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The Victorian dairy industry is seeing a strong recovery in returns and profitability after the long period of below average rainfall seasons and pressure on dairy farm product and input prices due to exchange rates.
As highlighted in the annual dairy industry survey in the Dairy Industry Farm Monitor Project (DIFMP) implemented by the Department of Primary Industries, well managed dairy farms are making good returns taking account of the inputs of family members. The
DIFMP reported that in 2010/2011, the average return on assets recovered (similarly), rising from 2.2% last year to 6.2%.
The top 25 percent of producers showed the strength of well run dairy farms, recording profitability levels well above the average. The average earnings before interest and tax on these farms was $2.31 per kilogram of milk solids, $2,260 per hectare; and a return on assets of 9.5 % excluding capital appreciation.
The dairy farm market is quiet at the moment being over-shadowed by a number of low performing farms that have been forced on to the market.
There are also a number of well located, good quality and profitable dairy properties available for sale through David Steel First National Real Estate carrying from 280 to 850 cows.
These create opportunities for dairy farm families or investors to purchase businesses which will continue to produce good returns with minimal or no additional investment.
In most cases, the existing employed staff could be interested in continuing to assist new owners and different management and supervision options are available to support outside owners. All have updated modern milking systems with some of these farms having significant irrigation resources and equipment to complement reliable annual rainfall.
These farms are only on the market as the owners wish to retire or allow family members to pursue other interests. There could be opportunities to consider different purchasing strategies.
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