Young Victorian dairy farmers Melanie and Paul Ackerley are bucking a range of industry trends on their farm, 160 kilometres south-west of Melbourne.
The dairy industry is shrinking. It has lost 20 per cent of its farmers in the five years since the Ackerleys bought their farm in 2017.
The two properties that neighbour their farm have gone the way of many in south-west Victoria, converting from dairy production to beef.
But the Ackerleys are keen to increase the amount of milk they are producing.
And it is a good time to have milk to sell. The reduction in farmers has seen national milk production decline, and now processors are offering close to $10 a kilogram of milk solids (kgms) as they vie for a declining supply.
The national commodity forecaster ABARES projected average dairy farm incomes to rise 35 per cent to $338,000 per farm in 2021-22, and again next year, thanks to higher farmgate milk prices.
But any increases over the coming year will be heavily moderated by the soaring costs of fuel, fertiliser, and feed for Ms Ackerley's cattle.
"To think back five years ago to now, for an equivalent kind of dairy ration, we're probably looking at an increase of over 100 per cent, so from $350 to $600 a tonne. So we're looking at some significant increases," she said.
Grain gain
The price of fodder is rising because grain prices are so high that broadacre farmers have devoted less land to feed, and more to wheat, legumes, and canola.
When Culgoa grain grower Georgina Warne was deciding what to plant, the high canola price was enough to entice her to try the crop for the first time.
And with wheat at $450/t Ms Warne could see the rationale in paying $1,300/t for fertiliser this year.
But there is also diesel for the farm machinery and the chemicals used to protect the crop and keep weeds at bay.
"I can't say it's frightening, because all of these bills are budgeted and I'd be ignorant for not expecting them," she said.
"For instance, last year I paid on average $750/t for urea for the farm and I thought that was very dear."
Last year's bumper harvest saw farm cash incomes lift 28 per cent to $620,000 per farm in 2021-22, a whopping 76 per cent above the long-term average.
Rabobank reported last week confidence in the coming season was highest among grain farmers with "40 per cent of growers expecting business conditions to improve over the year ahead".
Bullish on livestock
The prices paid for beef, lamb, and sheepmeat at saleyards around the country have broken record after record as farmers competed with meat buyers to rebuild their herds and flocks after the last drought.
Saleyard prices are expected to decline in the coming 12 months, and ABARES estimates the value of beef and sheepmeat exports to drop by around one per cent to $25 billion in 2022-23.
But in Hamilton, Victoria, where the dairy farmers moved into beef and sheep farmers maintained consistent numbers in their flocks, livestock agent Heath Templeton was not too concerned about declining saleyard prices.
"I don't think it'll dip that much. There won't be the records set but it'll still hold at a very good rate," he said.
"I sold heifers, two weeks ago, that were up to $10 a kilogram."
Past the farm gate
In May, the Australian Banking Association declared Australian agribusiness a "star performer" in its assessment of national business lending.
In the 12 months to February 2022 its members lent $4.3 billion to agriculture, forestry, and fishery businesses, a 30 per cent rise on the previous 12 months.
A run of good seasons, and expectations the high prices will stick around, has spurred an investment frenzy on farms.
"The infrastructure that's been spent on farms has been astronomical," Mr Templeton said.
"A lot of people are putting new sheep yards in, new cattle yards, their woolsheds are being upgraded."
But the the appetite for more investment may be waning as farmers wait to see just how high their input bills will rise.
While the Ackerleys still have long-term plans for expansion, right now they are holding off.
"The uncertainty has put a lid on a few things and we've just said 'let's sit with where we are now'," Ms Ackerley said.
But years of high livestock and grain prices has seen investment flow past the gate and into Hamilton, according to mayor Bruach Colliton.
Nationally, finding enough workers remains one of the biggest handbrakes for agriculture, especially in horticulture.
But between the COVID-induced exodus of Melbourne and the high availability of long-term work in agriculture and agricultural services, Hamilton has seen a boost in its population.
"We've seen new sporting teams starting up, particularly in the younger sector. We're seeing a lot more smaller businesses in our CBD and smaller towns," Mr Colliton said.
