victoria-dairy-industry-performance-2025

In 2025, the average annual milk production per cow in Victoria, Australia, faced significant constraints due to a convergence of adverse environmental and economic factors Verified Answer #1. While the industry maintains a long-term upward trajectory in yield per cow, these gains were subdued in the 2025 calendar year Verified Answer #1. Regional performance generally tracked below the long-term and previous five-year averages Verified Answer #1.

Environmental Factors

The Victorian dairy industry encountered several environmental challenges during the 2025 calendar year Verified Answer #1. Major dairying regions, particularly Northern and South West Victoria, experienced significantly below-average rainfall Verified Answer #1. This moisture stress severely limited natural pasture growth, which is a critical input for the state's predominantly pasture-based dairy systems Verified Answer #1. Consequently, farmers were forced to rely heavily on supplementary feeding, including concentrates, silage, and hay Verified Answer #1.

Water scarcity emerged as a critical constraint for irrigation-reliant producers in Northern Victoria Verified Answer #1. By October 2025, average temporary water prices in Northern Victoria reached approximately $294/ML Verified Answer #1. This price represented a 150% year-on-year increase and was 201% above the five-year average Verified Answer #1.

Economic Performance

Farm profitability in 2025 experienced severe margin compression as input cost inflation outpaced revenue Verified Answer #1. This squeeze was primarily driven by elevated fodder and water costs Verified Answer #1. According to the Agriculture Victoria Dairy Farm Monitor Project 2024–25 report, the statewide average dairy farm profit (EBIT) fell to $1.46/kg of milk solids (kg MS) Verified Answer #1. This figure recorded a decline below the 19-year long-term average Verified Answer #1.

Rising input expenses and volatile farmgate milk prices accelerated structural consolidation within the industry Verified Answer #1. Many dairy businesses, particularly mid-sized operators, faced increased pressure to exit the industry during this period Verified Answer #1.