Executive Summary
Milk payout received by farmers in 2019-20 increased by 63 cents to $7.05 per kilogram milksolids (MS). Milk production per cow and per hectare increased. Operating expenses per kilogram milksolids increased compared to the 2018-19 season, while operating profit per hectare increased to $2,750. Operating return on dairy assets increased to 5.1 percent. Total return on assets increased by 0.9 percent points to 1.4%. Equity decreased with reductions in capital values.
Owner-operator Summary
Operating profit of $2,750 per hectare in 2019-20 was up 28 percent on the previous season. The milk payout received of $7.05 per kilogram of milksolids was up 63 cents (+9.8%) on the price received in 2018-19. Both milksolids per cow (+3.5%) and milksolids per hectare (+4.3%) increased in 2019-20. Livestock income in 2019-20 increased to $0.49 per kg milksolids. Gross farm revenue of $7.62 per kilogram milksolids in 2019-20 was up 64 cents. Farm working expenses (FWE) of $4.41 per kilogram milksolids was 16 cents higher compared with last season. Operating expenses increased 21 cents to $5.31 per kilogram milksolids, more than the record high of $5.17 in 2013-14.
The cash available for living and growth (discretionary cash) in 2018-19 was $299,837 per farm, the highest level in ten years. Following a large capital expenditure, changes in debt and drawings, a cash surplus of $57,909 was recorded. The operating return on dairy assets increased to 5.1 percent in 2018-19 and the total return on assets was 1.4 percent. Total return on equity was -1.1 percent. Equity levels decreased 2.1 percent (-$85,307), with the positive growth in equity from profit more than offset by the decrease in asset values and small increase in liabilities. Total liabilities as a percentage of total assets (debt to assets ratio) decreased to 51 percent at the end of the season. Closing term liabilities per kilogram milksolids decreased to $23.25.
Owner-operator Summary Table
| 2018-19 | 2019-20 | |
|---|---|---|
| PHYSICAL KPIS: | ||
| Effective hectares | 146.0 | 142.1 |
| Peak cows milked | 424 | 415 |
| Stocking rate (cows/ha) | 2.9 | 2.9 |
| Kg milksolids sold | 167,189 | 169,761 |
| Milksolids sold per hectare | 1,145 | 1,194 |
| Milksolids sold per cow | 395 | 409 |
| PRICES: | ||
| PAYOUT RECEIVED: $/kg MS sold | 6.42 | 7.05 |
| CASHFLOW: | ||
| Cash operating surplus | 446,701 | 537,460 |
| Discretionary Cash | 208,906 | 318,872 |
| Cash available for living and growth | 213,109 | 299,837 |
| Cash surplus/deficit | −14,958 | 57,909 |
| PROFITABILITY PER HA: | ||
| Dairy gross farm revenue per ha | 7,991 | 9,097 |
| Dairy operating expenses per ha | 5,837 | 6,347 |
| Dairy operating profit per ha | 2,154 | 2,750 |
| Business profit before tax per all effective hectares | 1,077 | 1,681 |
| PROFITABILITY PER KG MILKSOLIDS: | ||
| Dairy gross farm revenue per kg milksolids | 6.98 | 7.62 |
| Farm working expenses per kg milksolids | 4.25 | 4.41 |
| Dairy operating expenses per kg milksolids | 5.10 | 5.31 |
| Dairy operating profit per kg milksolids | 1.88 | 2.30 |
| RETURNS: | ||
| Operating return on dairy assets % | 4.0% | 5.1% |
| Total return on assets % | 0.5% | 1.4% |
| Total return on equity % | −3.4% | −1.1% |
| WEALTH CREATION: | ||
| Growth in equity | −363,884 | −85,307 |
| Growth in equity from profit | 63,675 | 159,527 |
| Growth in equity from capital | −427,560 | −244,765 |
| Growth in equity % | −8.7% | −2.1% |
| RISK: | ||
| Closing debt to asset % | 53.4% | 51.0% |
| Closing term liabilities per kg MS | 24.92 | 23.25 |