Dairy farms under the microscope

Results from the just-completed 2013-14 NSW Dairy Farm Monitor Project also point to a State divided with southern NSW dairy farmers enjoying increased profits from the previous year while those in the north faced increased input costs - most notably feed - to deal with the dry season.

This year marks the third year of the Dairy Farm Monitor Project, which is run by the NSW Department of Primary Industries (DPI).

NSW DPI dairy technical specialist Kerry Kempton, Tocal College, Paterson, said the annual reports provided a good indication of what was happening on farms in terms of profitability and productivity on a year-to-year basis.

"It gives us that farm-level data for anybody in the industry to peruse, and also gives the individual farms involved in the project an idea of their performance in the past three years," Ms Kempton said.

She said the reports were used for strategic planning purposes by farmer organisations and government, and gave an idea of how a sample of dairy farms were performing in a business sense.

A total of 30 farms were involved in the NSW Dairy Farm Monitor Project this year, up by two on last year, with those farms spread throughout the major dairy regions of the State.

Ms Kempton said the farmers surveyed in the report were divided into northern and southern regions, with the Hunter Valley the dividing line.

"Generally, dairy farmers were more productive in 2013-14 than they were in the previous year, on the back of higher milk prices," she said.

"Last year, southern dairy farmers had a lower milk price than those in the north, while this year the price was similar and higher overall."

The price is at about $7.12 per kilogram of milk solids, which translates to about 52 cents a litre.

Southern farmers had a 10 per cent to 11pc increase in milk prices (compared to the previous year) while northern dairy farmers had a 5pc milk price increase.

"That has been offset, however, by really dry seasonal conditions, particularly in the northern half of the State with 30pc lower rainfall than usual," Ms Kempton said.

"They have really felt that in terms of having to buy in more feed, and feed has also been more expensive."

She said profits took a hit for northern dairy farmers due to the higher costs of production.

Feed costs were higher per tonne in the north than in the south, with $440 a tonne for dry matter (concentrate) in the north - the highest it has been since the 2006-07 drought - while in the south it was about $370/t.

"Grain costs were also higher in the north than in the south; grain in the north is a good $60 a tonne higher than in the south, so that chews up the profits," she said.

With feed costs up to 40pc to 50pc of production costs Ms Kempton said that was having an effect on optimism, however, generally, the results showed a lot more optimism and confidence than last year.

"We ask farmers a bunch of questions about whether they think their profits are going to increase or decrease, and we have found confidence has improved in both regions, and particularly in the south."

She said 75 per cent expected their farm business to improve in 2014-2015.

"If it wasn't for the dry conditions it would look like it would be pretty optimistic across the board."

She said the project also found dairy farmer debt had risen.

"General consensus across the board is our farmers have more debt per cow," she said.

"Given it was also such a tough year the year before, and people came out of 2012-13 with low levels of profitability, that has contributed to farmers taking on more debt, as well as funding the higher cost of production.

"I'd say the debt per cow has increased due to the higher cost of production, and also previous years where farmers had to borrow more in order to keep the business going."

On a positive note, demand for milk is good, with a shortage of milk generally, and export markets growing.

"Overall demand for milk has meant milk prices have increased, and look likely to hold at these levels for the next couple of years," she said.

A series of DPI dairy business outlook workshops for dairy farmers are being held across the State to explain the results of the Dairy Farm Monitor project, including Lismore on November 28 and Finley on December 12.

For more information on the workshops, and to RSVP, contact Peter Havrlant, NSW DPI, (02) 6938 1806.

GLOUCESTER dairy farmer Chris Stanton might be in the midst of a tough, dry season but has still expressed positivity having received increased returns for his milk this year.

A fourth-generation dairy farmer - and a third generation farmer - Mr Stanton milks about 140 Holsteins on his 385 hectare property, "Hiathwa", at Gloucester.

He said his last good season was about two years ago.

"It is probably the worst season we've had, I've seen it drier, but it has been dry for a long time," he said.

Mr Stanton said, however, they had been receiving higher prices for their milk this year, receiving 52 cents a litre.

Ideally, however, he said it would be good to be getting up towards the 55c/L to 56c/L mark.

Mr Stanton said it was important to attract young people into the industry, and good prices as well as continuing developments with dairy technology would play a key role.

"I think technology is great, but you have to work with it," he said, pointing out that dairy farmers could not simply rely on technology to do all the work.

Mr Stanton, who farms in partnership with his brother Rodney, said more government incentives for dairy farmers would also be a good way of attracting people into the industry - and keeping people in the industry.