Mr Odgers was speaking at Dairy Australia's annual Situation and Outlook breakfast in Melbourne.

"This industry needs to talk about margins, right through the chain," he said.

"We do have some farmers in all regions maintaining earnings, before interest and tax, above $1.50/kilogram milk solids.

"These farms are usually characterised by a high level of technical skills and staff.

"At that level of profit, these businesses are able to service debt and are able to reinvest."

But he said there were not enough farmers "in that place" making solid margins.

The latest Situation and Outlook report found just 43 per cent of farmers expected to make an operating profit in 2018-19.

"For most farmers, it's much harder," he said.

"Combined feed and labor costs on many farms now account for approximately 70pc of production costs on farm."

Mr Odgers said the last few years had been an extraordinarily difficult period for all primary producers, with the eastern seaboard drought, and the doubling of water and feed costs.

"We have been dealing with a succession of very tough years," he said.

"The impact of that, on the broader dairy community, has been profound, from market and supply chain pressures, through to the attraction of people to the industry and challenges to farmer profitability.

"These impacts are very real and continue to be felt across the industry."

He said it was unusual for a drought to be so widespread.

"Usually, in Australia, there will be dry regions, but this is pretty acute, even the national beef herd is at a 20 or 25-year low, so all industries have been hit," he said.

Read more: Numbers show dairy distress

The Situation and Outlook report forecast a drop of 7-9pc in milk production for 2018-19, relative to 2017-18.

But Mr Odgers said there had been excellent engagement from farmers on the new plan for the industry's future.

He told the breakfast more than 1000 people had attended 24 consultation workshops for the Australian Dairy Plan.

"It's been very well received, by the people who have attended," he said.

"The themes coming out of the meetings, held to date, have been remarkably consistent.

"Farmers are looking for strong leadership and the industry to speak with a consistent voice to consumers and governments alike, on issues such as the value of dairy, and the underlying policies that govern the industry."

Mr Odgers said a lot of participants had also talked about wanting to promote dairy to a higher degree.

"Let's make sure Australia really knows its dairy industry, and its products, even more closely," he said.

"All of those are great things that have been put to us and we think we can do something about them.

"I think there are a number of things we can do differently to address that."

He said the need for the plan had been informed by the Australian Situation and Analysis Report, which focused on broader industry challenges and settings.

These included the evolution of the market, faster than the rest of the industry, which came at a time of real changes in consumer trends.

"Global competitors are moving ahead of us, Australian dairy's relevance, in international markets, is being questioned," he said.

He said while there had been a $3 billion investment by processors in the industry in the last five years, on-farm profitability had become more difficult and volatile.

"Farming systems and structures have become more complex, in regards to market pricing and climate variability," he said.

Mr Odgers said the general feeling among participants at Dairy Plan meetings had been that there would be moderate growth in the next five years.

"The majority of people are saying moderate growth, we don't believe we are in decline, we don't believe we are going for high growth, given where we have been," he said.

"I was actually very encouraged by that moderate growth feeling that was in the room."