Thinking of Buying a Dairy Farming Business in Australia? Here Are 3 Vital Questions to Ask
The Australian dairy farming industry is valued at $6.13 billion in 2024, with an annualised decline of -1.41% from 2008 to 2025.
While total milk production has fallen due to climate challenges and industry exits, farmgate milk prices have surged by 25% in recent years, improving profitability.
With Victoria accounting for over 65% of national production, larger, more efficient farms are driving industry consolidation.
However, financial sustainability, herd management, and automation potential must be carefully assessed before investing.
1. Is the Business Financially Stable and Profitable?
Why It Matters
Dairy farms generate revenue through milk sales, cattle sales, and diversification into value-added dairy products.
Industry-wide profit margins have increased to 20.6%, but profitability is highly dependent on milk yields, feed efficiency, and cost control.
What to Check
- Revenue trends & profit margins – Review financial records from the last three to five years to assess profitability and cost structure.
- Herd size & production capacity – Larger herds (300+ cows) benefit from economies of scale, reducing per-unit production costs.
- Feed & fertiliser expenses – These account for 45% of total costs, requiring efficient pasture and grain management strategies.
- Diversified income streams – Assess potential for cheese, yoghurt, organic dairy, or export contracts to stabilise revenue.
2. How Competitive is the Business’s Market Position?
Why It Matters
The number of dairy farms in Australia has declined, but those that remain are larger and more technologically advanced.
Businesses that secure long-term contracts with processors and retailers are better positioned for financial stability.
What to Check
- Independent vs. corporate dairy model – Determine whether the business operates independently or benefits from corporate backing and bulk contracts.
- Market adaptability & product differentiation – Review the potential for organic dairy, lactose-free milk, or premium cheese production.
- Processor & retail supply agreements – Secure pricing contracts with major dairy processors and supermarkets to ensure revenue stability.
- Sustainability & compliance advantages – Assess environmental regulations, carbon emission targets, and investment in renewable energy solutions.
3. Is the Business Aligned with Industry Trends and Future Growth?
Why It Matters
Automation, data-driven herd management, and energy-efficient operations are reshaping the dairy industry.
Farms that invest in robotic milking, smart irrigation, and sustainability measures will maintain a competitive edge.
What to Check
- Technology & automation investment – Assess adoption of automated milking systems, AI-driven herd management, and energy-saving technology.
- Regulatory & compliance considerations – Ensure adherence to the Dairy Industry Code of Conduct (2020), biosecurity laws, and animal welfare standards.
- Expansion & revenue diversification – Identify opportunities in value-added dairy processing, direct-to-consumer sales, and export market penetration.
- Resilience to climate & market fluctuations – Evaluate exposure to droughts, floods, and rising input costs to determine long-term sustainability.
Ready to Invest in a Thriving Dairy Farming Business?
With increasing demand for premium dairy products, rising farmgate milk prices, and efficiency gains through automation, the Australian dairy industry presents strong investment opportunities.
However, financial viability, market positioning, and adaptation to industry trends are key to long-term success.
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