Dairy farm profitability in Australia fell in most states in 2024-25. Average earnings before interest and tax ranged from $1.08 per kilogram of milk solids in South Australia to $2.16 in Tasmania. Your own result depends on milk price, feed cost and debt. This guide shows you how to measure each one.
The figures come from the Dairy Farm Monitor Project and from ABARES. You also get a simple way to test your budget against the 2026-27 opening prices.
What the 2024-25 results show
The Dairy Farm Monitor Project tracks a group of farms in each dairy state. Agriculture Victoria runs the Victorian report. Dairy Australia publishes the reports for the other states. The main measure is earnings before interest and tax, or EBIT, per kilogram of milk solids (kg MS).
| State | EBIT 2024-25 ($/kg MS) | Note from the state report |
|---|---|---|
| Tasmania | 2.16 | Down from 2.34 in 2023-24 |
| Western Australia | 1.64 | Long-term average is 2.10 |
| Victoria | 1.46 | Net farm income fell to 0.47 |
| South Australia | 1.08 | Down from 2.09 in 2023-24 |
South Australia took the largest fall. Its state report names dry conditions and lower milk prices as the causes. Western Australia recorded its third lowest result in 12 years after inflation, according to the WA report.
New South Wales held up better. Profit fell about 2 per cent. The NSW report ranks the year as the fourth highest in 14 years after inflation.
Read these numbers with care. The project farms differ each year. The Victorian report warns they do not represent the whole industry or region. Do not add the states together to make a national average.
What ABARES says about farm income
ABARES surveys a broader group of dairy farms. It reports income per farm, so its numbers look different from the state reports.
- Average farm cash income in 2023-24 was $369,700 per farm.
- This was 21 per cent below the year before.
- It still sat 54 per cent above the 10-year average of $239,300.
- ABARES forecast a 20 per cent fall to $297,000 per farm for 2024-25.
The forecast assumed cash receipts would fall 6 per cent and cash costs would fall 3 per cent. ABARES tied the fall to lower farmgate milk prices. Queensland was the only state forecast to rise, as AgNavigator reported in August 2025.
Cash income leaves out some real costs. ABARES calculates farm business profit by adding the change in trading stocks, then taking off depreciation and the value of unpaid family labour. Use profit, and not cash income, to judge whether your farm pays you a wage.
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The 2026-27 milk price
Processors opened the 2026-27 season between about $8.20 and $8.80 per kg MS. Many farmers wanted $9.50, as FlowNews24 reported in June. Australian Dairy Farmers president Ben Bennett called the offers a “conservative floor”.
Opening prices often rise during the season. Do not bank on a rise in your budget. Rabobank’s 2026 dairy outlook says input costs leave current milk prices near break-even for many farms.
Supply is also shrinking. Dairy Australia’s mid-year outlook projects a 2 per cent fall in national milk production for 2026-27. Fewer litres give you less volume to spread your fixed costs over if your own output falls with the national trend.
How to work out your own profit
Use the same steps the Dairy Farm Monitor Project uses. Then compare your farm with your state result.
- Add up gross farm income. Include milk, livestock sales and other farm income.
- Take off variable costs. These include bought feed, fodder, herd costs and shed costs.
- Take off overheads. Include depreciation and a fair wage for your own labour.
- The result is EBIT. Divide by your total kg MS.
- Take off interest and lease costs. The result is net farm income.
Include your own wage even if you draw none. Without it, you compare your farm with others on an unequal basis.
A worked example
Take a farm producing 200,000 kg MS. These numbers show the maths. They are not an average for any district.
| Change | Sum | Effect on income |
|---|---|---|
| Milk price moves 10c per kg MS | 200,000 x $0.10 | $20,000 |
| Low offer against high offer ($8.20 and $8.80) | 200,000 x $0.60 | $120,000 |
| High offer against the $9.50 target | 200,000 x $0.70 | $140,000 |
| EBIT at the Victorian average ($1.46) | 200,000 x $1.46 | $292,000 |
The second line shows why your processor matters. A 60c gap on this farm equals more than a third of the EBIT in the last line. Compare offers each season. The ACCC administers the Dairy Code, which requires processors to publish their prices and standard terms.
Five costs to check first
Bought feed
Feed is the cost most exposed to the season. ABARES tied the 2024-25 cost fall partly to lower fodder spending. South Australia shows what a dry year does. Work out your feed cost per kg MS for each of the last three years. Then find the year your margin was best and work out why.
Australian Dairy Farmers has also flagged the risk of a strong El Nino this season. Price your summer feed now and write the price into your budget. Our guide to silage and hay helps you compare stored feed options.
Milk quality deductions
Processors pay on quality. Cell count penalties come straight off your milk cheque. Read your last 12 statements and total every deduction. Our guide to mastitis prevention and treatment covers the main cause of high cell counts.
Labour
Time your milking from cups on to wash down. Count the hours for one week. Divide the labour cost by the kg MS produced in the same week. Run the sum again after any change to your roster or shed.
Debt and lease costs
Victoria shows how much interest and lease costs take. Average EBIT was $1.46, and net farm income was $0.47. The gap of 99c also covers other finance items, so check your own split. Ask your bank to run your repayments at $8.20 milk before the next review.
Stock sales
Beef prices are helping dairy income. Heavy cows at the Wagga sale on 9 November made 406c to 440c/kg, up 8c. Check your empty and older cows against current prices. Keep your NLIS records correct before you load. Then compare the cull value with the cost of keeping each cow through summer.
Run a three-price budget
One budget at one milk price tells you little. Build three. Use the same costs in each, then change only the price.
- Low case. Use $8.20 per kg MS. Ask whether your cash covers wages, feed, interest and tax.
- Middle case. Use your own processor’s published price. This is your working budget.
- High case. Use $9.50 per kg MS. Decide now what you would do with the extra cash.
Then run the low case again with bought feed up 20 per cent. This figure is a test and not a forecast. Pick the rise you think fits your district. If this case runs out of cash, talk to your bank before summer and not after.
Questions to ask your processor
The Dairy Code gives you a written agreement and published prices. Use them. Ask these questions before you sign for the season:
- What is my weighted average price at my own fat and protein test?
- Which incentives depend on my supply curve, and what happens in a dry spring?
- What quality deductions applied to my milk last season?
- When do step-ups apply, and are they guaranteed?
- What is my notice period if I want to switch processors?
Compare the answers on your own production and not on the headline price. A processor with a lower headline price might pay you more once your solids and your supply pattern go into the sum.
What separates a profitable dairy farm
Compare your numbers with the top quarter of farms in your state report. Look at four measures:
- Milk solids per hectare
- Home-grown feed used per hectare
- Total cost per kg MS
- Return on total assets
Pick one measure and change one practice. Then measure the result across a full season. Your choice of cow also affects these numbers. Our guide to the best dairy breeds for Australian conditions covers the trade-offs. If you plan to enter the industry, read how to start a dairy farm and our full guide to dairy cattle farming in Australia.
Take your numbers to your accountant or a Dairy Australia regional group. Ask where your farm sits against the state report. Then set one target for the next 12 months.
Frequently asked questions
Is dairy farming profitable in Australia?
Many farms made a profit in 2024-25, but results fell in most states. Average EBIT ranged from $1.08 per kg of milk solids in South Australia to $2.16 in Tasmania. Your result depends on your milk price, feed cost and debt.
What is a good EBIT for a dairy farm?
Compare your EBIT with your state Dairy Farm Monitor Project report. Western Australia has a long-term average of $2.10 per kg of milk solids. Include a wage for your own labour, or the comparison will flatter your farm.
How much do Australian dairy farms earn?
ABARES estimated average farm cash income at $369,700 per farm in 2023-24. It forecast $297,000 for 2024-25. Cash income leaves out depreciation and unpaid family labour, so profit is lower.
What is the milk price for 2026-27?
Opening offers for 2026-27 ranged from about $8.20 to $8.80 per kg of milk solids. Many farmers wanted $9.50. Check the published price from your own processor, because offers differ by region.
What is the biggest cost on a dairy farm?
Bought feed is the cost most exposed to the season. Work out your feed cost per kg of milk solids over three years. Then compare the years with your margin.
See also: A2 Milk Farming in Australia: Is It Worth It?.
