Despite facing a wet first half of the financial year, which supported good growing conditions and ample irrigation water in the Macalister Irrigation District, fodder reserves increased, the report found.
A minor reduction in purchased feed costs, coupled with the boost in fodder reserves, helped offset some of the increased expenditures on repairs and maintenance. Notably, these maintenance costs included repairs related to the February storm event.
In 2023-24, nearly all Gippsland dairy farms (23 out of 25) recorded a positive earnings before interest and tax.
Despite a seven per cent reduction in average profits to $2.53 per kilogram of milk solids, the average earnings before interest and tax per farm was the fifth highest in the 18-year history of the Dairy Farm Monitor Project, after adjusting for inflation.
Climatic conditions largely influenced the range of individual performance year-on-year.
A focus on the pasture base enabled farmers to increase home-grown feed, thereby reducing variable feed costs and have a direct impact on the bottom line.
Variable cost reduced by two per cent to $4.92/kg MS, with large fluctuations in feed inventory change. Overhead costs were stable at $2.96/kg MS.
The largest cost component increase was employed labour.
Increased interest and lease costs, driven by larger borrowings and rising interest rates, put additional pressure on farm finances.
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.
Dry conditions in south-west Victoria depleted fodder reserves and added to their feed costs.
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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