The monitor project, which is funded by Agriculture Victoria and Dairy Australia, found that returns for south-west dairy farms in 2017-2018 were the fourth lowest in the project’s 12-year history.

The project surveys 75 dairy farms across Victoria including 25 in the south-west.

Claire Waterman from Agriculture Victoria told a WestVic Dairy business breakfast on Thursday that a long, dry summer in the south-west  and high feed costs had hollowed out increases in farmgate milk prices. The St Patrick’s Day fires had also had a big adverse effect, she said.

The project found the south-west farms surveyed had to increase their fodder purchases by 71 per cent and their concentrate costs by 18 per cent. 

Average net farm income for the south-west dairy farms dropped from $119,000 last year to $24,000 this year.

Average earnings before interest and tax (EBIT) fell from $261,000 last year to $147,000 in 2017-2018. Only 18 of the 25 south-west participants achieved a positive EBIT.

The sobering south-west figures continued with the average return on total assets more than halved, down from 4.2 per cent last year to 1.9 per cent. The average return on equity in 2017-2018 was a negative 1.1 per cent, down from 4.3 per cent last year but equity remained steady at 64 per cent.

Ms Waterman said the dairy farmers surveyed were less optimistic than last year with 68 per cent expecting their farm business returns to improve. The price of inputs was farmers’ main short-term concern while milk prices were their medium term concern.

WestVic Dairy’s Lindsay Ferguson said it was not an easy time for farmers and it had sent out an information package to help farmers deal with the feed shortage.