This is largely due to favourable seasonal conditions and farm gate milk prices, combined with improved irrigation water prices and availability.
“As a result, profitability in 2019-20 was considerably more widespread than in 2018-19 and the vast majority (89 per cent) of respondents expect to make an operating profit in 2020-21,” the Situation and Outlook report said.
This has enabled more farmers to be in an expansion phase this year, with 38 per cent of farmers increasing their herd size.
In contrast, seven per cent expect to exit the industry in the next two years.
The report says across the nation, much of Australia’s dairy industry has been riding on a wave of positivity over the past few months.
“Improved operating conditions, robust domestic demand and supportive global fundamentals have continued to underpin a reasonably strong market outlook,” it says.
“A vast majority of farm businesses are expecting to make an operating profit this season, and with Mother Nature mostly playing her part, industry confidence has bounced back.
“Several factors, including higher opening milk prices in 2021-22, suggest this momentum could be maintained well into next season.
“Current input dynamics have been cause for optimism, as key costs remain well below last year’s levels.”
The report points to falling irrigation water prices in northern Victoria and southern Riverina.