Into Dairy Home

Introduction

The project commenced in April 2013 with the secondment of project manager Steven Jarman to DairyTas from the State Government. This followed after the base funding from the main funders was secured. The range of initiatives and activities that make up the project were developed in the lead up to commencement and are summarised in this outline.

The development of the detailed initiatives was completed in May and June 2013 culminating in the launch of the State government funded Planning for Conversion Program in June 2013. Australian Government support for the project was secured in July 2014.

Funding for the project was provided from Dairy Australia, DairyTas, State Government, Milk Companies (Fonterra, TDP/MG, Cadbury and Lion), Commonwealth Government and industry sponsors for the first year (Roberts, Merial, Iplex, Integrated Packaging, Waratah and Philmac).

In total $1.564M was secured for the project over the period 2013 to 2017 with some activities now continuing into 2017/18.

Funded by:

State Government$740,000
Australian Government$372,000
Dairy Australia/DairyTas$216,000
Milk Companies$186,000
Service Providers$50,000

Project Objectives

The project was a DairyTas initiative that aimed to accelerate the growth in Tasmania’s annual milk production to meet the significant imbalance of 350 million litres between processing capacity and farm output.

As a result of seasonal and market conditions and volatility the industry has not met the ambitious milk production targets identified but the industry remains on track to surpass 1billion litres of annual production by the year 2020.

Industry Conditions

This report summarises the main project activities over the life of the IntoDairy project from 2012/13 to the end of 2016/17. The project was targeted to support growth in dairy farm production in Tasmania over the 5 year period from 2013.

During the project a number of significant challenges have impacted on the industry which has influenced this objective and the industry conditions underpinning it. We saw strong growth in the first few years of this period followed by seasonal challenges and milk price pressures on farms that has seen production growth stall and then drop away. We expect to see a recovery in 2017/18 and continued growth beyond in the medium term future.

Seasonal highlights over the past 4 years

2012/13lower milk price and poor season
2013/14higher milk price and better season
2014/15strong season continues and milk price drops slightly
Spring/Summer 2015/16Severe dry conditions, bushfires, price holding
May–June 2016Retrospective milk price drop by 2 major processors MG and Fonterra
June 2016Floods across many dairy catchments in North/NW Tasmania
2016/17Tactics for Tight Times program implemented
Spring 2016Continued record wet conditions affecting dairy production

Tasmanian Milk Production

2012/13765ML 
2013/14810MLup 45ML
2014/15891MLup 81ML
2015/16883MLdown 8ML
2016/17840ML est.down 43ML

A net gain of some 75ML over the 4 years with the impact of the 2016/17 downturn having a significant effect.

Project Activities

The key activities of the project covered across the core areas of building the Herd, developing People and facilitating Investment.

  • Heifer Rearing and Agistment
  • Building the Herd
  • Property Purchase Plans
  • Dairy Conversion Plans; 18 plans completed
  • Growing Dairy Businesses; 6 farms supported
  • Encouraging investment incl Dairy Investment Guide and Dairy Regions
  • Overseas Recruitment; mainly in UK and NZ
  • Business Management and human resource management; 220 dairy farms
  • Mentoring; young farmers and financial management
  • Veterinary Residency
  • Increasing Participation/Image Building; including “Faces of Tasmanian Dairy” video and Circular Head Pro-Dairy group
  • Clean Rivers sustainability program, 28 dairy farms
  • Tactics for Tight Times/Taking Stock program; 140 dairy farms

The new www.intodairy.com.au website was developed as a resource for the industry and to support investors.

Publications

  • Dairy Industry Guide for Investors (updated July 2017)
  • Tasmanian Dairy Regions (2016)
  • Faces of Tasmanian Dairy videos (2016)

Budget Summary

Funds spent to 30/6/2016$1,046,900
Funds spent for 2016/17$414,900
Funds still to spend in 2017/18$103,000

Over the remainder of the year activity will continue in the Image Building/Increasing Participation activity and Business Management to complete existing programs such as the Pro Dairy group in Circular Head, Dairy Scholarships, financial literacy and Succession Planning.

2017 UK advertisement

2017 UK advertisement

2016/17 Season Update

Tasmanian milk production reached 883 million litres in 2015/16, just under the record of 891ML in the previous year. This is 9.25% of national milk production. Seasonal conditions were challenging over the year with higher feed costs and dry conditions followed by severe floods late in the year. A late season milk price drop for many farmers also caused challenges for farmers to manage and this has impacted on production.

As a result 2016 has been a period of consolidation for many farmers with lower production expected going into 2016/17. Reduced cow numbers and lower prices on top of the wet 2016 period means that production has dropped in 2016/17 by some 6% and it will be close to 840ML. After a very wet winter and spring seasonal conditions have improved as the season has progressed, with feed in plentiful supply and prices improving.

The 2015/16 Dairy Farm Monitor Report for Tasmania showed an average return on assets of 4% compared to 7.8% and 9.6% in the previous 2 years. This reflects the industry situation but also shows that Tasmanian dairy farms on average have held up well with the events of last year.

Tasmanian Dairy Industry Snapshot in 2017

  • 430 dairy farms
  • Average of 3 people employed per farm
  • Average milking herd per farm is 336 cows (national 272)
  • 2015/16 milk production of 883 million litres
  • Average milk production per farm is 2.08 million litres in 2015/16
  • Over 42% milk production growth in the last 10 years
  • The largest agricultural sector in Tasmania contributing over $1 billion to the state economy each year

2015/16 Tasmanian Dairy Farm Monitor Report* – key data

IndicatorResultComments
Return on Assets3.9%Last year was 7.8%
Compares to Victorian average of 0.6%
Average EBIT$246,639Down 48% from 2014/15
Return on Equity0.8% 
Ave milk price$5.55/kg MSDown from $6.19 in 2014/15
Ave cost of Production$5.24/kg MSUp 4% from last year
Milk solids per ha936 kg MS/ha 
Milk solids per cow444 kg MS/cow 
Pasture consumption10.7 tonne DM/ha69% of energy from home grown feed
Milking cows/usable ha2.1 
Milking cows/fte141 

*The Dairy Farm Monitor report is based on data collected from Tasmanian dairy farms by the TIA Dairy Centre and processed by Dairy Australia. The report is available on the DairyTas website or from DairyTas. There were 29 farms in the survey with an average herd size of 580 cows.

2017/18 Outlook

Tasmanian dairy farmers have faced severe seasonal and milk price pressures over 2016. The factors driving this have shown improvement over recent months and the 2017 season has progressed to be one more favourable for pasture based dairying conditions.

The average farm gate milk price is now in the range of $5.50 to $6.00 kgMS for 2017/18. The international commodity price cycle has been improving through 2017 as demand and supply is more balanced internationally and this is underpinning milk price improvements into 2017/18. Opening milk prices have been well over $5.00 kgMS.

Investor interest in Tasmanian dairy farms remains positive and there is steady interest in new dairy conversions. In recent months there has been considerable corporate investment interest around dairy farm acquisition with businesses such as Compass Agri, Laguna Pastoral, Dutch Mill and Circular Head Farms all looking at opportunities to expand.

Tasmanian dairy farmers are still the most likely in the country to be positive about the future and the long term viability of the industry as borne out in recent survey results.

Over 200 farmers have taken advantage of the Taking Stock and Feed Budgeting programs on offer from DairyTas in 2016/17. Plus there has been strong interest from farmers in DairyBase, business and financial management workshops and HR and Employment training supported by DairyTas with various providers.

It remains to be seen what the immediate demand for extra milk is from the main 4 dairy processors. Further investment in processing to add capacity is not likely in the short term although Fonterra continues to invest in upgrades to the Wynyard Cheese operation. Lion Dairy is not actively seeking additional milk and Cadbury is in a steady position in terms of milk for processing.

Milk production is expected to bounce back in 2017/18 to levels close to 900ML which will return Tasmanian dairy to a growth trajectory.

Thanks to our project supporters

Tasmanian Government        Australian Government – Building Our Future

Dairy Australia          Main Project Partners          Roberts

Lion        Cadbury        Fonterra        Devondale

Into Dairy – into the future

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This page has been produced by DairyTas and was last modified Friday 28 July 2017.

The URL for this page is http://www.dairytas.com.au/intodairy/.

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