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:

• Irrigation vs dryland performance – understanding how water availability shapes output.
• Milk production per cow and per kg liveweight – a core measure of productivity.
• Stocking rate – balancing herd size with available feed and land.
• Pasture Utilization and Feed Sources – the proportion of grazed feed, homegrown feed, and purchased feed which is critical for cost control and sustainability.
• Labour Efficiency – measured as cows or hectares per labour unit to assess workforce productivity.

	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:

• Irrigation Coverage
  Average irrigated area increased to 70%, while lowest cost producers are farming on about 80% irrigation. This may suggest that the extra irrigation helped improve efficiency, but it is important to remember that within the lowest cost farms, there are 100% irrigated systems, 30 – 50% irrigated systems as well as 100% dryland systems. This means that success isn’t necessarily about the amount of irrigation, but more about having the skills to execute on the system.

• Stocking Rate Stability
  Stocking rates on milking platforms edged up from 3.5 to 3.6 cows/ha, with top 10% farms reaching 3.7 cows/ha, showing careful optimization without overstocking despite higher % irrigation.

• Pasture Utilization Driving Efficiency
  Grazed feed per hectare (milking area) improved year-on-year (12.2 to 12.5 tDM/ha), but top performers achieved 20 – 30% higher, highlighting the value of strong pasture management.

• Homegrown Feed and Grazed Feed Advantage
  Farms producing more of their own feed maintained better cost control. Top 10% farms sourced 70% of feed energy from homegrown sources, compared to 61% for the average. Furthermore, top 25% farms sourced 62% from grazed feed while top 10% farms pushed up to 66%, compared to 53% for the average.

• Purchased Feed Dependency
  While the average stayed at 36% purchased feed energy, top 10% farms managed as low as 28%, reinforcing resilience against feed price and milk price volatility.

• Milk Production Holding Steady
  Litres per cow remained stable (~5,800 litres), but efficiency gains came from feed and cost strategies rather than pushing production. In fact, milk solids per kg liveweight for the average was 7% higher than the top 10% performers.

• Better Labour Efficiency at the Top
  Average stayed at 46 cows per labour unit, while top farms managed towards 50 cows per labour unit, showing the impact of system design and productivity.

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:

• Milk Price Under Pressure
  Average milk income declined slightly from 731 to 716 cents/litre, reflecting flat market prices. Top performers managed similar levels but relied on cost control rather than milk price gains. Furthermore, milk production per cow remained steady across groups, proving that profitability came from efficiency and resource management, not pushing volume.
• Variable Costs Increased for Most Farms
  Average variable costs rose from 444 to 461 cents/litre, driven by higher herd and feed costs despite bought in energy percentages having remained the same, showing an increase in the cost of bought feed during the year. In contrast, top 25% farms kept these at 394 cents/litre, and top 10% at 368 cents/litre, showing the impact of efficient feed strategies through planning and execution.
• Purchased Feed Remains the Biggest Cost Driver
  While not shown in the table above, average purchased feed costs stayed high at 241 cents/litre, while top 10% farms reduced this to 199 cents/litre, reinforcing the fact that cost control in pasture based systems starts with increased pasture utilization and the advantage of homegrown feed. Farms that maximized grazed feed and homegrown feed, as seen in the physical KPIs, were able to keep purchased feed costs significantly lower (18%).
• Overhead Costs Maintained 

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%.

• Low-Cost, High Pasture-Utilized Systems Drove Superior Returns
  Top-performing farms that combined tight cost control with strong pasture utilization and feed self-sufficiency outpaced the average. These producers achieved EBIT of R14,485 per cow and R52,691 per hectare on milking platforms, underpinning returns on total assets of 12.6% vs 7.5% and returns on equity of 21% vs 9.9%. This synergy between low-cost structures and pasture focus translated into financial resilience and stronger overall profitability in a year where milk price remained flat.

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 irrigation, and distinct calving strategies. What they share is a robust business model, a clear focus on the physical and financial metrics that matter, and the skills to execute consistently.

Looking ahead, continuous learning and collaboration will be critical to unlocking new opportunities and sustaining profitability in an increasingly complex environment.

Take the next step and contact us:

We welcome your feedback and invite you to request a customized dairy benchmarking report or consultation. Together, we can shape a stronger, more competitive, and sustainable future for dairy farming.

Visit our website or contact info@pinionza.com for more information.