CONTENTS

Restructure and Reform

Outcome:  Provide a service that assists with restructure, relocation and consolidation to improve farm viability on South Australia dairy farms

Project Activities and Achievements:

• Farm Economic Analysis Project
  Red Sky  Appendix  27
  
  The farm economic analysis project has involved developing a business case for investing in dairying in South Australia via the expansion of existing dairy farms, restructuring, relocation or consolidation of existing farms and the conversion of farms from alternative land uses to dairying

Over the past four years the Dairy Industry Development Board has developed a strategic plan for the growth and development of dairying in South Australia.  Against this backdrop the industry has suffered from both a severe drought and a period of lower milk prices, and continued to face the challenge of an ever-changing landscape.  This has highlighted the need for the industry to have an accurate picture of the level of business performance being attained on South Australian dairy farms.  If we are to assist all sections of the South Australian dairy industry to develop and grow their businesses, as well as attract more investment into our state, then we need to know how our farmers perform from both a financial and physical perspective. 

Raw data has been collected to populate a database of information.  Over 40 sets of farm financial data has been collected, equating to 10% of our industry.  The farms represent a cross-section of South Australian dairy farms.  The data has been processed by ‘Red Sky’ and benchmarks have been produced for both average farm performance and top 15 of farms.   This benchmark data is being used to assess the present position of the South Australian dairy industry, the competitiveness of South Australia compared to other states and New Zealand, and the prospects for growth in South Australia.  All of this will be combined to review how resources can be best applied to assist with industry development and promotion.

Farmers involved in the project will receive a confidential analysis of their business at no cost other than a small amount of time.  It will include a comprehensive analysis of their business confirming the true level of profit in their business, the quantifiable level of risk, and an assessment of the key profit drivers.  The software to be used, Red Sky Farm Performance Analysis (‘Red Sky’), will also provide detail on the amount of pasture harvested, full feed costs, levels of labour efficiency and irrigation efficiency.  Each farm can then compare their own performance with South Australian , Victorian or Tasmanian dairy farms, as well as New Zealand dairy farms.  We will also be running some seminars once the data has been processed to discuss the outcomes of the project, to look at the key factors that distinguish the top farmers from their peers, and to discuss the key profit drivers in pasture-based dairying.  These seminars will also have no cost and will provide farmers an opportunity to understand the Red Sky reports on their businesses in more detail.

The industry gain the benefit of a firm set of farm financial data that allows them to analyse both the average and the top 15% performance of South Australian dairy farms and the performance of South Australia compared to other dairy regions.  This comparative analysis will then be used to determine the strengths of the various regions and determine what opportunities are available for growth.

The report in Appendix 27 provides a summary of the first set of data that has been analysed to determine South Australia’s dairy business performance.  The results so far show that South Australia is extremely competitive compared to other regions in:
 Farm Size
 Equity
 Production per cow
 Forage Costs
 Concentrate Costs

Financial Analysis