It’s good news for Dairy farmers on the move as cash incomes have shot up dramatically since 2018-19 when the average was just $120,450
Looking across the national scene, the financial performance of dairy farms in 2020–21 reflects the mixture of several market conditions.
There is the ongoing net effect of lower farmgate milk prices in southern regions, but this outplayed on the other hand by the positive impact of increased milk production and the reduced costs of feeding dairy cows in this plentiful season.
For Australia as a whole, taking everything into account, the average farm cash income for dairy farms is projected to increase slightly from an average of $187,100 per farm in 2019–20 to $190,000 in 2020–21.
As for farm business profit overall, that includes changes in on-farm inventories, capital depreciation and the value of unpaid family labour is projected to increase slightly more due mainly to increase in dairy herd numbers.
Nationally, farm business profit is projected to increase from an average of $60,800 per farm in 2019–20 to $66,000 in 2020–21.
There were several factors in play that affected the financial performance of Australian dairy farms such as the constraints from dry seasonal conditions in 2018–19 and 2019–20.
Dairy cow numbers were reduced, milk production declined and expenditure on feed-grains, hay and irrigation water increased.
On the side that matters, farmgate milk prices increased in 2018-19, and then increased further in 2019–20 as processors competed for milk supply.
Higher milk prices in 2018–19 together with improved seasonal conditions after February 2020 resulted in average farm cash income increasing in all states.
Nationally, the average farm cash income for dairy farms increased from $120,450 per farm in 2018–19 to $187,100 in 2019–20, an increase of 55%.
However, during season 2020–21, farmgate milk prices are forecast to decline in southern Australian dairy regions where milk is predominantly utilised for manufacturing.
Favourable seasonal conditions have resulted in increased on-farm feed production and low hay and grain prices.
Dairy farmers have been busy, with milk production increased in all states except Queensland and Western Australia and dairy farms have been able to reduce expenditure on purchases of grain, hay and irrigation water.
However, increases in milk production and lower expenditure on purchased feeds and are not projected to be sufficient to fully offset the effect of lower milk prices in southern regions.
In Queensland milk production is projected to fall in 2020–21, but this is also partly the result of the exit of farms from dairying.
In addition, continued relatively dry seasonal conditions in southern Queensland have resulted in a smaller reduction in purchased feed costs 2020–21 than in southern Australian regions.
In Western Australia, dry seasonal conditions have also resulted in reduced milk production and increased purchases of feed-grains and fodder.
Farm cash income is projected to decline slightly in Victoria, South Australia and Tasmania while still remaining relatively high in historical terms.
In New South Wales, Queensland and Western Australia farmgate milk prices have increased slightly and average farm cash incomes are projected to increase, primarily as a result of reduced expenditure on purchased fodder.
In all states, turnoff of dairy and beef cattle is projected to be low in 2020–21 as herds are rebuilt resulting in dairy and beef cattle sales making a much smaller contribution to farm cash receipts than in either 2018-19 or 2019-20 seasons.