Australian Dairy: financial performance of dairy farms, 2013-14 to 2015-16

Overview
This report presents the detailed financial performance of dairy farms from 2013-14 to 2015-16. It includes analysis of changes in farm performance, investment and debt by farm size to highlight variations in performance across the dairy industry. The analysis in the report is mainly based on data collected in 2015-16 from the Australian Dairy Industry Survey (ADIS) conducted between July and November 2015 and funded by the Department of Agriculture and Water Resources.

Key Issues
• At the national level, average farm cash income of dairy farms declined from around $156 000 in 2014-15 to an estimated $101 000 in 2015-16 as a result of lower farmgate milk prices and a slight reduction in milk production per farm. • The average farm gate milk price is estimated to fall in 2015-16 to around 43 cents a litre, following a step-down in milk payments to dairy farmers by major processors, particularly in Victoria, Tasmania, South Australia and southern New South Wales. • In 2015-16 average farm incomes are estimated to have declined in all dairy regions except Western Australia. • In 2015-16 an estimated 73 per cent of dairy farms received a milk price that covered at least the cash costs of production. • An average 28 per cent of dairy farms received a price for milk that covered all costs of production (including all cash costs, finance costs, depreciation and unpaid labour) in 2015-16, while 21 per cent of farms received a price that covered cash costs of production, finance costs and depreciation but excluding labour. • Since deregulation of the dairy industry in 2000, the number of dairy farms in Australia has fallen by around 47 per cent. This fall has been concentrated among farms with less than $3 million in total capital value (in 2015-16 dollars). The number of farms with more than $3 million in total capital has increased since 2000. • Average dairy farm debt increased from $346 000 in 1999-2000 to $861 500 in 2014-15 in real terms. Increased borrowing by individual farms for land purchases or new on-farm infrastructure and equipment contributed to the increase in average debt.