Business positivity is at its lowest point in five years, according to the annual National Dairy Farmer Survey.

While milk prices have been a key driver of farmer sentiment, the report indicated pricing had less impact on national confidence in this year's survey responses.
Released by Dairy Australia as part of its May Situation and Outlook report, the survey results detailed farmer sentiment across all dairy regions of Australia, following an interview of 600 farmers in February this year.
Difficult weather conditions impacted the status quo, causing widespread impacts on input costs and profits. At least half of all businesses in every dairy region across Australia experienced some effects of extreme weather conditions.
Good quality fodder is becoming increasingly difficult to source and more expensive, and water for stock and domestic purposes is also of heightened concern, the survey responses showed.
"The consequences of these challenges are having some flow on effect to milk production as culling rates rise in some areas, and with cows being dried off earlier than usual," the report stated.
In Gippsland, 75 per cent of respondents remained positive about their own business, but concerns with operating costs and farmgate prices significantly reduced business and industry confidence.
A high 88 per cent of dairy farmers reported an operating profit in 2024 but expectations for 2025 were significantly lower with most businesses anticipating lower than average profits.
Compared to 2024, Gippsland farmers are:
Less positive about the future of the dairy industry - 54 per cent, down from 67 per cent;
Less positive about their own businesses - 75 per cent, down from 89 per cent;
Less likely to be profitable in 2025 financial year - 71 per cent, down from 88 per cent;
41 per cent indicated their enterprise was where they wanted it to be, down from 54 per cent;
20 per cent, up seven per cent on last year, indicated they weren't in a position to expand their enterprise; and,
Only 15 per cent are planning major investment in the next year.
Gippsland farmers reported the greatest challenge for the season ahead would be climate (42 per cent), while 30 per cent reported concerns about labour and 29 per cent were concerned about input costs.
The average herd size in Gippsland was 388 with 34 per cent of farmers reporting herd sizes between 151 and 300, and 31 per cent reporting herd sizes of 302 to 500 - a seven per cent increase on last year.
The report stated production had continued to grow in Gippsland but pressures mounted in the final months of the season.
Half of Gippsland's farmers reported production in the range of 1.1 million to two million litres, which was four per cent more than last year; and 15 per cent were producing between 2.1 to 3 million litres also slightly up on last year. While there have been some farm exits, several have been purchased by neighbouring dairy farms. During the first half of the season, there was increased appetite to grow herds in response to lower incomes, and investment from major producers in the region picked up.
"While this was supported by Gippsland's longer-term equity prospects, high farmland values in Australia's most expensive dairying region deters new entrants.
"More recently, drier conditions in the region's western and southern areas have led to feed and stock water issues for many farmers resulting in increased culling.
"Considering the lingering impacts of these challenges into the new season, Gippsland's production is likely to ease in the 2025/26 season," the report stated.
In terms of medium to longer term priorities, making on-farm improvements continues to the top priority and current sentiment is resulting in fewer farmers across all regions looking towards business growth in the next five to 10 years.
Australia's milk production is on track to end this season at 8.3 billion litres, however, the report indicated unfavourable weather, farm exits, smaller herds and persistently tight margins will likely impact production in the new season.
Dairy Australia is forecasting the national milk pool to drop between zero to two per cent in the 2025/26 season.