Dairy farmer Jamie Vogels had a good winter that filled his dams at Scotts Creek. Then a dry spell came over early spring. “Now we’re looking at a really poor harvest on farm,” he said.
It’s a downward turn for a farm still climbing out of drought, even as a new report shows south west Victoria’s dairy profits rebounding.
The numbers: The Dairy Farm Monitor Project’s 2025-26 Victorian annual report, released this month, found average earnings for South West farmers surveyed rose to $3.31 per kilogram of milk solids, up from $1.26 the year before.
Debt still looms: But Vogels said higher profitability “doesn’t wipe out the financial impact of the previous two years yet”.
The report found average liabilities rose, driven by short-term borrowing for cash flow and long-term debt for land purchases.
Costs still biting: Through the drought, Vogels de-stocked some of his cattle to keep his feed costs down after fodder doubled from $400 to $800 a tonne.
“The current challenge, one hundred percent, is cost of production,” he said.
Input costs are now farmers’ top concern at 19 percent, ahead of milk prices at 18 percent and climate at 16 percent. Only 40 percent of farmers surveyed expect returns to improve in 2026-27.
Looking ahead: The report covers the year to June, so it doesn’t capture this spring’s dry spell. Vogels said he needs rainfall through to Christmas to grow fodder, after exhausting reserves and buying in extra feed.
“We’ll just have to wait and see how the season progresses,” he said.
“Drought is disastrous, but we’re in recovery mode, and profitability is what keeps us going.”
By the numbers: Average annual rainfall rose to 785 millimetres in 2025-26 from 604 in 2024-25, after 2024-25 delivered just 77 percent of the region’s long-term average.
That rain grew more of the farms’ own feed, with homegrown pasture and crops making up 61 percent of what cows ate, up from 59 percent.
The amount of feed farmers had stored on hand rose from 0.5 tonnes of dry matter (feed with the water removed) per cow to 1.7 tonnes, the most in over a decade.
Farms also spent less on buying feed, with purchased feed and agistment costs falling from $2.99 to $2.77 per kilogram of milk solids.
What changed: The average milk price rose 12 percent to $9.76/kg MS after falling 9 percent in 2024-25, and feed costs fell 14 percent to $3.84.
Spring 2025 was rated the best in recent years by 80 percent of participants, lifting fodder reserves to 1.7 tonnes of dry matter per cow, the highest in over a decade and up from 0.5.
Herds grew 12 percent to 490 cows on average, and milk solids per cow rose 8 percent.
The region’s 797 dairy farms produced 1.90 billion litres, 34 percent of Victoria’s milk and 22 percent of Australia’s milk pool.