The release of the report from the Queensland Dairy Accounting Scheme (QDAS) for the 2017-18 year showed a significant drop in profitability for Queensland dairy farms.
The average Dairy Operating Profit (DOP) per cow reduced from $758 in 2016-17 to $400 this year. Drought, lack of home-grown forage and high prices for all concentrates increased the feed related costs by 3 cents a litre.
The current high grain prices haven’t shown through yet and estimates by departmental staff indicate extra feed costs of around 3c/l for the 2018-19 year.
The top 25 per cent of QDAS farms achieved a DOP of $928 per cow and the remaining 75pc was $149. The main difference and drivers for this extra margin are in four main areas – bigger herds, higher production per cow, lower feed costs and better labour use efficiency. Milk price and investment per cow do not have strong correlation to farm profitability.
The Queensland dairy industry has used $1000 DOP as a fully sustainable figure which allows appropriate business reinvestment. A group of 32 long term QDAS farms were benchmarked over the past five years and the average DOP was $602.
These farms averaged 248 cows and 6100 litres per cow. The performance of these farms would indicate a higher margin than the average Queensland dairy and yet these same farms need between 6-7c/l margin to achieve the $1000 DOP. This more than anything else highlights the challenges for all dairy farmers operating in a dysfunctional market.
QDAS has operated since 1976 and currently is supplied with figures from 50 of the 390 Queensland dairies. As a comparison, the Victorian Dairy Farm Monitor Project (DFMP) had 75 farms contributing data out of a total of 3880.
All of this data then contributes to DairyBase for national benchmarking.
