Executive Summary
Milk payout received by farmers in 2018-19 decreased 20 cents to $6.42 per kilogram milksolids (MS). Milk production per cow and per hectare increased. Operating expenses per kilogram milksolids remained similar to the 2017-18 season, however operating profit per hectare decreased to $2,154. Operating return on dairy assets dropped slightly to 4.0 percent. Total return on assets increased by 0.7 percent points to 0.5%. Equity decreased with reductions in capital values.
Owner-operator Summary
Operating profit of $2,154 per hectare in 2018-19 was down 3.8 percent on the previous season. The milk payout received of $6.42 per kilogram milksolids was down 20 cents (-3%) on the price received in 2017-18. Both milksolids per cow (+5%) and milksolids per hectare (+7%) increased in 2018-19. Livestock income in 2018-19 increased to $0.47 per kg milksolids. Gross farm revenue of $6.98 per kilogram milksolids in 2018-19 was down 25 cents. Farm working expenses (FWE) of $4.25 per kilogram milksolids was 5 cents higher compared with last season. Operating expenses decreased 3 cents to $5.10 per kilogram milksolids, though still not far below the record high of $5.17 in 2013-14.
The cash available for living and growth in 2018-19 was $213,109 per farm, the highest level in five years. Following a large capital expenditure, changes in debt and drawings, a cash deficit of $14,958 was recorded. The operating return on dairy assets decreased to 4.0 percent in 2018-19 and the total return on assets was 0.5 percent. Total return on equity was -3.4 percent. Equity levels decreased 8.7 percent (-$363,884), 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) increased to 53.4 percent at the end of the season. Closing term liabilities per kilogram milksolids decreased to $24.92.
Owner-operator Summary Table
| 2017-18 | 2018-19 | |
|---|---|---|
| Physical KPIs | ||
| Peak cows milked | 430 | 424 |
| Effective hectares | 151.4 | 146.0 |
| Milksolids sold per cow | 376 | 395 |
| Milksolids sold per hectare | 1,067 | 1,145 |
| Cows per FTE | 148 | 146 |
| Prices | ||
| Payout received $ per kg milksolids | 6.62 | 6.42 |
| Cashflow | ||
| Cash operating surplus | 678,172 | 446,701 |
| Discretionary cash | 230,881 | 208,906 |
| Cash available for living and growth | 208,127 | 213,109 |
| Cash surplus | −42,275 | −14,958 |
| Profitability | ||
| Dairy gross farm revenue per ha | 7,715 | 7,991 |
| Dairy operating expenses per ha | 5,477 | 5,837 |
| Dairy operating profit per ha | 2,238 | 2,154 |
| Dairy gross farm revenue per kg milksolids | 7.23 | 6.98 |
| Farm working expenses per kg milksolids | 4.20 | 4.25 |
| Dairy operating expenses per kg milksolids | 5.13 | 5.10 |
| Dairy operating profit per kg milksolids | 2.10 | 1.88 |
| Business profit before tax per all effective ha | 810 | 1,077 |
| Returns | ||
| Operating return on dairy assets | 4.3% | 4.0% |
| Total return on assets | -0.2% | 0.5% |
| Total return on equity | -4.4% | -3.4% |
| Wealth Creation | ||
| Growth in equity | −238,662 | −363,884 |
| Growth in equity from profit | 85,385 | 63,675 |
| Growth in equity from capital | −324,047 | −427,560 |
| Growth in equity % | -5.7% | -8.7% |
| Risk | ||
| Closing term liabilities per kg milksolids | 25.31 | 24.92 |