The 64-year-old owns one of an increased number of farms converting to grazing in the south-west, rural real estate agents and industry groups have said.

David Johnston has farmed for 48 years and is a passionate breeder, but working on his feet every day has caused health concerns and forced him to sell a quarter of his 400 cows.

Mr Johnston's sons have indicated they won't take over the dairy farm, but he doesn't want to sell the farm.

"Our farm will cease being a production farm sometime in the next five years, and plenty more will do the same or similar," Mr Johnston said.

"We are not big enough to afford a permanent employee or share farmer."

He had fears the average age of dairy farmers would increase. "There are a heck of a lot more 55 years or older than what's under them," Mr Johnston said.

The average age of a dairy farmer is 53 to 56, Dairy Australia survey data showed. A spokesman said that remained steady in recent years.

Dairy Livestock Services' specialist Ross Suares said a spike in land and cattle prices meant farmers had continued to exit the industry.

"There's a group of farmers out there who have done it really tough for the last few years," Mr Suares said.

"They can see there's an opportunity to get out now with some cash up their sleeves, that's what they are choosing to do.

"There will still be an exodus of dairy farmers whether it is for health or opportunity."

He estimated about 75 per cent of the dairy farms sold in the south-west went to graziers.

"The biggest issue confronting the dairy industry now is there is little avenue for young farmers to get in," Mr Suares said.

"There are minimal number of share farmers being offered now and lease farms are hard to get, because people can get such good money for them and sell now."

WestVic Dairy executive officer Lindsay Ferguson said the national farmer survey showed eight per cent of dairy farmers were stepping back from the industry this year, including those retaining their land.

"I think it is the case that young people aren't replacing the older generation," Mr Ferguson said.

"But the reason is not lack of young people wanting to get into the industry. It's the lack of flexibility of older farmers wanting to step back.

"It's about succession planning. And some people only think of succession planning only being within the family business, from a broader perspective there are a range of ways of allowing non-family members to work their way into a business."

One of five key commitments of the Australian Dairy Plan, to be released in full in coming months, is to "attract and support new entrants and investment" to the industry.

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