Northern Victoria is looking forward to a recovery in the dairy industry this year, according to the latest Dairy Australia report.
Based on opening prices and processor forecasts, Dairy Australia is estimating that returns could be up by about 10 per cent over last year.
The dairy development organisation says with more water in the reservoirs, there is a possibility of input costs falling but many farms were experiencing tight cash flows.
The Dairy Situation and Outlook report found that last year, the average farm reported negative returns on equity and negative farm incomes.
These figures were lower than other Victorian production regions.
Dairy Australia is forecasting modest growth in milk production, generally favourable seasonal conditions and contained input costs for southern state dairy regions.
Dairy Australia Senior Analyst, John Droppert, said the results reflect the reality of a volatile past 12 months for the industry.
“2016/17 was undoubtedly a tough season for cash flow but the ability of farmers to adapt, together with generally lower hay and grain costs and better weather conditions, has helped many to generate a more positive financial result than they may have anticipated.”
Results from the Dairy Farm Monitor Project show a similar, or slightly improved earnings before interest and tax (EBIT) compared to the previous 12 months.
Mr Droppert noted that whilst EBIT results were better than the previous season, many farm businesses would be using any surplus cash for debt reduction or expenses incurred from last season.