Investor Presentaiton
The dairy industry in Tasmania
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The Tasmanian dairy industry - history
A guide for investors
The Tasmanian dairy industry - the industry today
WELCOME TO
LEGENDAIRY
COUNTRY
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Since European settlement in 1788,
the production of milk has been a key
industry within Australia's agriculture
sector. From the original four cows and
one bull brought out with the First Fleet,
the industry continued to expand as
more parts of Australia were explored.
Dairying in Tasmania began with
farmers converting thickly wooded
landscapes to farming land. In the early
to mid-1800s, Tasmanian farmers milked
a few cows for their own use, with
any surplus sold for cash or exchange
of other commodities. It wasn't until
Tasmania's first cooperatively owned
butter factory, the Table Cape Butter
and Bacon Factory, was established in
Wynyard in 1892 that the commercial
dairy industry began to grow.
The Table Cape cooperative, modelled
on a successful Victorian operation,
was closely followed by others including
the North West Cooperative Dairy
Company, the Duck River Cooperative
Butter and Bacon Factory in Smithton,
and the Ringarooma Cooperative in the
north east.
In addition to the dairy cooperatives, up
to 20 private factories operated in the
Circular Head region at various times
from 1893.
In the early 20th Century, the
introduction of refrigeration allowed
dairy products to be transported to
markets, and native pastures were
replaced with more productive exotic
species. This enabled farmers to
increase stocking rates, resulting in a
dramatic increase in milk production
from the available land.
Another factor that encouraged rapid
growth in the dairy industry was the
introduction of the milking machine
into Australia. In the late 1930s, once
electricity became more readily
available to farms, milking by machine
was adopted as the norm and farmers
were able to increase their herd sizes as
the machines reduced the time needed
to milk their cows.
The early 1970s saw the merger of
Tasmanian dairy cooperatives, with
Table Cape and Duck River being the
first to form United Milk Products.
In 1981, United Milk Products
amalgamated with north western and
north eastern cooperatives to form
United Milk Tasmania (UMT).
Up until 1997, UMT operated three
main production sites at Wynyard
(cheese), East Devonport (milk
powders and butter) and Legerwood
(milk powder). A new site was built at
Spreyton in 1997 and the Legerwood
and East Devonport operations
were closed soon after. Bonlac Foods
took over UMT in the late 1990s
and subsequently, the world's largest
dairy exporter Fonterra acquired the
operation in 2004.
Today's dairy farms are usually
large-scale, capital-intensive
operations using the latest technology
to produce whole milk with
approximately three per cent of farms
using automated milking systems.
Cows are milked up to twice daily, in
large dairy sheds which can milk over
250 cows per hour. Alternative systems
operate that allow multiple herds to
be milked through single dairy sheds.
Other options are milking three times
every two days, or once per day.
Deregulation of the Australian industry
in 2000 and a growing export focus,
have seen production increase in the
more temperate, higher-rainfall areas
of Australia, like Tasmania, that are
more suited to low-cost, pasture-based
dairy farming.
Over recent years there has also been
an increase in the number of small-scale
dairy and cheese-making operations
in Tasmania, as more operators move
into adding value to their business.
Between 2012 and 2014, processing
capability grew by 300 million litres due
to investment in new factories by Lion
in Burnie and the Murray Goulburn
Co-operative in Smithton. Over the
next 10 years, milk production has the
potential to grow from 913 million litres
per year in 2016-17 to around
1.5 billion litres per year, dependent
on continued investment in additional
processing capacity and farm
conversion.
The major dairy processing companies
now operating in Tasmania are
Fonterra, Saputo, Lion and Mondelēz
(Cadbury). Others include Ashgrove
Cheese, Dutch Mill, Pyengana Cheese,
Westhaven Dairy, Bruny Island Cheese,
Wicked Cheese Co, Grandvewe and
Betta Milk.
Dairy is now Tasmania's biggest
agricultural industry. In 2016-17,
the estimated value of farm milk
production was around $325 million.
The value of packed and processed
products in 2016-17 was approximately
$474 million4.
The National Dairy Farmer Survey
measures industry confidence as the
proportion of farmers who are positive
about the future of the industry.
The survey results highlight the very
different levels of confidence between
dairying regions. Early 2018 results
indicate that 74 per cent of Tasmanian
dairy farmers are more positive
towards their own business future than
any other state in Australia.
More farms in Tasmania are increasing
their herd size, staff and supplementary
feed levels compared with 12 months
ago.
The number of farms that are
undergoing this level of expansion is
considerably higher than counterparts
from other Australian dairy regions
(38 per cent national) 6.
4. DPIPWE, Dairy Industry Scorecard, 2016-17.
5. Dairy Australia Situation and Outlook
October 2018
6. Dairy Australia Situation and Outlook
June 2018View entire presentation