Yet, under the surface of these national level aggregates, the story has some positive elements, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.
ABARES executive director Jared Greenville said Australian dairy was operating as a ‘multi-speed’ industry, with clear differences in productivity growth between dairy regions.
“While dairy farm productivity growth has slowed in some regions, it has accelerated in others,” Dr Greenville said.
“We are seeing variability in productivity performance driven not only by climate but also differences in input use and the degree of intensive management practices.
“Large dairy farms have also been able to achieve stronger productivity growth than small- and medium-sized dairy farms.”
During the slowdown period from 2011-12 to 2022-23, the ABARES report says only two dairy regions achieved positive average annual growth rates — Western Dairy (WA) [0.84 per cent] and WestVic Dairy (south-west Victoria) [0.77 per cent].
The lowest productivity growth rates over the slowdown period were observed in Murray Dairy (Victoria) [-1.08 per cent], Dairy NSW [-0.83 per cent], and Murray Dairy (NSW) [-0.83 per cent].
The ABARES report says Victoria, the main dairy state, stands out as having two of the regions with the lowest average annual productivity growth rate (Murray and Gippsland), but also high productivity growth rates in south-west Victoria.
It says south-west Victoria currently is the largest milk-producing region in Australia. However, other reports seen by Country News and based on a more recent timeline say the Murray (northern Victoria) region has reclaimed that title.
Dr Greenville said further incremental productivity gains are expected to stem from continued on-farm innovation, increased scale, and the gradual exit of dairy farms with marginal profitability and lower productivity.
“Continued investment in research, development and extension will also help as it’s a well-established driver of productivity,” he said.
“We need to make sure innovation is reaching the farm gate and being adopted to ensure prosperity of this integral industry.”
Dr Greenville said differences seen across regions and between farms also point to opportunities for cross learnings to help kick-start productivity.
“Efforts to increase productivity growth will be important in offsetting any further increases in input prices, and to buffer against any future fall in milk price.”
Read the ABARES Insights Report, The ’multi-speed’ industry: Dairy productivity in the spotlight, here: https://www.agriculture.gov.au/abares/products/insights/australias-farm-productivity-slowdown
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