Victorian dairy farmers weathering rural market
Farmers are holding onto dairy farms in the south west region of Victoria until a stronger situation in the dairy farm industry according to Herron Todd White's rural report for November.
HTW said although confidence has been shaken, there is presently an element of optimism for the future and dairy farmers are adapting to different management processes.
"In mid 2016 there was much well publicised negative press coverage in regard to the dairy farming industry, highlighted by Murray Goulburn’s sudden back dated drop in farm gate milk prices paid to farmers, with income to farmers less than cost of production (below break even point)," the report said.
"Added to this were higher than usual feed costs incurred by farmers due to the drier than usual seasonal conditions sustained since 2013.
"Despite the mood in the dairy farm industry, there has not been a flood of farms on to the market from dairy farmers anxious to relinquish dairying and it is anticipated this will continue until farmers are in a stronger nancial situation.
"There is now a significant focus on cost control with the business strategy being reviewed to reduce debt and rebuild equity rather than chasing profit margin. On farm adjustments are being made to downgrade off farm feed requirements, increase rate of culling of less productive stock and repairs and maintenance treated only on an essential need basis.
"There is presently limited enquiry from the corporate and foreign sector for the purchase of dairy farms and the availability of suitable farms to consider
is equally limited. Unless the farm satisifies an absolutely thorough due diligence and the prospect of longer term capital growth is encouraging, it will not be purchased.
"The recent sale at auction (September 2016) of a 182 hectare, average dairy farm located just outside Timboon township which sold for $12,355 per hectare, purchased by a neighbour points to an approximate 10 percent to 15 percent drop in value from the peak of the market pre GFC. "
Property Observer found a dairy farm currently on the market in Timboon with approximately 165.00ha.
The property, 115 Church and Trotters Road, Timboon, has irrigation, a freestall barn with a capacity of approximately 1,000 cows, 50 unit rotary design dairy and modern, four bedroom residence completed in 2008.