On-farm factors key to safeguarding business profitability

Apr 10, 2015

Over the past decade, Australian dairy farms have faced many challenges to profitability. With the wide range of climatic zones, production systems, operating structures and milk price structures – it’s no wonder there is no silver bullet to ensuring long-term farm profitability.

Following key outcomes from the 2014 Australian Dairy Farmers (ADF) National Dairy Farmers’ Summit, and earlier recommendations of the Horizon 2020 study, the Australian Dairy Industry Council (ADIC) commissioned Dairy Australia to prepare a report on Sustainable Farm Profitability.

The report, released this month, focuses on the on-farm factors that influence individual dairy farmers’ ability to run profitable farm businesses. Macro drivers outside of farmers’ control, such as weather events, milk price volatility and government policy, are put aside to provide a focus on the aspects of technical efficiency, management capability, tactical flexibility, cost control and investment decisions that farmers can make to deal with risk and volatility.

Dairy Australia’s Farm Business Capability Program Manager, Neil Lane said dairy farms are significantly more successful when farmers are good at managing their business across the board, with a combination of technical and financial skills.

“There isn’t a one-size-fits-all approach to sustaining profitability and it can be a challenge for many individual dairy businesses, however in both good times and bad, there are key areas that farmers can improve to better safeguard their businesses,” Mr Lane said.

Download your copy of the Sustainable Farm Profitability report, here.

 

Shared leadership for a strong future

Mar 30, 2015
Speaking at the annual Tasmanian Dairy Conference on 26 March in Burnie, ADF President Noel Campbell discussed the importance of the industry working together - not in silos - to achieve a stronger voice and ultimately, a more sustainable future.

“The traditional view of leadership, where the buck stops with the person at the top does not work for our industry.

“The extent to which dairy succeeds in getting where it wants to will rely on the strength of this shared leadership,” Mr Campbell said.

The conference, in its eighth year, attracted over 200 dairy farmers, industry service providers, government and dairy organisation representatives to discuss a range of topics, including industry outlook, future developments, farm investment, and industry sustainability and innovation.

Mr Campbell, a third-generation dairy farmer at his 470-cow dairy farm in West Gippsland, Victoria, said there was a need for farmers to be proactive in the promotion of dairy past the farm-gate.

“The understanding about the relevance and importance of our industry has been and continues to be heard louder than ever before. And we all have a role to play in building on this momentum; to promote the value and good practices of our industry.

“You don’t have to be an outstanding public speaker or the most experienced statesman in the room to be a strong, effective leader. What you do need is vision, persistence and the courage to pursue your cause.

“Everyone in the dairy industry can show leadership to promote the industry... Farmers can invite people onto their farms and show them that, while we're not perfect, we're committed to good practices, and building a stronger, more prosperous industry.

“The more we do this, the more value the broader dairy community will see in supporting us,” Mr Campbell said.

Speaking alongside Mr Campbell at the conference included LEGENDAIRY Ambassador, Michael Klim, Dairy Futures CRC CEO, David Nation and Dairy Australia Managing Director, Ian Halliday. For more information about the event, download your copy of the conference program here.

 


Photo source: Meg Windram, The Advocate

Drought preparedness key to long-term profitability

Jan 08, 2015

The percentage of Australian dairy farms reported with negative farm business profit is estimated to have decreased significantly from 67 per cent in 2012-13, to 38 per cent in 2013-14, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).


In addition, the ABARES reported a significant jump in the average rate of return on capital (excluding capital appreciation) to 3.1 per cent in 2013–14, up from 0.9 per cent in 2012–13 and above the ten year average of 2.1 per cent.


Released in December 2014, the ‘Australian dairy: financial performance of dairy farms, 2011-12 to 2013-14’ report correlates improved profitability to the strong rebound in the average farm cash income  which increased to $129,000 in 2013-14, around 29 per cent above the 10-year average. Dairy farmers in southern New South Wales, South Australia, Victoria and Tasmania had the largest increases as a result of significant milk price rises, with smaller increases in Western Australia.


Yet, whilst incomes may have ended on a high and negative farm business profit on a low in these states, northern New South Wales and Queensland continue to feel the pinch of higher fodder expenditure and lower production due to dry seasonal conditions, highlighting the relevance of  drought preparedness to long-term profitability.


Australian Dairy Farmers (ADF) President, Noel Campbell said whilst many factors, including drought, impact dairy farm profitability, there are some sound principles we can apply to reduce their effects on our farm business returns, with drought preparedness being one of these.


 “Farmers need to demonstrate a commitment to long-term sustainable farming through appropriate business and farm practices that embrace effective risk management options,” Mr Campbell said.


“The Government can play a key role in reinforcing its long-term commitment to drought through providing policy options that support farmers in risk management, for example, tax incentives to encourage fodder and water infrastructure investment by farmers.”


ADF continues to actively advocate on tax solutions and other complementary measures that may assist in drought preparedness, including improving the Government and industry’s investment in seasonal forecasting.


Further development of the Managing Climate Variability Program, which promises greater accuracy in midseason forecasting, will enable farmers to make better tactical decisions around managing their fodder and water resources to maximise profit.


Mr Campbell welcomed Minister for Agriculture, Barnaby Joyce’s announced $100 million in Drought Recovery Concessional Loans in December 2014 and the lower interest rates on drought concessional loans announced earlier in January this year, however stressed that further proactive measures need to be taken to achieve long-term drought policy and ensure the ongoing viability of our dairy farm businesses.


ADF will continue to lobby for a range of measures to support drought preparedness management and security to ensure that dairy farmers are supported in sustainable farming practices to manage whatever Mother Nature may bring.


 

*The ABARES report data is gathered from the annual Australian Dairy Industry Survey, with a sample size of approximately 300 dairy farmers.

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