Investor Presentaiton
The dairy industry in Tasmania
A guide for investors
18
Indicative costs of buying a dairy farm in Tasmania
Table 7: Farm descriptions
Cows milked
Number
250
500
750
1 000
Farm area
20 unit HB
Replacements carried on-farm
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
Cows per labour unit
Cows/FTE
w
3.0
83
100
58
5.0
6.5
8.0
115
125
Buying an operating dairy farm is the
way most people choose to enter the
industry. From that point onwards
there are several options for expansion:
>> increase output on the current farm
>> share farming
>> buy extra land
>> sell up and buy a larger or more
productive farm.
This section outlines indicative budgets
for the purchase and effective running
of a dairy farm business in Tasmania,
at the present time.
Farms for sale may range in size from
around 150 cows to in excess of 1 000.
It is generally accepted that a minimum
herd size of around 200-250 cows
is required for a business to be fully
viable at the present time. If past trends
continue, this number may increase
over time.
Depending on a range of factors,
actual financial performance may be
better or worse than the examples
outlined. Prospective investors should
consult widely before deciding on a
specific farm.
A list of useful industry contacts has
been provided on the back cover.
Farm description
Managerial ability is the key factor in
determining financial performance.
The model farms here assume that
management ability is above average.
The main profit drivers for dairy farms
in Tasmania are:
pasture utilisation
(and stocking rate)
>> labour efficiency
>>> milk price.
Management has a major role in both
pasture utilisation and labour efficiency.
It can also affect milk price to some
degree, through decisions on time of
calving, milk company chosen and by
its impact on milk quality.
Pasture utilisation is a key profit driver.
The model farms outlined below are
assumed to have 50 per cent dryland
and 50 per cent irrigated pastures with
an average pasture consumption of
9.5 tonnes of dry matter per hectare.
This is a reasonable average and should
be achievable on most farms with
good soil fertility and good pasture
composition.
The main assumptions are outlined in
the table on the following page.
Bare land value
$ per ha
$14.000
$14.000
$14.000
$14 000
$ per ha
$21 000
$21000
$21 000
$21 000
Dryland
Irrigated'
Capital investment
Land and improvements
$ million
$2.61m
$5.47m
$7.53m
$9.88m
Stock
$ million
$0.45m
$0.89m
$1.34m
$1.74m
Plant and machinery
$ million
$0.19m
$0.22m
$0.25m
$0.38m
Working capital
$ million
$0.11m
$0.19m
$0.27m
$0.35m
Total capital
$ million
$3.36m
$6.78m
$9.39m
$12.34m
Per total ha
$ per ha
$24 100
$25 200
$24 800
$24 700
Per effective ha
$ per ha
$29 300
$29 500
$27 700
$27 500
Per cow
$ per cow
$13 500
$13 600
$12 600
$12 400
Milk price
Average for season
$/kgMS
$5.15
$5.20
$5.20
$5.20
I. Includes water and fixed irrigation infrastructure. Not including centre pivot, long laterals or other.
Source: Macquarie Franklin, April 2017
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