Buying a dairy farm or considering a dairy conversion

Dairy operators need to comply with statutory requirements of both State and local government authorities including:
Initial citing of the dairy
Waste management and disposal
Identification of stock
Welfare and transport of stock
Welfare of employees.

The steps required before and dairy can be established include the following:

The capital cost of establishing a new dairy in WA is low in comparison to other dairy areas of the world.  The cost of establishing a 1,000 cow dairy farm ranges  between $8,000-$11,000/cow or less than $25/kg MS. This is very competitive with New Zealand, which has capital costs of around $35/kg MS (excluding co-operative shares).

The table below shows an example of development costs to establish 1,000 cow dairy farms based on centre pivot irrigation in WA.

Source: Primary Consulting (2007).

Some 30-45% of the cost of establishing a new dairy farm is associated with land and 10-20% with cattle.

A Year-In-Year Out budget for one of these regions (Scott River) is presented below assuming an average milk price of 32 c/L or $4.51 kg MS (Note: Milk prices for 2007/8 are 20-30% higher than the average used in this example

As the price of milk has increased over the last 3 years and varies according to processor, the impact of milk prices on margin is demonstrated below.

Expansion of the dairy industry