NINETY per cent of Western Australia's 120 dairy farmers made a profit last financial year and a similar proportion expect to make a profit again this year, according to the May Dairy Situation and Outlook report.
WA dairy farmers were also among the most positive in the country - 73pc compared to 68pc nationally - about the future for their industry, according to National Dairy Farmer Survey findings released by Dairy Australia last week as part of the outlook report.
But profitability and confidence will not be enough to stop a further shrinkage of 7pc - another eight dairy farmers - leaving the WA dairy industry over the next two years, according to the report.
A higher proportion of WA dairy farmers (73pc) than the national average (58pc) expect no change in their herd size between now and 2024-25.
Half of WA's dairy farmers compared to 39pc nationally expect their milk production will not change over the same period.
Only 13pc of WA dairy farmers (27pc nationally) and 33pc (47pc nationally) expect to increase herd size and grow milk volumes respectively by 2024-25, according to the survey results.
With fewer dairy farmers and relatively static herd size and milk production forecasts for those expecting to remain in the industry in WA, the Dairy Situation and Outlook report suggests there will be continued pressure on processors - including Coles Supermarkets, considered a processor because it buys raw milk direct off farmers for some of its retail products - to improve farmgate prices.
WA dairy farmers responding to the national survey said they saw challenges to be faced in the next six months as farm labour (60pc), input costs (also 60pc) and climate (17pc).
But none of them said they saw milk price as a challenge this year.
This compared to 20pc who saw it as a problem last year and 18pc who thought milk price was a challenge the year before.
The test of whether processors recognised and were prepared to respond to the pressure applied by a diminishing number of farmers supplying them with a likely decreasing total volume of raw milk was expected by WA dairy farmers as soon as yesterday (Wednesday).
WA's main milk processors – Brownes Dairy, Bega Dairy & Drinks, Harvey Fresh owner Lactalis and Coles - were required under the national dairy code of conduct to display from noon yesterday indicative standard-form supplier agreements and pricing for the 2022-23 season.
Competition among processors for sufficient supply to meet contracted agreements with retailers was expected to see some processors forced to lift their price offers yesterday.
WA's National Dairy Farmer Survey respondents indicated 17pc intended or wanted to change the milk factory they currently supplied, while 7pc had changed processor last year, the latest Situation and Outlook report showed.
According to the report, 43pc of WA's dairy farmers now run herds of between 150 and 300 cows, compared to 33pc last year and 28pc the year before, while 27pc - the same as last year and 2pc more than the previous year - run 301-500 cows.
But the number of larger dairy farm herds has decreased over the past three years, the report showed, with only 3pc of farmers now milking 501-700 cow herds, compared to 13pc last year and 20pc the year before that.
Farmers milking herds of more than 700 cows now comprise 13pc of WA's dairy farms - down from 17pc last year and 18pc the year before.
Similarly, the number of WA farmers producing small to medium volumes of milk has increased two out of the past three years and increased three years in a row for farms producing medium to larger volumes.
Farmers producing 1.1-2 million litres of milk a year now comprise a third of the WA dairy industry, compared to 21pc last year and 23pc the previous year.
Farmers producing 2.1-3mL a year comprise 27pc of the industry, compared to 24pc last year and 18pc the previous year.
But bigger producers have become fewer over the past three years.
Herds with annual production of 3.1-4mL a year made up 18pc of the WA dairy industry in 2019-20, 17pc last year and 13pc in the current year, while herds producing more than 4mL a year comprised 31pc of the WA industry in 2019-20, 28pc last year and 17pc this year.
All of WA's 120 dairy farmers said in the survey they had invested onfarm in the past two years and 83pc said they intended to further invest in the next two years.
Of those, one third said they planned minor investment, 37pc said they planned "moderate" investment and 13pc said they planned major investment.
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