UDV president says Dairy Plan profit target not enough to stem dairy exits to beef

Marian Macdonald
By Marian Macdonald
Updated April 28 2022 - 9:25pm, first published 8:34pm
Dairy farmer exits won't stop unless profit targets change

The profit target for dairy farmers set by the Australian Dairy Plan won't be enough to stem the flow of dairy farmers leaving the industry says United Dairyfarmers of Victoria president Paul Mumford.

The Dairy Plan set a target of $1.50 a kilogram of milk solids in earnings before interest and tax when it was launched in September 2020.

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Speaking the day before his final address to the UDV annual meeting and conference, Mr Mumford said that target needed to be lifted or dairy farmers would continue to leave the industry, opting for earlier retirement or less labour intensive options like growing beef.

"If you look at the beef industry as an example, they have less inputs, they have less stress, they have less labour, yet they can achieve comparable profit margins from their land," Mr Mumford said.

"We need something that is going to better that.

"If I do the back of the envelope, rubbery numbers, that's an EBIT of $2.00 to $2.50/kgMS."

Mr Mumford stressed that his figures were indicative only but said the industry needed to formally review its targets.

"We have to lift our profit indices significantly to stop the loss of the dairy industry's milk and possibly regrow the industry," he said.

Australia's milk production has continued to shrink despite dairy farmers receiving record high milk prices in the last two years.

In its most recent Situation and Outlook Report, Dairy Australia said that, in January, milk flows slowed by 6.3 per cent, and year-to-date volumes were down by 2.6pc.

It revised its forecast to a 1-3pc drop in the national milk pool this season.

Exiting the dairy industry had become more attractive, Mr Mumford said, as farmland prices surged and the profitability of beef enterprises reached new highs.

"If we can't compete with like-minded industries, they will continue to leave," he said.

"We need to readdress the profit and cost of production and to show farmers a reason to stay within the dairy industry."

Marian Macdonald

Marian Macdonald

National rural property writer

Writing for farmers in the Stock & Land, The Land, Queensland Country Life, Stock Journal and FarmWeekly, farming in Gippsland.

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