Sour news for Victorian dairy farmers as milk and property lose value

With production costs on the rise, land losing value and supermarket wars driving down the price of milk, Victorian dairy farmers are doing it tough. 

Farm gate milk prices have fallen 15% in 12 months to 35¢ per litre, according to recent ABC television program The Business. 

It now costs far more to produce a litre of milk than the farmer will recoup by selling it.

“Most farmers are facing a loss this year … as the cost of feed and electricity has risen up to 50%,” says accountant and dairy specialist Gary Smith from Coffey Hunt Accountants. 

“On an average client, we are looking at a cashflow effect of $250,000.”

The rising costs are clear to Dick McAlpine, a dairy farmer from Woodside North. 

McAlpine told Stock & Land the costs have rapidly increased for his 160-hectare property, from $6,000-$7,000 per month to approximately $11,000 per month.  

Not only are production costs rising, but farm prices in Victoria are to have gone from around $7,000 per acre to $4,000-$5,000 per acre, according to one report.

“Its common in today’s market for all farms, including dairy farms, to be on the market for many months,” according to Greg Tucket, a stock and station agent with Elders for 32 years.

There has been “scant enquiry”, and “I’m not seeing any sales in Gippsland of any significance” he told Stock & Land.

Farmers have no choice but to wait for prices to pick up for both their properties and their products.

Land capital assets have been significantly devalued, according to Ron Paynter, deputy president of the United Dairy farmers of Victoria.

“Those with cash resources behind them have been able to purchase poorer-quality property at maybe three-quarters of the prices that were being asked four years ago,” Tucket said.

Farmers are trying to hold onto their values, with many farms on the market for over 12 months unable to find buyers.

Paul Bourke from Gippsland Real Estate says: “There are plenty of farms that could be bought at the right money… It is very tough at the moment, I haven’t seen it tougher.” 

Victoria is responsible for the majority of Australia's milk production producing over 65% of the total output.

Property Observer compiled a list of three current offerings, including a 180-hectare holding at Camperdown Victoria (pictured above), 194 kilometres south-west of Melbourne. The farm is described by First National Real Estate agents as an "outstanding, high-productive, well-balanced dairy farm situated in prime tightly held area".  The property is for sale at $2,447,500, representing $5,500 per acre or $13,597 per hectare.

A 186-hectare irrigation dairy farm (pictured below) in Yarram District is rated a 300-cow farm. It's for sale at $3,600 per acre, or a total of $1,652,400.

A 134 hectare Leongatha property (pictured below) is listed at a rate of $6,250 per acre, or a total of $2,062,500.