBIT) rose to $346,000 ($1.68/kg MS), a significant increase from $85,000 in 2018-19.

All but three farms recorded a positive earnings before income tax performance in 2019-20, lifting the average to the third highest level recorded for the project.

The average return on total assets (ROTA) also increased, up to 5.4 per cent from 0.7 per cent in 2018-19.

Farms were able to grow their business on average as reflected by return on equity (ROE) increasing from minus 3.5 per cent in 2018-19 to 8.3 per cent in 2019-20.

Seasonal conditions across the three dairying regions were characterised by challenges throughout winter and spring 2019, followed by a mild summer and good autumn 2020 rains.

Farms in each of the regions responded differently depending on the relative positions heading into 2019-20.

While nearly all Dairy Farm Monitor Project farms experienced positive profits in 2019-20, with consistent performance reported across the regions, many farms have not fully recovered from the recent years of challenging conditions and lower performance.

In 2019-20, there was greater pasture availability in some regions (south-west and Gippsland) and lower feed prices in the second half of the season compared to the previous year.

This enabled farmers to source relatively cheaper feed and increase their feed and water reserves.

Average milk production increased from greater levels of feeding (6.4 tonne DM/cow in 2019-20, compared to 6.2 tonne DM/cow in 2018-19).

A dairy checkoff group says holiday demand for butter is strong this year. Suzanne Fanning with Dairy Farmers of Wisconsin tells Brownfield sales have not fallen since the start of the pandemic.

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