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Benchmarking
When benchmarked against other Australian states or New Zealand, Tasmanian dairy farms often come out on top.
Return on Capital Invested
Tasmania has a long history of benchmarking dairy farm physical and financial performance with the Department of Primary Industries, Water and Environment (DPIWE) having been involved for the past 25 years.
Farm returns vary between years due to variations in both milk price and seasonal conditions. The results for the most recent year for which figures are available are outlined below.
Tasmanian Benchmarking Results - 2006
| Measure | Unit | Average | Top 10% |
|---|---|---|---|
| Return on assets | (%) | 5.7 | 12.6 |
| Herd Size | (Cows) | 364 | 448 |
| Production | |||
| Total milk solids | (kg) | 142,701 | 256,709 |
| Milk solids per hectare | (kg) | 1,025 | 1,338 |
| Milk solids per cow | (kg) | 392 | 448 |
| Pasture irrigated | (%) | 24 | 28 |
| Pasture utilised | (tDM/ha) | 8.95 | 11.2 |
| Purchased feed1 | (%) | 23 | 30 |
| Cows/labour unit | (Cows/FTE) | 90 | 113 |
1. Proportion of total diet as purchased feed - eg grain, pellets.
Source: DPIWE Dairy Business of the Year Award
The Australian Bureau of Agriculture and Resource Economics (ABARE) conducts annual surveys of dairy farm performance throughout Australia. Over time the return on capital in Tasmania has out-performed Australia as a whole, and the major dairy state, Victoria.
Average Return on Assets Invested
(before capital gain)
| Year | Tasmania (%) | Victoria (%) | Australia (%) |
|---|---|---|---|
| 1996-97 | 1.2 | 1.8 | 1.6 |
| 1997-98 | 1.3 | 1.2 | 1.4 |
| 1998-99 | 3.4 | 2.2 | 2.2 |
| 1999-00 | 3.4 | 0.8 | 2.1 |
| 2000-01 | 4.4 | 4.7 | 3.1 |
| 2001-02 | 7.2 | 7.9 | 5.7 |
| 2002-03 | 2.2 | -1.7 | -1.1 |
| 2003-04 | 1.1 | 1.0 | 0.9 |
| 2004-05 | 1.4 | 3.1 | 2.3 |
| 2005-06 | 2.3 | 3.6 | 2.1 |
| Average | 2.8 | 2.5 | 2.1 |
Source: ABARE, Farm Surveys
Growth in Net Worth
Growth in net worth or equity has been monitored by the Department of Primary Industries and Water (DPIW) through its annual benchmarking of dairy businesses (above). In recent years there has been a significant increase in net worth.
Fifteen farms have been involved in benchmarking for each of the past four years. For those 15 farms net worth doubled over the three-year period from 2002-03. This is equivalent to a compound increase of 26.5 per cent per annum.
Since 2002-03 increases in property prices have caused returns from the 'property owning' part of a dairy business to be much greater than the return on assets for the 'dairy farming' part of the business. The average annual return on assets measured through the benchmarking program varied from around four to eight per cent over the same period.
Growth in Net Worth on Tasmanian Dairy Farms
| 2002-03 | 2003-04 | 2004-05 | 2005-06 | |
|---|---|---|---|---|
| Assets ($) | $1,310,000 | $1,702,000 | $2,016,000 | $2,526,000 |
| Liabilities ($) | $359,000 | $415,000 | $401,000 | $402,000 |
| Net assets (equity) ($) | $1,042,000 | $1,278,000 | $1,616,000 | $2,109,000 |
| Equity growth, % pa | 23% | 28% | 31% |
Source: DPIW Benchmarking
Cost of Production
The ABARE survey data (above) has been used to determine the cost of production of milk throughout Australia. This has also been compared with New Zealand results. Tasmania routinely has the lowest cost of production in Australia - and is on a par with New Zealand (see graph below).
Cost of Production
Tasmania Versus Other States & New Zealand
The more reliable dairying climate in Tasmania is highlighted by the results in 2003-04. In that year a drought on the mainland resulted in a substantial increase in the cost of production. Tasmania with its more reliable climate was only marginally affected.
Farm Cost Per Hectare
A recent (2005) comparison by the dairy benchmarking company Red Sky has highlighted the relative affordability of farms in Tasmania.
Farm Cost Per Hectare
A number of additional sources of financial and benchmarking information are provided in the attached documents:
