Variable costs to 10-year highs on many Victorian properties

Loans were extended as prices collapsed and dry conditions ate into balance sheets. See the full financial impact revealed.

The latest Livestock Farm Monitor project results show farm profits last financial year were the lowest since 2006-07.

The large-scale benchmarking program, including comprehensive data from 133 Victorian farms collated by Agriculture Victoria, showed negative profits were recorded by 48 per cent of surveyed farms.

Average earnings before interest and tax decreasing to well below the 10-year average with southwest Victoria recording the lowest EBIT since 2006–07 and northern Victoria the lowest in the history of the project.

A collapse in livestock prices during the period of the study was the main driver; while in southwest Victoria, drought conditions drove variable costs to 10-year highs as farmers were forced to buy in feed.

There, farms in the benchmarking program recorded either the lowest rainfall on record for the period, or falls that were very much below average in the 2023-24 financial year.

A handful of farms in the North East also recorded very much below average rain, whereas Gippsland and the central-north properties had average rainfall conditions and in some cases, above average falls in the period.

Overall, southwest Victorian farms recorded a 58 per cent fall in prime lamb gross margins, a 67 per cent drop in fine wool margins, and beef was also down 30 per cent.

In the state’s north, beef gross margins fell 50 per cent, lamb 37 per cent and wool 39 per cent. Gippsland fared a bit better, seeing falls of 32 per cent for beef, 20 per cent for lamb, and a rise 4 per cent on wool.

Stud cattle breeder Nick Moyle of Pathfinder at Gazette said the past 12 months had been testing across southern Australia, with 2023-24 “extraordinarily tough”.

“It was one of the worst financial years,” he said.

“But we have to expect that with the higher costs and lower returns and it came off a (price) high.”

However, Mr Moyle said the “outlook for prices this year and next is really good”.

Tahara sheep producer Garry Cooper said that after some late 2024 rain, pastures were waning, boding for a tough summer and autumn without an early break.

“Water could be a problem with some dams, but we do have a spring-fed creek,” he said.

Mr Cooper was looking to restock but with prices high, he decided to hold off buying more sheep at the moment.

“The feed is disappearing again,” he said.