Dairy Benchmarking: Strategic Insights and Critical Trends 2024/2025 in South Africa
The 2024/2025 Dairy Benchmarking exercise, covering farms in the Eastern Cape, Western Cape, KwaZulu-Natal, and Free State, provides a snapshot of a year that tested resilience in South African dairy farming. Most of the farms in this study are pasture-based, operating under diverse production systems, from fully irrigated platforms to dryland setups and include both seasonal and year-round calving herds. From July 2024 to June 2025, producers faced rising input costs, flat milk prices, and unpredictable weather, while global market shifts and geopolitical events added more uncertainty. Despite these challenges, many farms stuck to the fundamentals while also adapting through smarter feed strategies, tighter cost control, and early adoption of technology. At the same time, industry conversations highlighted the need for stronger collaboration and export readiness to stay competitive. Alongside overall trends, we benchmark against the top % of return on total assets and top % of lowest-cost producers, as these farms are best positioned to manage market shocks and maintain profitability. This approach helps identify not only what is typical, but what is possible when efficiency and resilience are prioritized. Benchmarking acts as a business health check, revealing strengths and weaknesses. It helps farms owners and management assess performance through an independent review. In this article, we share the key physical and financial performance trends revealed by our dairy benchmarking analysis and what they mean for dairy businesses planning for the future. Physical KPIs: What Drives Performance Physical performance indicators tell us how efficiently farms turn their resources into milk. In the 2024/2025 dairy benchmarking exercise, most participating farms were pasture-based, operating under diverse systems as touched on in the introduction. This diversity makes benchmarking essential for identifying what works best under different conditions. Key metrics we measured: Units SA Average 23/24 SA Average 24/25 SA Top 25% 24/25* SA Top 10% 24/25* Usable area irrigated % 63 70 82 77 Stocking Rate (Milking Area) cows / ha 3,5 3,6 3,6 3,7 Grazed feed (Milking Area) tdm / ha 12,2 12,5 15,0 16,6 Grazed feed (Total Area) tdm / ha 10,4 10,8 12,9 13,0 Homegrown feed (Total Area) tdm / ha 12,1 12,8 14,1 14,4 Purchased feed energy % % 36 36 32 28 Homegrown feed energy % % 60 61 66 70 Grazed feed energy % % 53 53 62 66 Milk production (Litres) litres / cow 5 770 5 813 5 706 5 800 Milk production (Solids) kg MS / cow 492 500 494 486 Milk solids per kg liveweight kg MS / kg LW 1,07 1,09 1,08 1,00 Labour efficiency cows / labour unit 46 46 50 48 *Top 25% and Top 10% figures represent farms with the lowest cost of production. What we saw: These physical efficiencies are not just operational wins, they form part of the foundation for profitable pasture-based dairy farming. In the next section, we explore how these factors translate into financial performance. Financial KPIs: Profitability Under Pressure Financial performance in 2024/2025 reflected the challenging market conditions, flat milk prices, rising input costs, and environmental variability. Benchmarking against the top 25% and top 10% of lowest-cost producers provides valuable insight into how efficiency translates into resilience from a profitability perspective. *R/Ha figures indicate EBIT per unit of milking area. Units SA Average 23/24 SA Average 24/25 SA Top 25% 24/25* SA Top 10% 24/25* Milk Income cents / litre 731 716 707 716 Total Farm Income cents / litre 769 754 747 754 Total Variable Cost cents / litre 444 461 394 368 Gross Margin cents / litre 325 293 354 386 Total Overhead Cost cents / litre 136 137 137 136 Total Operating Cost cents / litre 580 598 531 503 EBIT (Litre) cents / litre 190 156 217 250 EBIT (Cow) R / cow 10 985 9 031 12 313 14 485 EBIT (Total Area) R / ha 32 715 28 265 38 875 42 255 EBIT (Milking Area) R / ha 38 671 32 936 44 761 52 691 Operating Profit Margin % 25,3 21,2 30,1 35,2 Return on Total Assets % 9,1 7,5 9,9 12,6 Return on Equity % 10,8 9,9 12,5 21,0 *Top 25% and Top 10% figures represent farms with the lowest cost of production. What we saw: Average overhead costs held steady at 136–137 cents/litre, matching top performers. Variable costs primarily caused total operating costs to rise to 598 cents per litre for the average, which was 11% higher than the top 25%. Why Return on Total Assets Matters Up to this point, the paper has benchmarked the average against the lowest-cost producers. While this comparison is valuable, we recognize that cost of production can vary significantly between irrigated and dryland systems. This is why Return on Total Assets (ROTA) is so important. ROTA measures how effectively a farm uses all its assets (land, livestock and infrastructure) to generate profit. It provides a true apples-to-apples benchmark across farms with different resource bases, land values and productive capacities. The graphic below compares the average to the top 10% based on ROTA. Similar to the lowest cost producers, these top performers are highly diverse, ranging from 100% irrigated to 100% dryland operations. The numbers reinforce a key point made earlier: the real differentiator is not the production system, but the ability to execute consistently year after year. *R/Ha figures indicate EBIT per unit of milking area. As South African dairy farming faces rising costs, volatile markets, and climate uncertainty, benchmarking is more than comparative analysis, it’s a strategic compass guiding smarter decisions. Top performers use it to improve year-on-year, leveraging insights that go beyond cost of production to include measures like Return on Total Assets (ROTA), which provide fair comparisons across different resource bases. This year’s analysis shows that efficiency, resilience, and adaptability are not optional, they are the foundation for long-term success. Importantly, the top performers are not concentrated in one region. They include farms from the Free State, KwaZulu-Natal, Fish River, and Tsitsikamma in the Eastern Cape, operating under diverse systems, varying levels of
