Farm profits in 2023-24 were reduced from the previous year as farm incomes were lower, feed inventories were depleted and cash costs were higher, according to the latest project report.
Very dry seasonal conditions led to the lowest pasture production in many years and dairy herds were fed greater quantities (at higher costs) of concentrates, silage and hay to maintain per cow milk production.
The project found nearly all participants headed into 2024-25 with expectations for lower business returns emanating from a lower milk price, depleted feed reserves, high interest costs and an outlook for a dry 2024 spring.
In 2023-24, variable costs increased from the previous year mostly due to the costs of managing dry conditions.
Feed inventory reserves were depleted on most farms which added to their costs — 22 of the 25 farms reduced their feed on hand (tonnes of dry matter).
The very low rainfall limited pasture availability and feed conservation.
Farmers relied on their carry-over reserves to supplement the lower pasture availability, and many headed into the next season with minimal fodder reserves.
In 2023-24, more supplements were fed — both home-grown and purchased — to maintain milk production.
The price of purchased feeds ($/tonne DM) were mixed with concentrates cheaper in 2023-24 compared to the previous year, while hay was more expensive. Overall, purchased feed costs increased from the previous year.
Victoria-wide, in 2023-24, average farm profits fell nine per cent from the previous year’s high and remained strong compared to the long-term average.
There was variability in profit across the Victorian participants with farm returns increasing on average in northern Victoria.
In contrast, the two southern regions (south-west Victoria and Gippsland) had a decrease in profits from the previous year.
Across the state, prices received for milk supply and cattle decreased, leading to lower average farm incomes.
Total costs (variable and overhead costs) were similar to the previous year on average.
Improvements in feed inventory lowered feed costs in northern Victoria and Gippsland, along with lower expenditure on fertiliser.
In all regions, there were increased costs on purchased fodder and all cash overheads which kept total costs high relative to the longer-term.
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