The dairy industry in Tasmania - A guide for investors January 2019 - Tasmania Delivers - Invest Tasmania
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Tasmania Delivers...
The dairy industry
in Tasmania
A guide for investors
January 2019
www.cg.tas.gov.au
The dairy industry in Tasmania A guide for investors
ii 1
2 Tasmania – a unique island of opportunity
4 The Tasmanian dairy industry – history
5 The Tasmanian dairy industry – the industry today
10 Value proposition
18 Indicative costs of buying a dairy farm in Tasmania
26 Dairy conversion opportunities
32 Investment regulations and business entry
Key reasons for investing in the »» increasing global demand for dairy »» opportunity to capitalise on climate
Tasmanian dairy industry: products change driving Australian milk
33 Assistance for investors
»» significant scope for profitable »» low production costs through production to cooler, wetter parts
expansion of low-cost milk of the country
pasture-based farming
production could see Tasmania’s
»» highly competitive land prices – land »» forecasts for a climate-changed
Contacts milk output almost double to world point to a long term and
values in Tasmania are lower than
1.5 billion litres per year profitable future for the Tasmanian
many other Australian states and
»» a growing industry – Tasmanian milk dairying areas in New Zealand, with
dairy industry3
production increased by around 38 the north west, north east, Upper »» first world infrastructure and a
per cent over the past 10 years1 Derwent Valley and Meander Valley well-organised, cohesive dairy
This marketing document was developed by Dairy Tas in collaboration with the
Office of the Coordinator-General and the Department of State Growth. »» substantial factory investment has regions all offering opportunities for industry sector with clear,
occurred, providing major support investment demonstrated capability that
includes multinational, national and
Disclaimer: for new dairy farm investment »» a higher return on total assets than Tasmanian dairy manufacturing
The information in this paper has been prepared with care, but no warranty
is given as to the accuracy of the information, or for any advice given, or
»» Tasmania’s environmental other Australian states, increasing
companies operating both large and
advantages – comparative natural from 3.6 per cent to 5.1 per cent
for omissions from this paper. Readers rely on the information at their own small processors.
risk and should seek their own independent legal and financial advice. water advantage, irrigation YE 16/172
investments, absence of major
© State of Tasmania January 2019. animal diseases and an ideal climate
for pasture-based dairy production
Images courtesy of DairyTas, Chris Crerar, Simon de Salis, Tony Crehan,
Mitch Osborne, Adam Gibson, Biosecurity Tasmania, Peter Mathews, »» international and national market
Clint & Bethanie Creative, Bjorn Qarfordt - DeLaval, Tourism Tasmania and recognition of the quality of
Rob Burnett Tasmanian dairy products
1. Dairy Tasmania milk produce and price
YE Dec 2018
2. Dairy Australia Situation and Outlook
October 2018 – provisional data
3. Antarctic Climate and Ecosystems CRC,
Climate Futures for Tasmania, Impacts on
Agriculture http://acecrc.org.au/
climate-futures-for-tasmania/
The dairy industry in Tasmania A guide for investors
2 3
Tasmania – a unique island of opportunity
Tasmania at a glance
Location Located broadly at latitude 41-42° south and longitude 144° east, and separated from the
Australian continent by Bass Strait. Tasmania is a group of over 300 islands, with the main island
being 315 km (180 miles) from west to east, and 286 km (175 miles) north to south.
Climate Tasmania has a mild, temperate maritime climate with four distinct seasons, making it the ideal
location for production of premium food and wine. In summer (December to February), the average
maximum temperature is 21° Celsius (70° Fahrenheit). In winter (June to August), the average
maximum is 12° Celsius (52° Fahrenheit) and the average minimum is 4° Celsius (40° Fahrenheit).
Government Tasmania is a parliamentary democracy governed according to the principles of the
Westminster System. Since 1901, Tasmania has been a state of the Commonwealth of Australia.
Population At December 2017, the estimated resident population of Tasmania was 528 097.
Capital city The capital of Tasmania is the city of Hobart. The greater Hobart area has a population of
approximately 229 088 people.
Major industries The major industries are food and agriculture (including dairy, wine, salmon, fruit, vegetables
and red meat), tourism, mining and mineral processing, forestry and related products, specialist
manufacturing, research and science, Antarctic–related industries, building and construction,
renewable energy, and information and communications technology.
Community and lifestyle Tasmania’s rich natural heritage, its diverse range of arts and cultural experiences, its lifestyle
opportunities and its public spaces are advantages that help to make the state one of the
world’s most liveable places.
History and heritage Aboriginal people are thought to have first moved onto the island 30 000 years ago, during an
ice age which exposed a land bridge between the island and mainland Australia. Europeans from
the British Isles established a penal colony in 1803. During this time, the island was called
Van Dieman’s Land. The transportation of convicts ended in 1853 and the island was renamed
Tasmania in 1856.
King Island
Tasmania’s temperate climate, fertile approximately one quarter the size underpinned by reliable rainfall and
soils, reliable rainfall and sunshine all of its neighbouring Australian state, increasing irrigation infrastructure. Flinders Island
ensure excellent growing conditions Victoria. Tasmania is similar in size to This translates to lower costs of
for lush pasture, underpinning the Ireland and Sri Lanka, and half the production, considerable growth
production of premium quality dairy size of Fujian Province in China. potential and a more reliable milk •
Stanley
products. Tasmanian dairy cows are supply, when compared with many
The dairy industry is the largest •
housed outside all year round, grazing dairy districts both in Australia Burnie
sector of Tasmania’s agricultural •
Devonport
on grass and clover, while enjoying and internationally. •
industry and a significant contributor Launceston
some of the cleanest air in the world.
to the Tasmanian economy. It offers a The dairy industry is a priority sector
Discovered by Dutch explorer Abel number of investment opportunities, with excellent growth prospects Tasmania Bicheno •
Tasman in 1642, Tasmania is Australia‘s including large-scale pasture-based and the Tasmanian Government • Queenstown Swansea •
• Strahan
only island state and is separated from milk production, specialty cheese encourages investment in milk
mainland Australia by Bass Strait, manufacture and large-scale dairy production (farming) and value adding
a 240 kilometre stretch of water. commodity processing. within the state. Hobart •
The state’s area is 68 330 square Tasmanian dairy farmers benefit
kilometres with 3 300 kilometres from a sustainable, low-cost, AUSTRALIA
of coastline, making Tasmania pasture-based production system,
The dairy industry in Tasmania A guide for investors
4 5
The Tasmanian dairy industry – history The Tasmanian dairy industry – the industry today
Since European settlement in 1788, In addition to the dairy cooperatives, up The early 1970s saw the merger of Today’s dairy farms are usually Between 2012 and 2014, processing The National Dairy Farmer Survey
the production of milk has been a key to 20 private factories operated in the Tasmanian dairy cooperatives, with large–scale, capital–intensive capability grew by 300 million litres due measures industry confidence as the
industry within Australia’s agriculture Circular Head region at various times Table Cape and Duck River being the operations using the latest technology to investment in new factories by Lion proportion of farmers who are positive
sector. From the original four cows and from 1893. first to form United Milk Products. to produce whole milk with in Burnie and the Murray Goulburn about the future of the industry.
one bull brought out with the First Fleet, In 1981, United Milk Products approximately three per cent of farms Co-operative in Smithton. Over the The survey results highlight the very
In the early 20th Century, the
the industry continued to expand as amalgamated with north western and using automated milking systems. next 10 years, milk production has the different levels of confidence between
introduction of refrigeration allowed
more parts of Australia were explored. north eastern cooperatives to form Cows are milked up to twice daily, in potential to grow from 913 million litres dairying regions. Early 2018 results
dairy products to be transported to
United Milk Tasmania (UMT). large dairy sheds which can milk over per year in 2016–17 to around indicate that 74 per cent of Tasmanian
Dairying in Tasmania began with markets, and native pastures were
250 cows per hour. Alternative systems 1.5 billion litres per year, dependent dairy farmers are more positive
farmers converting thickly wooded replaced with more productive exotic Up until 1997, UMT operated three
operate that allow multiple herds to on continued investment in additional towards their own business future than
landscapes to farming land. In the early species. This enabled farmers to main production sites at Wynyard
be milked through single dairy sheds. processing capacity and farm any other state in Australia5.
to mid-1800s, Tasmanian farmers milked increase stocking rates, resulting in a (cheese), East Devonport (milk
Other options are milking three times conversion.
a few cows for their own use, with dramatic increase in milk production powders and butter) and Legerwood More farms in Tasmania are increasing
every two days, or once per day.
any surplus sold for cash or exchange from the available land. (milk powder). A new site was built at The major dairy processing companies their herd size, staff and supplementary
of other commodities. It wasn’t until Spreyton in 1997 and the Legerwood Deregulation of the Australian industry now operating in Tasmania are feed levels compared with 12 months
Another factor that encouraged rapid
Tasmania’s first cooperatively owned and East Devonport operations in 2000 and a growing export focus, Fonterra, Saputo, Lion and Mondel z ago. The number of farms that are
growth in the dairy industry was the
butter factory, the Table Cape Butter were closed soon after. Bonlac Foods have seen production increase in the (Cadbury). Others include Ashgrove undergoing this level of expansion is
introduction of the milking machine
and Bacon Factory, was established in took over UMT in the late 1990s more temperate, higher-rainfall areas Cheese, Dutch Mill, Pyengana Cheese, considerably higher than counterparts
into Australia. In the late 1930s, once
Wynyard in 1892 that the commercial and subsequently, the world’s largest of Australia, like Tasmania, that are Westhaven Dairy, Bruny Island Cheese, from other Australian dairy regions
electricity became more readily
dairy industry began to grow. dairy exporter Fonterra acquired the more suited to low-cost, pasture-based Wicked Cheese Co, Grandvewe and (38 per cent national)6.
available to farms, milking by machine
operation in 2004. dairy farming. Betta Milk.
The Table Cape cooperative, modelled was adopted as the norm and farmers
on a successful Victorian operation, were able to increase their herd sizes as Over recent years there has also been Dairy is now Tasmania’s biggest
was closely followed by others including the machines reduced the time needed an increase in the number of small-scale agricultural industry. In 2016-17,
the North West Cooperative Dairy to milk their cows. dairy and cheese-making operations the estimated value of farm milk
Company, the Duck River Cooperative in Tasmania, as more operators move production was around $325 million.
Butter and Bacon Factory in Smithton, into adding value to their business. The value of packed and processed
and the Ringarooma Cooperative in the products in 2016–17 was approximately
north east. $474 million4.
4. DPIPWE, Dairy Industry Scorecard, 2016-17.
5. Dairy Australia Situation and Outlook
October 2018
6. Dairy Australia Situation and Outlook
June 2018
The dairy industry in Tasmania A guide for investors
6 7
Prime dairy regions
King Island
Far
North West North East
North West
Central North
42˚S
South
Table 1: Tasmanian dairy farms by region Dairy industry summary7 Tasmanian milk production (ML) and milk price ($/kg milk solids) 2008-18
Council area Region Farms »» 412 farms 1000 $8.00
Circular Head Far North West Region 141
»» 140 000 cows 900 891.4 883
835.4
913
$7.00
Meander Valley Central North Region 70
810
Dorset North East Region 55 »» Average of 336 cows per farm 800 792
765 $6.96 $6.00
709 726 $6.33
Wynyard-Waratah North West Region 32 »» 1 500 people employed on farms 700 677 $5.91
Milk price, $/kg milksolids
$5.51 $5.60 $5.61
Central Coast North West Region 27 $5.00
Milk production
600 $5.20
Kentish North West Region 19 »» 913 million litres of milk in $5.19 $5.16
$4.64
2017–18 500 $4.00
King Island King Island 10
Burnie North West Region 10 »» Average annual growth in 400
$3.00
Break O Day North East Region 9
10 years of three per cent
300
$2.00
Northern Midlands Central North Region 9 »» 9.3 per cent of national 200
West Tamar Central North Region 9 production
$1.00
100
Central Highlands Southern Region 5
»» Total value of dairy farm gate
Latrobe North West Region 5 0 $0.00
income $386m 2015–16
20
20
20
20
20
20
20
20
20
20
Launceston Central North Region 3
10
11
12
13
14
15
16
17
08
09
–
–
–
–
–
–
–
–
–1
–9
12
18
13
14
16
15
17
11
0
Huon Valley Southern Region 4
Production, million litres Milk price, $/kg milk solids
New Norfolk Southern Region 2
Sorell Southern Region 1 Source: DairyTas 2018, based on data from Dairy Australia.
Southern Midlands Southern Region 1
Total farms 412
Source: TDIA dairy licence data June 2018 7. DairyTas and Dairy Australia data
The dairy industry in Tasmania A guide for investors
8 9
Major Investors: Betta Milk Fonterra Lion Mondelēz (Cadbury) Saputo
Betta Milk Co-op Society Ltd produces Fonterra is a global dairy company Lion is a wholly owned subsidiary Mondel z owns and operates Cadbury, Saputo is a multinational dairy company
Ashgrove
fresh milk products (milk, cream and involved in large-scale milk procurement, of Kirin Holdings. Lion’s Tasmanian a global confectionery business. based in Canada, which has operated
Ashgrove Cheese is Tasmania's and one
custard) and has around 30 per cent of processing, marketing and management. interests include cheese and drinking Mondel z’s operation includes a milk a milk powder plant since 2018 in
of Australia's largest family owned and
the local market for those products. Fonterra is the largest processor milk production, and a brewery. The drying plant in the state’s north west at Smithton, north-west Tasmania.
operated dairy processors. Under the
It uses about two per cent of Tasmania’s of milk in the world, with a supply dairy portfolio includes a number of Burnie and a chocolate manufacturing The plant is designed to manufacture
Ashgrove Tasmanian Farm brand they
total milk production but does not chain spanning over 140 countries market-leading brands across the milk, plant in the south at Claremont. high-specification milk powders and
produce fresh milk, cheese, cream
buy milk directly from farms. It has a and producing more than two million cheese and dairy product categories. associated products, with a capacity
and butter. Mondel z uses around eight per cent of
processing facility at Burnie and in 2017 tonnes of dairy ingredients, valued- of approximately 250-300 million litres
Lion processes around 14 per cent Tasmania’s total milk supply.
The dairy portfolio also includes the won a gold medal for its full cream added and specialty ingredients, and per year.
of the total Tasmanian milk production www.cadbury.com.au
Elizabeth Town Creamery brand which milk product at the Dairy Industry of consumer products every year. www.saputo.com
and recently invested over $150 million www.mondelezinternational.com.au
specialises in the selection, packing and Australia awards.
In Australia, Fonterra operates seven to consolidate Australian specialty
distribution of portion control cheese. www.bettamilk.com.au
manufacturing sites, including two in cheese production at Burnie and
The Ashgrove processing facility is Tasmania at Wynyard and Spreyton. to upgrade its award-winning King
Dutch Mill
surrounded by the Ashgrove Dairy In Tasmania, Fonterra has more Island factory.
Dutch Mill is one of Thailand’s largest
Farm at Elizabeth Town in Northern than 200 suppliers and processes www.lionco.com
dairy companies. Since 2017, it has
Tasmania, which includes a popular approximately 55 per cent of the state’s www.kirinholdings.co.jp
owned the UHT milk processing
on–site retail factory and farm store. milk, producing approximately 60 000
factory at Edith Creek in north-west
In 2017, the Ashgrove factory was tonnes of cheese, milk powders, butter
Tasmania that was formerly operated
certified by NASAA Organic: Australian and lactose.
by Murray Goulburn.
and International Organic Certifier www.fonterra.com
www.dutchmillinternational.com
to process organic milk into premium
value Tasmanian organic dairy products.
www.ashgrovecheese.com.au
The dairy industry in Tasmania A guide for investors
10 11
Value proposition
Water availability The Australian and Tasmanian Farm irrigation
A key component of sustainable Governments have committed $220 Tasmanian dairy farmers are increasingly
agriculture is the availability of reliable million to develop irrigation schemes using irrigation to supplement rainfall and
water supply for irrigation. Dairy stocking with at least 95 per cent reliability of maintain pasture production through
rates are directly linked to the availability water supply, in partnership with local summer and early autumn. Mostly
of water and Tasmania’s most significant communities around the state. this is based on farm schemes utilising
natural resource advantage is water. Private sector investment of around winter storage or direct take from rivers
$93 million is also anticipated, which and, in some areas, groundwater also
Tasmania does not have the water
will double the amount of irrigable land contributes to the total supply.
supply constraints experienced in
other parts of Australia and much available for production purposes.
Irrigation water requirements
of the world. Tasmania represents A comprehensive list of all current Irrigation water requirements depend on
one per cent of Australia's land mass, Tasmanian irrigation projects can soil type, climate, soil fertility and pasture
yet has 27 per cent of Australia's be found at: species. The estimated annual irrigation
freshwater dam storage capacity. www.tasmanianirrigation.com.au requirements for well-managed perennial
An ongoing priority in Tasmania is the ryegrass dairy pastures are shown in the
completion of major irrigation schemes, table below. Irrigation of well-managed
with the potential to double the water dairy pasture with high soil fertility is likely
available for irrigation. to increase pasture utilisation by three
to four tonnes of drymatter per hectare
per year, and this will typically require
around four megalitres per hectare
per year of water to be applied8.
Tasmania is in a unique position within Table 2: Indicative irrigation requirements
Australia for increased investment in King Island Flinders Island
dairy farming. The state’s expanding Region Location Irrigation requirement
(ML/ha/year)
milk processing capacity offers
opportunities and Tasmania’s climate 800–1000 700–800 North West Burnie 4.6
and water availability ensure consistent Currie (King Is.) 4.0
and predictable production rates.
Mawbanna 2.6
Climate Smithton 800 Redpa 2.7
Tasmania has an optimal climate for Wynyard
George Town
pasture-based dairying. Tasmania 0 Burnie Sheffield 4.2
140 Devonport 10 Scottsdale
0
has a temperate climate, fertile soils, 1600 0
Launceston Smithton 3.0
reliable rainfall and plenty of sunshine, 1800
000 Deloraine
1200
all of which ensure excellent growing 2 800
0 Woolnorth 3.9
conditions for lush pastures that 220 Bicheno
2400
600
1000
support the production of premium Campbell Town Wynyard 3.9
quality products. Queenstown
North Cressy 5.3
Modelling undertaken through the
Climate Futures Tasmania project to Deloraine 4.7
800
2040 and the Dairy Businesses for 1800 New Norfolk Lilydale 4.5
Future Climates project has shown
Tasmania will remain Hobart Mole Creek 4.1
Rainfall Huonville
globally competitive for perennial
Millimetres of precipitation Ringarooma 3.5
00
ryegrass production, the pasture
14
that underpins the dairy industry of per year
Scottsdale 4.1
Southern Australia.
South Bushy Park 4.8
8. Water requirements of annual crops.
Source: vW Maps ©2009 Martin von Wyss, vW Maps Pty Ltd. Source: Macquarie Franklin, Farm Irrigation, January 2012 DPIPWE, Feb 2012.
The dairy industry in Tasmania A guide for investors
12 13
Land affordability Dairy Tas has more detailed survey data available in addition
Tasmania has traditionally had lower land prices than to Table 3 below.
comparable dairy areas in Victoria and New Zealand. There is a noticeable increase in size of farms sold and in the
The tables below summarise dairy farm sales over the period per hectare values, particularly in Circular Head and north
2015 to 2016. west regions.
Dairy farm sales analysis: 2015–16
Table 3: Farm area and total value
Region Number Farm area Farm price
of farms
Dry land Irrigated Bush / Total Land Improvements1 Total
analysed Stock prices (including concentrates) than it is to Also Friesian cull cows are worth more
pasture pasture waste
The cost of livestock represents a breeding. The size of heifers at first than Jerseys. However, there appears
(ha) (ha) (ha) (ha) ($m) ($m) ($m)
significant proportion of the total calving is also important. to be little economic justification for
Circular Head 12 130 67 18 214 2.74 0.98 3.72
investment in dairying. Dairy stock the difference in cow prices between
Breed
North West 5 66 40 31 136 1.46 0.62 2.08 prices vary over time depending Friesians and Jerseys. No relationship
Friesian cows have traditionally been
North 4 81 44 16 141 1.54 0.60 2.14 on a range of factors, including: more expensive than crossbred or has yet been determined between
North East 3 130 114 19 263 2.19 0.80 2.99 »» milk prices Jersey cows. In recent years, some breed and financial returns.
dairy farmers with Friesian herds have
All dairy farms 24 109 63 20 192 2.20 0.82 3.02 »» breed been able to sell replacement heifers
In recent years there has been a
significant shift to crossbred cows, in
1. Includes irrigation equipment. »» production history at premium prices to China. At present
an attempt to correct herd health and
Source: Opteon, June 2017 »» time of calving exporters are buying Friesian heifers
as calves and yearlings. Export markets
fertility problems associated with large
»» seasonal conditions. occasionally exist for Jersey and high-producing pure-bred Friesians.
Table 4: Per hectare values Cow prices can vary by as much as crossbred heifers.
40 per cent from one season to another.
Region Number Value per ha Per total ha Per effective ha
of farms The prices quoted in the table below are
analysed
Dry land Irrigated Improvements2 Total farm2 Total farm3 a reflection of the 2016–17 situation. Table 5: Stock prices 2016–17
pasture pasture1
($/ha) ($/ha) ($/ha) ($/ha) ($/ha)
Prices and demand for export dairy Type of stock Production Jersey Crossbred Friesian
stock vary depending on export orders. level
Circular Head 12 12 729 16 150 4 572 18 052 18 983 Export stock must meet relevant (kgMS/hd) ($/hd) ($/hd) ($/hd)
North West 5 11 600 16 820 4 576 17 446 21 170 selection criteria. Dairy stock that do Dairy cows
North 4 10 375 14 475 4 212 15 787 17 260 not meet export selection criteria
Spring calving >550 kgMS 1 700
are subject to local prices.
North East 3 7 131 11 852 3 030 11 877 12 373 >350 kgMS 1 300 1 400 1 500
All dairy farms 24 11 402 14 908 4 264 16 776 18 325 Time of calving 550 kgMS 1 700
the state calving in the spring, it is often
2. Total value divided by total farm area – including bush/waste. >350 kgMS 1 300 1 400 1 600
3. Total value divided by effective area (dryland plus irrigated pasture). difficult for autumn-calving farms to
source cows. Traditional autumn-calving
The dairy industry in Tasmania A guide for investors
14 15
Biosecurity Infrastructure Natural gas is delivered via a gas
As an island state, Tasmania has a pipeline connecting Tasmania to
Transport and travel
clear biosecurity advantage. Tasmania’s mainland Australia. This provides
Tasmania has well-developed transport
biosecurity system is at the very core greater choice, flexibility and reliability
systems, encompassing sea, land and
of the Tasmanian brand, as its natural of energy supply to a multitude of
air travel. These provide fast and
environmental values and quality customers.
efficient links between the major
produce rely upon the state’s relative Tasmanian centres, mainland Australia Tasmanian businesses and residents are
freedom from pests, diseases and weeds. and international markets. Each guaranteed a safe, clean and reliable
The state is free of foot and mouth week, approximately 600 flights carry energy source. Importantly, the supply
disease and bovine spongiform passengers and airfreight into and out of of energy to Tasmania has never been
encephalopathy (BSE). the state. Qantas, Jetstar, Virgin Australia interrupted by industrial action.
and Tiger Airways all fly into the state
Sensing Tasmania (SenseT)
from many mainland cities, including
Research and development The SenseT project will see the
direct flights from Sydney, Melbourne
The Tasmanian Government, industry development of an integrated sensor
and Brisbane.
and the Tasmanian Institute of network across Tasmania for live, online
A dedicated freight rail system provides climate monitoring. The network will
Agriculture (TIA), work together to
transport for bulk freight. Tasmania has mesh together historical, spatial and
undertake research and development
a comprehensive road system linking real-time data, and make it available
programs. These are designed to
all of its major cities and towns, which through the web. SenseT has potential
address agricultural productivity, safe
provides access to rural areas suitable application in dairying through localised
food production and social and natural
for dairying. The relatively short distance weather observations and tools to
resource management issues. TIA is
between major centres and rural areas minimise weather-related risk. It also
home to the Dairy Centre, which
allows for commuting with minimal has the potential to monitor stock
provides dairy research, development
traffic congestion. movements, especially useful with the
and extension of international standard.
The state possesses four deep-water new robotic milking which is currently
The Dairy Centre maintains a close being trialled in the state. There is also
sea ports, located in Hobart, Burnie,
working relationship with Dairy Australia potential to monitor pasture moisture
Agistment rates Typical costs for budgeting purposes Some of the variation in agistment Devonport and Bell Bay. There are
and DairyTas, and includes areas of work content, in order to highly refine
are outlined below. rates is due to the inclusion, or not, regular shipping services linking Tasmania
Dairy farmers in Tasmania often agist such as the following. optimum stock conditions.
of animal husbandry practises such as to Asia, Europe, the Middle East and
young stock and dry cows off the main
farm, in order to maximise the number
In some cases, yearling heifers are
drenching and mineral supplementation. »» Extension program for dairy farmers. North America, via other Australian www.sense-t.org.au
charged on a weight gain basis until ports.
of cows milked. April/May and then go on to a per
The stock owner bears the cost of any »» Feed production – the production
week basis of $13.50–$22.00 per head.
drenches, mineral supplements and and consumption of pasture crops, Two passenger, vehicle and freight ships, Adaptive, flexible and
Agistment rates for young stock vary. health treatments. innovative workforce
grazing and harvesting management, Spirit of Tasmania I and II, provide daily
The quality of the job may also vary. It
water use efficiency and nutrient sailings across Bass Strait, linking the Tasmania has a strong agricultural
has become popular for replacement
requirements. north west city of Devonport to the tradition, with skilled and innovative
heifers to be agisted on a weight gain
»» The factors affecting milk production Port of Melbourne. primary producers, processors and
basis, in order to reward the agistment Table 6: Typical agistment costs
– supplementary feeding, feed service providers.
farmer for the result achieved and Energy options
Type of stock Per week Per kg liveweight gain conversion, body tissue mobilisation,
to encourage the production of well Tasmania’s energy network complements The Tasmanian workforce is readily able
grown heifers. Cows $15.00–$22.00 NA milking frequency, genetic merit and the state’s natural environment. to adapt to meet demand and can offer
Yearling heifers $10.00–$13.50 $1.50–$1.70 developmental epigenetic effects. investors stability, with an excellent
The price paid for winter agistment The majority of Tasmania’s energy is
of dry cows can also vary depending Calves to 12 months $7.00–$9.10 $1.40–$1.60 »» Management of the dairy environment supplied by renewable hydroelectricity.
industrial relations record.
on location and season. Generally the Bulls $10.00 NA – synchronisation of fertiliser use with An undersea power cable linking Tasmanian training providers work with
cost will increase as the amount of feed weather conditions, plant demands Tasmania with Victoria has provided local industry to ensure that industry
allocated daily to the cow increases. Source: Macquarie Franklin, Agistment Rates, 2017 and soil properties, nutrient budgeting further competition to the Tasmanian training needs are met. They actively
and management, and improvement energy market and allows electricity to design national and international training
The cost of transport to and from an
of catchment water quality. be exported during high-priced peak programs for accreditation and ensure
agistment property should also
The TIA Dairy Research Facility at demand periods, while still meeting that high-demand skills are created
be taken into account.
Elliott is a fully operational 340 head the needs of electricity customers in within the state.
dairy farming operation and is home to Tasmania.
structured experiments on a wide range
of key industry issues.
The dairy industry in Tasmania A guide for investors
16 17
Government support TIA’s Dairy Centre provides research The TFGA consists of five commodity
The Tasmanian Government is putting services and support to the dairy groups – Dairy, Meat, Wool, Agriculture
the state’s primary industries on the path industry. A website dedicated to and Vegetable – as well as a number of
to achieving a tenfold increase in the informing the Tasmanian dairy industry committee groups including Cereal and
value of the sector by 2050. It recognises about TIA’s activities offers a host of Seeds, Poppies, Environmental Policy,
that the development of the dairy resources and tools for innovative Climate Change, Game Management,
industry is important to the economic dairy farmers. Native Vegetation, Water, Weeds and
future of Tasmania and encourages www.utas.edu.au/tia/dairy-grains-and- Forestry.
potential investors to investigate the grazing/dairy
TFGA members lead each of these
benefits of dairy production and value groups and regularly work with
adding in the state. Industry support Australian and Tasmanian Governments
on the wide range of issues that impact
Office of the Coordinator-General DairyTas
modern farming.
The Office of the Coordinator-General DairyTas is the Tasmanian service
www.tfga.com.au
is the Tasmanian Government’s delivery arm of Dairy Australia,
principal entity to attract and support investing farmer levies and other Tasmanian Irrigation
investment, which provides free funds to support the Tasmanian dairy To capitalise on Tasmania’s comparative
confidential services and professional industry. water advantage, Tasmanian Irrigation
advice to investors. Pty Ltd (TI) was established as a state-
DairyTas’ main aim is to identify,
www.cg.tas.gov.au owned company to progress a suite of
promote, facilitate and leverage
opportunities for research, regionally significant irrigation schemes.
Department of Primary Industries,
Parks, Water and Environment development and extension activities in TI’s board and staff provide the
The Department of Primary Industries, the Tasmanian dairy industry, which will technical, financial and project
Parks, Water and Environment assist dairy farmers to manage change. management skills to take a
(DPIPWE) is responsible for the The DairyTas Board seeks to encourage $310 million suite of irrigation schemes
sustainable management and protection the development of a sustainable and from concept, through feasibility, The Tasmanian brand The state is a natural larder, with Exports and licensing
of Tasmania’s natural and cultural detailed design and approval stages, Tasmania is globally recognised for clean air, unpolluted water and rich International dairy exports from
dynamic dairy industry in Tasmania that
assets for the benefit of Tasmanian to construction and operation. its pristine environment, as a tourist soils giving rise to the production of Tasmania totalled $141 million in
offers economic and social rewards to
communities and the economy. location of historical and environmental 100 varieties of specialty cheeses, as 2016–17, with the largest contributor
dairy farmers and those in the wider TI schemes are demand-driven
significance, and as a producer of well as milk powders, butter and other being powdered full cream and skim
DPIPWE's activities inform the use community. and constructed as public-private
high–quality food and wine. dairy products. It also produces rock milk valued at $95 million9. Exports
and management of Tasmania’s land DairyTas provides small project grants partnerships, to which the Australian
lobsters, oysters, scallops and abalone, were predominantly made up of
and water resources. The department to assist regional groups, industry and Government is contributing Tasmania is an island of difference. Atlantic salmon, beef, premium beers, milk powder and cheese.
is also responsible for delivering the advisors with local projects for the $140 million, the Tasmanian Its people are resourceful, applying leatherwood honey, mineral waters,
services that support primary industry dairy industry. Government $80 million and the the kind of creativity that arises from The Tasmanian Dairy Industry
fine chocolates, fresh berries and stone
development and for the protection www.dairytas.com.au private sector $90 million, through geographical isolation to their business Authority (TDIA) is responsible for
fruits, apples, vegetables and award-
of the state’s relative disease and the purchase of fully tradeable water activities, scientific research and artistic the food safety licensing, inspection
winning cool-climate wines.
pest–free status. Tasmanian Farmers and Graziers entitlements to particular schemes. endeavours. and auditing of dairy processors and
www.dpipwe.tas.gov.au Association (TFGA) Other export products include dairy farms.
Schemes developed by TI deliver water Tasmanian businesses are world leaders
The Tasmanian Farmers and Graziers essential oils such as lavender, www.tdia.tas.gov.au
Tasmanian Institute of Agriculture at 95 per cent reliability. A significant in many areas of specialisation, including
Association (TFGA) is Tasmania’s pharmaceutical products and
The Tasmanian Insititute of Agriculture amount of this new irrigation will water large-scale, high-speed catamarans, Tasmania has food processing facilities
farmer organisation, representing over premium wool that is sought after
(TIA) works closely with its partners in dairy pastures around the state. marine evacuation gear, high- that are export licensed and Halal
5 000 members who live and work on in Europe and Asia.
government and industry to improve www.tasmanianirrigation.com.au performance radio antennae certified, which comply with the most
farm businesses across Tasmania. www.brandtasmania.com
the performance of Tasmania’s and aquaculture equipment. stringent food safety requirements.
agricultural sector, across all industries The TFGA is an active lobby group that
is owned and governed by farmers, for Exporting from Australia also
and value chains. TIA is recognised requires a licence from the Australian
nationally and internationally for farmers. Since its formation in 1948,
the TFGA has generated substantial Government Department of
its research excellence. It partners Agriculture (DAFF).
strategically with many other benefits for the agriculture sector.
www.agriculture.gov.au/export/
organisations around Australia. controlled-goods/dairy
Internationally, TIA is rapidly increasing
its research portfolio, influence and
9. Tasmanian Agri-Food Scorecard 2016-17,
student numbers. DPIPWE
www.utas.edu.au/tiaThe dairy industry in Tasmania A guide for investors
18 19
Indicative costs of buying a dairy farm in Tasmania
Table 7: Farm descriptions
Cows milked Number 250 500 750 1 000
Replacements carried on-farm
Farm area 20 unit HB 50 unit rotary 50 unit rotary 50 unit rotary
Total farm area ha 140 270 380 500
Total effective area ha 115 230 340 450
Irrigation area (50 per cent) ha 58 115 170 225
Milk production
Per cow kgMS 400 390 390 380
Total kgMS 100 000 195 000 293 000 380 000
Pasture consumed
Irrigated area tDM/ha 12.0 12.0 12.0 12.0
Dryland area tDM/ha 7.0 7.0 7.0 7.0
Average tDM/ha 9.6 9.6 9.6 9.6
Grain fed per cow t/cow 0.9 0.9 0.9 0.9
Labour required
Total units FTE 3.0 5.0 6.5 8.0
Cows per labour unit Cows/FTE 83 100 115 125
Bare land value
Buying an operating dairy farm is the Depending on a range of factors, Management has a major role in both
way most people choose to enter the actual financial performance may be pasture utilisation and labour efficiency. Dryland $ per ha $14 000 $14 000 $14 000 $14 000
industry. From that point onwards better or worse than the examples It can also affect milk price to some Irrigated1 $ per ha $21 000 $21 000 $21 000 $21 000
there are several options for expansion: outlined. Prospective investors should degree, through decisions on time of
consult widely before deciding on a calving, milk company chosen and by Capital investment
»» increase output on the current farm specific farm. its impact on milk quality. Land and improvements $ million $2.61m $5.47m $7.53m $9.88m
»» share farming A list of useful industry contacts has Pasture utilisation is a key profit driver. Stock $ million $0.45m $0.89m $1.34m $1.74m
»» buy extra land been provided on the back cover. The model farms outlined below are
Plant and machinery $ million $0.19m $0.22m $0.25m $0.38m
»» sell up and buy a larger or more Farm description
assumed to have 50 per cent dryland
productive farm. and 50 per cent irrigated pastures with Working capital $ million $0.11m $0.19m $0.27m $0.35m
Managerial ability is the key factor in an average pasture consumption of
This section outlines indicative budgets determining financial performance. 9.5 tonnes of dry matter per hectare. Total capital $ million $3.36m $6.78m $9.39m $12.34m
for the purchase and effective running The model farms here assume that This is a reasonable average and should
management ability is above average. Per total ha $ per ha $24 100 $25 200 $24 800 $24 700
of a dairy farm business in Tasmania, be achievable on most farms with
at the present time. The main profit drivers for dairy farms good soil fertility and good pasture Per effective ha $ per ha $29 300 $29 500 $27 700 $27 500
Farms for sale may range in size from in Tasmania are: composition. Per cow $ per cow $13 500 $13 600 $12 600 $12 400
around 150 cows to in excess of 1 000. »» pasture utilisation The main assumptions are outlined in Milk price
It is generally accepted that a minimum (and stocking rate) the table on the following page.
herd size of around 200–250 cows Average for season $/kgMS $5.15 $5.20 $5.20 $5.20
is required for a business to be fully »» labour efficiency
viable at the present time. If past trends »» milk price. 1. Includes water and fixed irrigation infrastructure. Not including centre pivot, long laterals or other.
continue, this number may increase
over time. Source: Macquarie Franklin, April 2017The dairy industry in Tasmania A guide for investors
20 21
As Table 4 (page 12) indicates, farm On the other hand, the 250 cow farm Pasture utilisation Labour use Table 8: Wages cost
prices can vary considerably. has a relatively low-value herringbone Pasture utilisation is the most Labour and feed are the most
Number of cows 250 500 750 1 000
The values included in the indicative shed included in its improvements and significant driver of profit in significant cost inputs. Within the
costs of buying a dairy farm are so has an overall capital per cow similar Tasmanian pasture-based dairy model farms, full time equivalents Labour required (FTE)
representative of better farms sold in to the larger 500 cow farm with a systems. (FTE’s) have been used to define labour
Tasmania the past few years. rotary dairy. requirements. This is the number of Owner operator 1.0 1.25 1.25 1.5
Typically the best results are
employees (including the manager)
They assume a bare-land value of The average milk price is assumed to be achieved by paying close attention Other wages 2.0 3.75 5.25 6.5
required to run the farm, based on a
$14 000 per hectare for dryland and around $6.00 per kg milk solids, which to the pasture supply and demand
38 hour week. The budgets assume Total 3.0 5.0 6.5 8.0
$21 000 per hectare for irrigation area is below where prices are currently, but situation, and making astute decisions
that all labour (including the owner/
(including water and underground are in line with the longer term trend. about grazing management and Cows per labour unit 83 100 115 125
manager) is fully paid for.
mains and other costs). supplementary feeding. Increasing
They are shown to increase by
pasture utilisation by one tonne of In most instances, significant increases Wages cost
On the assumptions here, there is 5c per kg milk solids, between the
dry matter per hectare (10 per cent) in disposable income can be achieved if
limited reduction in capital cost per 250 cow farm and the other farms. Owner operator $68 330 $91 100 $102 490 $113 880
can make a significant difference to owners or share farmers elect to take
hectare or per cow as farm size and The actual increase based on quantity
overall profitability. on a greater proportion of the work. Other wages $89 000 $166 880 $233 630 $289 250
cow numbers increase. Any reduction premiums should be higher than this,
is likely to come from spreading but milk quality also needs to be taken Training in grazing management is Labour use efficiency is generally Total $157 330 $257 980 $336 120 $403 130
the cost of the milking facility over into account and it can be difficult to available through the Tasmanian measured as the number of cows
additional hectares/cows, especially with maintain standards with larger herds. Institute of Agriculture (TIA) and milked per FTE. The average is around Average cost per labour unit $52 450 $51 600 $51 750 $50 400
a rotary dairy (for example, 500 cows assistance in on-farm implementation 80 to 90 cows per FTE, but well-set
versus 750 cows). and monitoring is available from up farms can exceed 100 cows per Labour cost per kg milk solids $1.57 $1.32 $1.15 $1.06
private consultants. FTE. Generally as farm size increases
there are labour efficiencies. These may Source: Macquarie Franklin, April 2017
continue to increase with herd sizes
up to 1 200 cows.The dairy industry in Tasmania A guide for investors
22 23
Table 9: 250 cow farm
Total Per effective Per cow Per kg
ha milk
($’000) ($/ha) ($/cow) ($/kgMS)
Income
Milk sales 515 4 478 2 060 5.15
Stock trading 50 238 110 0.27
Total income 565 4 910 2 259 5.65
Expenses
Shed and cow costs 43 374 172 0.43
Feed costs 155 1 350 621 1.55
Tractor and plant operating 25 215 99 0.25
Repairs to structures and improvements 23 196 90 0.23
General overheads 15 130 60 0.15
Wages (including owner/manager) 157 1,369 630 1.57
Capital replacement (depreciation) 20 170 78 0.20
Total expenses 438 3 804 1 749 4.38
Profit
Earnings before interest and tax (EBIT) 127 1 107 509 1.27
Return on capital (ROC) 3.8 per cent
Source: Macquarie Franklin, April 2017
Table 10: 500 cow farm
Total Per effective Per cow Per kg
ha milk solids
Milk price Tasmania's pasture–based farming Farm profit ($’000) ($/ha) ($/cow) ($/kgMS)
The assumed milk price of $5.20 systems, that have a reasonable stocking Indicative profit budgets are outlined Income
per kg milk solids is conservative and is rate and typically feed up to one tonne for the four farms described.
well below the longer-term trend of supplementary grain or pellets per Milk sales 1 014 4 409 2 028 5.20
of approximately $6.00 per kg cow, can generally respond well to Farm profit has been calculated as
Stock trading 99 432 199 0.51
milk solids. annual milk price variations. earnings before interest and tax (EBIT)
and as a return on total capital invested. Total income 1 113 4 841 2 227 5.71
Over time, the real (adjusted for Farms with a heavy dependence on Expenses
inflation) milk price in Tasmania has grain feeding can have more trouble Depending on the amount of borrowed
capital, there will be an interest cost Shed and cow costs 85 371 171 0.44
been relatively stable, but there coping when milk prices are low and/
has been considerable year-to-year or grain prices are high. The indicative to be deducted from the EBIT figure Feed costs 303 1,317 606 1.55
variation. budgets below allow for around 0.9 to arrive at a net profit estimate for a Tractor and plant operating 36 158 73 0.19
tonnes of grain fed per cow. specific business. Also some operators
may choose to pay themselves less than Repairs to structures and improvements 40 174 80 0.21
the commercial wages included in the General overheads 27 120 55 0.14
EBIT calculation shown here. Wages (including owner/manager) 258 1 122 516 1.32
Capital replacement (depreciation) 23 98 45 0.12
Total expenses 772 3 360 1 546 3.97
Profit
Earnings before interest and tax (EBIT) 341 1,481 681 1.75
Return on capital (ROC) 5 per cent
Source: Macquarie Franklin, April 2017The dairy industry in Tasmania A guide for investors
24 25
Table 11: 750 cow farm
Total Per effective Per cow Per kg
ha milk solids
($’000) ($/ha) ($/cow) ($/kgMS)
Income
Milk sales 1 521 4 474 2 028 5.20
Stock trading 149 438 199 0.51
Total income 1 670 4 912 2 227 5.71
Expenses
Shed and cow costs 129 379 172 0.44
Feed costs 462 1,359 616 1.58
Tractor and plant operating 48 141 64 0.16
Repairs to structures and improvement 50 147 67 0.17
General overheads 45 132 60 0.15
Wages (including owner/manager) 336 989 448 1.15
Capital replacement (depreciation) 26 75 34 0.09
Total expenses 1 096 3 222 1 461 3.74
Profit
Earnings before interest and tax (EBIT) 574 1,689 766 1.96
Return on capital (ROC) 6.1 per cent Farm summary The slight increase in capital investment per cow between
Source: Macquarie Franklin, April 2017 A comparison of the four farms is provided in the table below. the 250 cow and the 500 cow farms is associated with a shift
in the type of dairy, from a herringbone to a rotary shed.
The analysis shows the potential for return on capital
The cost per hectare falls after 500 cows, with the nominated
increases with increasing farm size. This is due mainly to a
Table 12: 1 000 cow farm 50 bale rotary dairy able to milk up to 1 000 cows.
relative reduction in the cost of labour, plus a slightly lower
Total Per effective Per cow Per kg capital outlay per cow.
ha milk solids
($’000) ($/ha) ($/cow) ($/kgMS)
Table 13: Farm summary
Income
Milk sales 1 976 4 391 1 976 5.20 Cows milked Number 250 500 750 1 000
Stock trading 193 429 193 0.51 Replacements carried on-farm
Total income 2 168 4 820 2 169 5.71 20 unit HB 50 unit 50 unit 50 unit rotary
rotary rotary
Expenses
Capital investment
Shed and cow costs 171 381 171 0.45
Feed costs 614 1 364 614 1.62 Total $million $3.36m $6.79m $9.41m $12.37m
Tractor and plant operating 48 107 48 0.13 Per cow $ $13 464 $13 583 $12 547 $12 370
Repairs to structures and improvements 65 144 65 0.17 Pasture consumed tDM/ha 9.6 9.6 9.6 9.6
General overheads 55 122 55 0.14 Irrigation per cent 50% 50% 50% 50%
Wages (including owner/manager) 403 896 403 1.06 Grain fed t/cow 0.9 0.9 0.9 0.9
Capital replacement (depreciation) 38 85 38 0.10 Labour
Total expenses 1 394 3 099 1 395 3.67 Total units FTE 3.0 5.0 6.5 8.0
Profit Cows per unit Cows/FTE 83 100 115 125
Earnings before interest and tax (EBIT) 774 1 720 774 2.04 Milk price (below long term average) $/Kg MS $5.15 $5.20 $5.20 $5.20
Return on capital (ROC) 6.3 per cent Return on capital1 per cent 3.8% 5.0% 6.14% 6.3%
Source: Macquarie Franklin, April 2017 1. Return on capital (EBIT) before capital appreciation.
Source: Macquarie Franklin, April 2017The dairy industry in Tasmania A guide for investors
26 27
Dairy conversion opportunities
There is potential in Tasmania to create There is only one milk company on Deloraine area, to properties along the
new dairy farms by converting current the island, which is King Island Dairies, Meander River and via four pipelines
grazing or cropping farms into dairy owned by Lion (previously National installed in 2010 (Caveside, Rubicon,
units. Foods) and its requirement for Quamby and Hagley).
Ideally a potential dairy conversion additional milk will be a key factor The Northern Midlands is also
property will have the potential to milk in any proposed investment. reasonably prospective, with larger
500 or more cows. It will be in either Far north west properties, relatively flat topography
the traditional higher-rainfall areas, or There is reasonable scope for dairy and with the current and ongoing
in lower-rainfall areas with access to a conversions in the far north west irrigation development in the area.
plentiful supply of irrigation water at (Circular Head municipality), including Several dairy conversions have already
a reasonable cost. some large beef properties. The climate been undertaken in recent years.
The advantage of dairy conversions over is ideal for dairying with good rainfall The availability of irrigation water
existing farms is that there is more scope distribution and limited frosts. from new schemes being developed
to have a fully functional farm with new The far north west is considered the by Tasmanian Irrigation will open up
infrastructure, situated in the right place. best dairying region in Tasmania and as additional potential in the Midlands and
In addition to this, the scope to grow a result it is already a well-developed Northern Midlands over the next few
over time can be built in upfront, rather dairy area. Some conversions may years.
than hoping that adjoining properties need to include several adjoining North east
come onto the market over time. properties. Some of the land in the The north east (Dorset municipality)
There is a substantial amount of land district, particularly on swamp ground, is already one of the three main
available in Tasmania suitable for would require drainage as part of the dairying areas in the state and there
conversion to dairying. Tasmania is conversion process. are opportunities to develop further,
also one of the few states which has with large areas suited to dairying Derwent Valley Potential returns from The financial models assume that the
Central north west
a government water development with the aid of irrigation. Tasmanian dairy conversions management deployed within the
This area has limited scope for dairy There are large properties along
strategy in place and is encouraging Irrigation has recently completed system is average or above. Hence so
conversions because of the small size the Derwent River with significant The following tables provide some
farmers to develop water resources for the Headquarters Road Dam in the too is financial performance. Significant
of many of the properties. There is water rights that would be suitable indicative figures as a guide to
agricultural purposes. New irrigation Scottsdale area plus an expansion of the capital expenditure is included in the
competition for the better land from for conversion to dairying. The area investment.
schemes currently being developed by Winnaleah Irrigation Scheme. There models to provide a solid platform for
intensive horticulture operations. Base has some of the warmest summer
Tasmanian Irrigation have the potential are also further schemes currently There are many variables to consider good performance.
land prices are generally higher than in temperatures in Tasmania and with
to open up new land for dairying. being assessed. in undertaking a dairy conversion, so
other prospective areas. the aid of irrigation and improved soil The conversion farm is assumed to be
Subject to water management plans potential investors wishing to go further
As well as the traditional inland dairy fertility is capable of excellent pasture in a lower-rainfall non-traditional area
and maintenance of environmental flow Central north should consult widely.
areas on the better-class clay loam soils, production. of the state. Conversion is assumed
requirements, it is also possible to obtain There is a significant area of land there is also potential for large-scale A list of useful industry contacts has to require purchase of a water right,
Local sources suggest that some of the
new water rights for winter-take into suitable for converting to dairy in dairy development on some of the been provided on the back cover. at a capital cost of $1 300/megalitre,
better land lies away from the river
storage. Alternatively, it is possible to the central north. Large properties sandy and sandy loam soils closer to the sufficient to irrigate around 50 per cent
and therefore water may need to be Assumptions
buy or lease existing water rights from currently running extensive cropping coast. While the soils are not as naturally of the total effective area. Alternatively,
pumped or transferred over some The financial models used to assess the
other farmers or buy water from them and livestock are well-suited to dairying. productive, winter temperatures are if the farm already has water and
distance. There are also good alluvial financial viability of dairy conversions
directly. Rainfall in this region varies considerably higher with very few frosts. In recent irrigation infrastructure, the base price
soils along the river itself. use a number of assumptions that
Conversion opportunities currently lie and will need to be taken into account times, many of these properties have will be higher and the conversion
when selecting a potential dairy farm. Dairy conversion investment has underlie the results shown.
in the following areas of the state. installed irrigation (usually pivots) to cost will be lower. Replacements are
occurred in recent years and has The key factor in achieving a good
Many of the farms have large historical grow crops such as potatoes and assumed to be run off-farm and limited
King Island the potential to develop further. result is the ability of the manager.
water rights. Irrigation requirements poppies. Some of the soils are not grain input (around 0.7 tonne per cow)
There are large tracts of land suitable are also relatively high, due to lower robust enough to withstand continuous South of Hobart Important profit drivers include: is used.
for conversion to dairying on
King Island. There are variations in
summer rainfall (in some areas) and cropping, but are well-suited to grazing There is some smaller scale dairy »» initial capital cost The $5.20 per kg milk solids milk price
high evapotranspiration rates. and hence dairy farming. In some
soil type and rainfall across the island instances, there may be the need to
investment occurring. For example, »» pasture utilisation per hectare is the assumed closing milk price for
The Meander Dam was completed in the Bruny Island Cheese Co. farm (and stocking rate) 2016–17. This is below the longer-term
that need to be taken into account. combine farms to get to commercially
2008 and has the capacity to provide expansion in Glen Huon. trend of approximately $6.00 per kg
Drainage, soil fertility and a few pockets
an additional 23 900 megalitres in the viable sizes, however there are also »» labour efficiency and milk solids.
There is very limited potential to
of salinity are potential issues. many larger farms in the area.
convert land to dairy farming in the »» milk price.
The main assumptions are outlined
area south of Hobart. in the following table and explained
overleaf.You can also read
