ECONOMIC hardship will put a dent in Dairy Australia's finances, the company's managing director Mike Ginnivan said last week.

Dr Ginnivan told the Dairy Australia annual general meeting in Melbourne that the company's income for the past financial year was higher than expected, but he warned some reserves might be spent in the future.

Dairy Australia's income for 2008-2009 was $53.45 million, which included income from dairy service levies, the Federal Government, external contributions, royalties and interest dividends.

The company spent $50.4 million during the year; $33.68 million on pre and post farmgate R&D and $16.36 million on industry services.

"Our income for the year was higher than forecast and our investment strategy was on target, delivering a surplus of $1.2 million dollars," Dr Ginnivan said.

"Our income this year, which is largely a function of milk production and farmgate milk prices, is expected to come under pressure as a result of the economic downturn and lower milk prices.

"But our current five-year plan anticipates the need to draw down on these reserves in order to maintain our current level of expenditure on R&D and industry services."

Dairy Australia chairman Max Roberts acknowledged the hardships the dairy industry had faced in the past 12 months with volatility in demand, climate, milk prices and input prices, but he remained positive.

"The impact was enormous and felt by over 70 per cent of our farmers and it came after a year of record earnings," Mr Roberts said.

"For many businesses, this sort of volatility is extremely difficult to manage, however, the fact that Australian farmers have been adapting through these times is evidence of the skill and resilience we have on our dairy farms."

The meeting also saw the reappointment of Dairy Australia board directors Kelvin Jackson and John Doyle.

The company plans to continue research into genetics and robotics.

It also plans to pay close attention to climate change and the effects an emissions trading scheme would have on the dairy industry.