Victoria’s Western District the most productive for dairy

There’s a wide gap in productivity growth if you’re a dairy farmer in Victoria. New data has found one region comes out on top.

The Western District has emerged the most productive dairy region in Victoria, while the Murray and Gippsland regions have recorded the lowest annual productivity growth.

The dairy divide was revealed in a new report by ABARES, released on Thursday, which shone a light on dairy productivity.

Authors Dr Will Chancellor and Dr Jared Greenville’s report analysed dairy productivity and average annual growth rates calculated from 1978–79 to 2022–23.

“These long-term average annual growth rates demonstrate that dairy farm productivity growth has evolved at different paces across the individual dairy regions,” the authors said.

There are large variations in productivity between dairy regions in Victoria.

The report stated Victoria stood out due to the big differences in productivity in different regions. Western Victoria had the second highest productivity growth in the nation of 1.47 per cent, compared to two of the lowest regions in Australia, with Murray productivity growth at 0.66 per cent and Gippsland, 0.82 per cent.

Western Victoria has emerged as the region with the highest productivity growth in the state.

But Dr Greenville, who is ABARES executive director, said the Victorian productivity range was not unique to that state.

“Australian dairy is operating as a ‘multi speed’ industry, with clear differences in productivity growth between dairy regions,” Dr Greenville said.

“We are seeing variability in productivity performance driven not only by climate but also differences in input use and the degree of intensive management practices.”

Dr Greenville said productivity growth had been led by large dairy operations.

“Further incremental productivity gains are expected to stem from continued on-farm innovation, increased scale, and the gradual exit of dairy farms with marginal profitability and lower productivity,” he said.

“Differences seen across regions and between farms also point to opportunities for cross learnings to help kick-start productivity.

“Efforts to increase productivity growth will be important in offsetting any further increases in input prices, and to buffer against any future fall in milk price.”

Rabobank dairy and consumer foods senior analyst Michael Harvey said there had been a more stable period of on-farm profitability more recently, and with it an uplift in investment confidence.

“In many dairy regions, we have seen an increase in investment in capital projects on farm, mostly which are focused on labour efficiency and production capacity improvements,” Mr Harvey said.

WestVic Dairy declined to comment.