Northern Victorian dairy farmers participating in the Dairy Farm Monitor Project have achieved the best results across the state in the 2020-21 year.
While average dairy farm profits were up Victoria-wide, the 30 northern Victorians took advantage of favourable seasonal conditions to record the highest profits this region has seen for 15 years.
Since the last report, farm cash flows have increased from the previous year, with 94 per cent of farms recording a positive return.
This financial rebound has enabled farmers to invest back into their businesses by repairing and upgrading infrastructure and machinery and improving pastures.
The average earnings before tax and interest per farm was $500,000, which was higher than the western Victoria and Gippsland regions.
The report, compiled by Agriculture Victoria, tracks the performance of dairy farms in the three major dairy regions of the state.
Despite a slightly lower milk price and higher home-grown feed costs, income from livestock trading compensated for much of the increased costs.
Figures show the top performing farms earned about the same dollars per kilogram of milk solids as the lower performing ones, but had lower costs.
Earnings before interest and tax, per kilogram milk solids, were on average $1.76 in northern Victoria, compared to the top 25 per cent of farms who earned $2.42/kg.
Northern Victoria experienced better weather conditions, resulting in greater pasture growth and reduced reliance on purchased feed.
The number of milking cows per farm and average usable area was similar to last year, with slight increases of two per cent and one per cent, respectively.
The average home-grown feed as a percentage of metabolisable energy (ME) consumed improved from 50 per cent to 55 per cent.
This result reflected the favourable conditions for growing pasture and less reliance on purchased feed this season.
The average water use (rainfall and irrigation) for northern Victorian farms was 910 mm/ha (higher than 762 mm/ha in 2019-20), which produced 0.9 tonnes DM/100 mm/ha of home-grown feed.
With an improvement in seasonal conditions and irrigation availability, farmers focused on harvesting greater quantities of feed in 2020-21, as compared with previous years of high irrigation water prices.
Similar to the average of northern farms, home-grown feed supplied half of the ME consumed (52 per cent) on the top performing farms.
They had 15 per cent higher water use efficiency (1.1 tonnes DM/100 mm/ha) than the average for the north.
The report found many farmers focused on higher milk production this year with strong milk prices and affordable feed prices.
However, limited supplies of good quality fodder constrained this approach.
Most of the higher production was generally achieved by milking extra cows rather than improved milk production.
Overall, the year saw increased returns, with returns on total assets at six per cent and returns on equity at 7.5 per cent.