South Australian Dairy Farm Monitor figures highlight 2024 changes

South Australia’s dairy farm monitor numbers are out, with drought an increasing concern for farmers. Here’s why.

Drought across much of South Australia has flattened dairy profitability, going from one of the sector’s best seasons to one of its worst in less than two years.

The release of the South Australia Dairy Farm Monitor Project numbers has highlighted how the million dollar returns of the 2022-23 season are fading fast, with farmers saying conditions this season are dire.

The 2023-24 report conducted by Dairy Australia showed the average SA farmgate price was $9.86 per kilogram of milk solids – close to one of the best farmgate figures on record.

However, feed costs led the way in eating into farmgate profits at $4.59 per kilo milk solids, while general overhead costs tallied at $3.18 per kilo, herd costs were $0.40 per kilo and shed costs were $0.32 per kilo milk solids last season.

That $8.49 per kilo milk solids average farm spend in 2023-24 had likely grown in 2024-25, according to South Australian Dairyfarmers Association president Robert Brokenshire.

He told The Weekly Times much of South Australia was struggling with drought and step ups were needed in the coming months to reflect changing financial conditions.

South Australian Dairyfarmers Association president Robert Brokenshire. Photo: Kelly Barnes

“The seasons of high farmgate prices, high input costs and favourable conditions are over,” Mr Brokenshire said.

“We now have lower farmgate prices, still have high input costs and that’s exacerbated by unfavourable conditions. Drought is eroding dairy profitability.

“For hay, we’re in the region of $180 a bale and rising. That’s if you can get fodder with the scarcity of feed due to the drought.

“There was some recent state government assistance but the farmgate is crucial for the medium to long-term viability of dairy. Yes, step ups this season but also a stronger opening next season for that financial certainty going forward.”

F. Smith Agribusiness Consultants analyst Fiona Smith worked with Dairy Australia to conduct the latest farm monitor figures.

“South Australian Dairy Farm Monitor results this year were significantly impacted by seasonal conditions,” Mrs Smith said.

“There was a very late autumn break, with some regions not even receiving an autumn break.

“While milk price stayed relatively stable compared to the season before (2022-23), the biggest impact on profitability came from the increasing feed costs.

“There was also an impact of lower livestock trading profit, with trading conditions not being as positive – partly due to live export disappearing.”

The report found the average South Australian dairy farm earnings before interest and tax in 2022-23 were $1,078,000, falling to $857,000 last season, meaning the average net farm income went from $957,000 in 2022-23 to $671,000 in 2023-24.

The average return on equity for the monitored SA farms also contracted from 2022-23 at 11.2 per cent to 5.4 per cent in the 2023-24 season.