“The driest season for 40 years”: Gippsland farmers aren’t confident about the future
Increases in the cost of feeding cattle along with decreases in the price of milk solids are squeezing dairy farmers throughout the state.
Jacob Wallace
October 13, 2025
Dairy farm profits in Gippsland have fallen by 57 percent, marking the region’s lowest return since the 2018/19 milk season, as a dryer season and high costs forced farmers to pull back on spending and lean on savings.
What’s happening: A new report from Agriculture Victoria found Gippsland average dairy farm profit dropped to $1.09 per kilogram of milk solids, down from $2.53 the previous year.
Dairy farmers’ payments are based on the amount of milk solids (everything in milk minus the water) they produce. That price is set annually by the major milk companies.
The report found that “severe rainfall deficiencies” in Gippsland was a primary driver in decline in profitability.
What do farmers think? Neerim South dairy farmer Dave Johnson told the Monitor it’s probably the driest season he’s experienced in 40 years.
“The season last year wasn't very good,” said Johnson. “It cost us significantly more to buy in extra feed to make sure the cows were well fed and producing.”
Johnson said the season had been so dry his farm had “exhausted all of our feed reserves, which we thought we had reasonable levels of. That was probably the biggest impact on the profitability last financial year.”
The factors that brought us here: The report found two things made managing the dry conditions harder for farmers.
A 10 percent decrease in the average milk price
An 11 percent increase in feeding costs
How it impacts the whole country: There are 917 dairy farm businesses in Gippsland that produced almost 2 billion litres of milk in 2024/25. This represents almost a quarter (23.2 percent) of the country's milk production.
More rain could save the season: Johnson said the next two months were critical and will mean farmers can store as much silage and hay as possible, keeping the cows milking for longer and cheaper.
“If we get really good rain in the next two months, it could be an okay season,” said Johnson.
“There's no reserves of soil moisture… If the season cuts out early, then that would put a lot of pressure on the profitability again this year.”
Why is it so dry? A report from the Bureau of Meteorology and the CSIRO explains that increases in the concentration of CO2 in the atmosphere from burning coal, oil and gas has caused a continued decrease in seasonal rainfall across many regions of southern and eastern Australia, which will likely lead to more time in drought.
Low confidence: The Agriculture Victoria report found that Gippsland’s average net farm income was negative for the first time since 2018/19.
“I don't think there's a massive amount of confidence in the industry at the moment,” said Johnson.
