Rising Costs, Climate Pressure and the Future of Farming in Australia
Dairy Australia’s Situation and Outlook Mid-year 2026 report points to a sector under increasing strain, with extreme weather, rising input costs and a growing reliance on supplementary feed reshaping the reality for many dairy farmers.
The report, based on a national survey of 600 dairy farmers, found that 80% of respondents were slightly or severely impacted by extreme weather in the 12 months to February 2026.
Extreme weather affects far more than seasonal production. It can disrupt pasture growth, reduce feed availability, increase water costs, affect herd management and leave farmers carrying financial pressure long after conditions improve.
Recovery from one season can be interrupted by the next. A difficult season can leave farmers with higher debt, reduced reserves, delayed repairs and less capacity to absorb the next shock. When this pressure continues over multiple seasons, the question for many farmers shifts from how to manage a difficult year to whether the business remains viable at all.
One of the clearest indicators in the report is the increased reliance on supplementary feed. Dairy Australia found that the average amount of concentrate supplements fed per cow rose from 1.8 tonnes to 2 tonnes in the previous season, the highest level recorded since reporting began in 2009.
This shift matters. Supplementary feeding can be essential during poor seasons, but it comes at a significant cost. Purchased feed, freight, storage, machinery, labour and infrastructure all add pressure to already tight margins. When pasture cannot be relied on as planned, farmers are left to cover the shortfall — often at the same time as other costs are rising.
The report also found that the proportion of farms using some form of feeding infrastructure outside the dairy increased from 52% to 63%. This suggests that many farms are not simply making small seasonal adjustments. They are changing the way they operate in response to a more difficult and less predictable environment.
Input costs are compounding the problem. Dairy Australia notes that fuel and fertiliser prices have spiked, with these increases expected to affect feed production and broader farm costs. While improved rainfall may provide short-term relief in some regions, it does not erase the cost of purchased feed, water, transport, fertiliser, labour or debt carried over from previous seasons.
The regional findings show the pressure is uneven, but widespread. Western Victoria was particularly affected, with almost all respondent farms reporting impacts from extreme weather and seven in ten reporting severe impacts. South Australia, New South Wales, Murray and Subtropical regions also recorded high levels of weather-related pressure.
Nationally, around 7% of dairy farms are in a “winding down” phase.
Behind that figure are farming families weighing difficult decisions. Winding down is rarely the result of a single event. More often, it follows years of pressure: rising costs, unpredictable seasons, physical exhaustion, debt, succession challenges and uncertainty about whether the current model can continue.
This is where early, practical transition support becomes essential.
Farmers should not have to wait until they are in crisis before they can explore their options. For some, the right path may be changing land use. For others, it may be diversification, succession planning, reducing herd size, or leaving the industry entirely. These decisions are complex and deeply personal, and they deserve to be made with clear information, time and support.
Farm Transitions Australia exists to help create those pathways.
The Dairy Australia report makes clear that the pressures facing farmers are not isolated or temporary. Weather volatility, feed reliance and rising costs are now central factors in farm decision-making. For many, the question is no longer only how to get through the next season. It is whether staying in production remains financially, physically and emotionally sustainable.
When the cost of continuing becomes too high, farmers deserve more than pressure to keep going. They deserve practical options, respectful guidance and support before crisis takes those choices away.
