Dairy report ‘not a representative sample’ of farmers

A new report found the average annual profit among surveyed dairy farmers was $629,000 last financial year, a figure that has raised concerns. Here’s why.

Dairy leaders are warning processors not to use a new report into farm performance as a reason to keep farmgate prices artificially low.

The 2023–24 Dairy Farm Monitor released this week found the average annual profit among surveyed farmers was $629,000 last financial year.

The long-running monitor of 80 farms across Victoria found the average farmgate profit in 2023-24 was $2.64 per kilograms of milk solids.

Monitor analysts said the 2023-24 average farmgate price fell slightly to $9.64 per kilogram milk solids, a one per cent decrease on the 2022-23 high farmgate figures.

Australian Dairy Farmers president Ben Bennett warned processors not to use the 2023-24 survey as an excuse to keep the farmgate artificially low.

“Statistics is one of my areas of interest — I studied it an university — and when it comes to statistics, sampling is crucial to swaying the outcome,” the southwest Victorian farmer said.

“The gold standard is random selection. The Dairy Farm Monitor Project, helpful as it may be, is not random, it’s self-selecting.

The 2023–24 Dairy Farm Monitor found the average annual profit among surveyed farmers was $629,000 last financial year. Picture: Zoe Phillips

“Of course, the farmers that nominate for the Monitor Project are usually in the top quartile — it’s human nature, if you’re doing well, you’re happy to promote it, if you’re not performing well, you don’t want to advertise that.

“The second point is the significant reduction at the farmgate and rising input costs, from financial year to financial year. The profit margin has been squeezed significantly, so yes 23-24 was a good season but that 600 grand figure isn’t the whole story.”

The Farm Monitor Project is a joint initiative between Dairy Australia and Agriculture Victoria. Organisers say the project is intended as an industry snapshot rather than a forensic financial average for Victorian dairy operations.

Dairy Australia executive manager Charles McElhone said: “We accept that it is a not a representative sample of dairy farmers.

“Since its inception, it’s been to assist us to give us an understanding to inform our investments, our programs, understanding the longitudinal changes on farm and impacts of different issues over time.

“ABARES have their own dairy farm performance survey, which was a representative sample, but we recognise there’s a lot of focus in industry on the Dairy Farm Monitor as being the most respected indicator on on-farm performance.”

United Dairyfarmers of Victoria president Bernie Free said the Dairy Australia acknowledgment was welcome.

“To Dairy Australia’s credit, they’re working through some changes to the Farm Monitor Project, particularly the statistical spread of farmers in the system,” he said.

“The concern is that processors and supermarkets use these numbers, from a prior financial year and from a small sample, to justify what are break-even prices paid at the farmgate.”