Victoria dairy industry performance 2025

In the 2025 calendar year, average annual milk production per cow in Victoria remained relatively stagnant Verified Answer #2. This stabilization represents a departure from historical growth trends driven by genetic and management improvements Verified Answer #2. Regional performance generally tracked below both the long-term and previous five-year averages Verified Answer #1. In South West Victoria, average milk solids sold per cow was 529 kg MS/cow, a negligible increase from the 528 kg MS/cow recorded in the 2023–24 period Verified Answer #2.

Environmental Factors

The industry faced significant environmental headwinds that constrained production yields Verified Answer #1.

• Moisture Stress: Persistent dry seasonal conditions affected major dairying regions, including South West and Northern Victoria Verified Answer #2.
• Rainfall Deficits: Some areas recorded only 77% of their long-term average rainfall Verified Answer #2.
• Feed Challenges: Moisture stress limited natural pasture growth, which is the cornerstone of the state's pasture-based systems Verified Answer #2.
• Supplementary Feeding: Farmers increased their reliance on supplementary feed, such as concentrates, silage, and hay Verified Answer #1.
• Feed Volume: In some key regions, supplementary feeding increased by an average of 0.5 tonnes of dry matter per cow Verified Answer #2.

Economic Performance

Victorian dairy producers experienced a severe cost-price squeeze as high input costs outpaced farmgate revenue Verified Answer #2. Statewide average dairy farm profit (EBIT) fell by approximately 45% year-on-year to $1.46 per kilogram of milk solids (kg MS) Verified Answer #2. This profit level was below the 19-year long-term average for the industry Verified Answer #1.

Input Costs and Inflation

Rising expenses for feed and water significantly impacted production costs Verified Answer #1.

• Feed Costs: In certain monitored districts, feed costs rose by 5% to reach $4.46/kg MS Verified Answer #2.
• Water Scarcity: Water availability became a critical constraint for irrigation-reliant producers in Northern Victoria Verified Answer #1.
• Water Pricing: By October 2025, average temporary water prices in Northern Victoria reached approximately $294/ML Verified Answer #1.
• Price Inflation: This water price represented a 150% year-on-year increase and was 201% above the five-year average Verified Answer #1.

Industry Structure

Volatile farmgate milk prices and escalating input expenses accelerated structural consolidation within the industry Verified Answer #1. Many dairy businesses, particularly mid-sized operators, faced increased pressure to exit the sector Verified Answer #1.