Industry leaders say the state will need to supply 40% more milk within the next four years to meet processor demand, which means up to 20 new dairy farms per year will need to come on board.
Already some cropping and beef operators are seeing the financial benefits of converting to dairy and the industry is encouraging others to follow suit.
The northern Midlands and north-east areas of the state are seen as most likely to host future dairy opportunities.
DairyTas chief executive officer Mark Smith says growth needed to sustain the dairy processors’ expansion cannot be achieved within current dairy areas.
“We are achieving growth of 3-4% on an average dairy farm but we need 7-8% to keep the processing companies operating at sufficient capacity,” Smith says.
The introduction of irrigation in northern Midlands and north-east regions has helped to turn non-traditional dairying areas into land suitable for dairy expansion, he says.
“Without irrigation it wouldn’t be possible,” Smith says “It is a bit drier and hotter and the soil isn’t as fertile as land further south but with irrigation it is quite viable.
“Already we have examples of farms around Cressy that have been successfully converted from broad acre cropping and livestock to dairy.
“This has been done in partnerships between owners and managers with dairy experience and they are showing what can be done with the land. The development of water resources has opened up some exciting opportunities.”
DairyTas chairman Paul Bennett says the influx of new and expanded processors is a shot in the arm for the Tasmanian dairy industry and dairy farmers needed to respond to the challenge by supplying more milk.
“It is the first time in my time in dairying where I can choose which supply company to go to, but there’s not really a push to get extra cows in here,” he says.
Bennett says the investment by processors was good for the industry and needed to be matched on the land.
“It’s good as it drives competition for prices but the processors need to see a return on their investment and need to be operating at 80-85% capacity,” he says.
“They have elected to come here because they realise dairy is a natural fit in Tasmania. I’d certainly like to see another 40 or 50 dairy farms come in.
“We’ve seen a few start-ups in traditional sheep territory in the Midlands, so we have the prototype there for others to follow. They see good opportunities in dairy.”
However, Bennett warns that many older dairy farmers were looking to exit the industry.
“We have probably 50 farms on the market at the moment, so we need to replace those farmers and at the same time encourage more into the industry.”
Tasmanian Premier, Lara Giddings says a new AgriTas training college and A$1.5 million to construct new power lines would allow for the creation of more dairy farms.
She also opened a new A$4 million Cape Barren dairy at Woolnorth, which was a prelude to the Van Diemen’s Land (VDL) company’s future
expansion plans in the region.
Last year VDL announced a A$180 million investment to treble production at what is already Australia’s largest dairy farm.
Other dairy investments include:
Fonterra’s A$6.5 million gas conversion at Spreyton and A$12 million upgrade of its Wynyard cheese plant
National Foods investing $150 million expanding and modernising its Burnie and King Island specialty cheese plants
Tasmanian Dairy Products plans to build a A$60 million milk powder plant in Circular Head.
