THE operation of Terang’s showcase DemoDAIRY is under review after making a $78,000 loss last year.
The demonstration and research farm, which is expected to make a further loss this year, has been placed under the management of farm consultant Paul Groves.
DemoDAIRY chairman Bryan Dickson said it was expected to take 18 months to two years to return the farm to profit.
Mr Groves, from near Timboon, said control of costs would be essential in returning the farm to profit.
“We don’t have the milk income to do everything as we would want in an ideal world, so we will be looking at better feed budgeting, better cash flow budgeting and making sure the farm is stocked and staffed appropriately,” he said.
“We have to make compromises to make the farm work. The farm needs to make a profit without external funding.”
Mr Groves said overstocking has been a major contributor to the farm’s poor results.
The 166-hectare property has about 110 hectares devoted to the dairy.
“The board has been focused on having a 300-cow herd to be representative of a typical dairy in the region,” Mr Groves said.
“But you can’t milk 300 cows on 110 hectares. We’ll be looking at more like 240 cows next season.”
DemoDAIRY employs the equivalent of three full-time employees in administration and two on the farm.
“You wouldn’t have three administrative positions on a normal farm. I have yet to get my head around how these costs are distributed, but we have to ensure administrative costs that don’t arise from the farm operation are not borne by the farm,” Mr Groves said.
“I’m not suggesting a reduction in numbers, but costs that arise from work with outside companies have to be properly allocated.”
About 22 hectares of the farm are devoted to research trials, for which DemoDAIRY receives income.
“That’s not included in the farm income. I’m looking at money made from milking cows,” Mr Groves said.
He said the farm’s costs were inevitably higher than a normal farm because it was run entirely by employee labour, but he was confident it could be profitable.
“It has made a profit in the past and I’m sure it can make a profit again.”
DemoDAIRY is owned by a co-operative of about 300 dairy farmers and service providers. It was set up in 1996 as a showcase dairy and a centre for industry research.
Its facilities host industry events and it also rents office space to WestVic Dairy, the National Centre for Dairy Education Australia and the University of Melbourne.