Farm margins severely cut.

The release of the report from the Queensland Dairy Accounting Scheme (QDAS) for the 2017-18 year showed a significant drop in profitability for Queensland dairy farms.

 The average Dairy Operating Profit (DOP) per cow reduced from $758 in 2016-17 to $400 this year.  Drought, lack of home-grown forage and high prices for all concentrates increased the feed related costs by 3 cents per litre.

 The current high grain prices haven’t shown through yet and estimates by Departmental staff indicate extra feed costs of around 3 cents per litre for the 2018-19 year.

The Top 25% of QDAS farms achieved a DOP of $928 per cow and the remaining 75% was $149.  The main difference and drivers for this extra margin are in 4 main areas - bigger herds, higher production per cow, lower feed costs and better labour use efficiency. Milk price and investment per cow do not have strong correlation to farm profitability.

The Queensland dairy industry has used $1,000 DOP as a fully sustainable figure which allows appropriate business reinvestment. A group of 32 long term QDAS farms were benchmarked over the last 5 years and the average DOP was $602.

These farms averaged 248 cows and 6,100 litre per cow. The performance of these farms would indicate a higher margin than the average Qld dairy and yet these same farms need between 6-7 cents per litre margin to achieve the $1,000 DOP. This more than anything else highlights the challenges for all dairy farmers operating in a dysfunctional market. 

QDAS has operated since 1976 and currently is supplied with figures from 50 of the 390 Qld dairies. As a comparison, the Victorian Dairy Farm Monitor Project (DFMP) had 75 farms contributing data out of a total of 3, 880.

All of this data then contributes to DairyBase for national benchmarking.

QDO Board member: Ross McInnes