Tasmania faces milk production challenge

At Smithton in the Tasmania's far north-west, construction is well under way for a brand new $75 million milk plant.

It is hoped Tasmanian Dairy Products, which is owned by the country's largest dairy cooperative Murray Goulburn, will be processing milk by September this year.

It is going to create up to 70 new jobs on-site, with a huge processing capacity of 250 million litres.

The new venture is just one of several expansions, with three milk companies developing their sites in Tasmania.

But will farmers be able keep up with the growing demand for their valuable product?

DairyTas chairman Paul Bennett said it was an exhilarating time to be dairying in Tasmania, with producers spoilt for choice in processing.

"We've had one of the best ever growing seasons, coupled with a reasonable milk price," he said.

Although a smaller industry compared to other Australian States, Tasmania boasted a growing base of 440 dairy farmers.

"Last season we produced 720 million litres and we are on track to produce 800m litres this season," he said.

"We are the only State where production is on the rise and where new plants are opening.

"Dairy is the shining light on the hill of the Tasmanian economy."

But amid all the talk of a "glowing" future, Mr Bennett admitted the growth signals also presented an enormous challenge.

"There is a shortage of milk and these factories will want to run at 80 per cent capacity," he said.

The key to success would be providing incentives for existing farmers to ramp up production and encouraging new farmers to enter dairying.

At Smithton, in the heart of the State's north-west dairying region, the push to train people in dairy has begun with a new community college being built.

Tim Smith, who is helping to facilitate AgriTas, says the college will use exciting new technology, including automated dairies and calf feeders.

"We need to break the paradigm that farming is a labour pursuit, because it's a technical pursuit too," he said.

Mr Bennett says the college should entice labour and go a long way in assisting the much-needed growth.

"There is already a requirement for 30-40pc more milk for next season – that's over and above what we are already producing," Mr Bennett said.

That means Tasmania will need to almost double their production levels.

On his farm at Elizabeth Town, a total of 1300 cows are milked, with 75pc processed on-farm into cheese and 25pc sold to Fonterra.

"We upgraded our factory last year and it's enabled us to process more milk and sell domestically," he said.

"But overall in Tasmania, it's going to be a challenge to sustain that milk flow."

The most recent National Dairy Farmer Survey showed91 per cent of dairy farmers had a positive attitude tothe industry's future, whichMr Bennett said was agreat start to growing the industry.

Nearby at Gawler, sixth generation dairy farmer Rob Frampton says he is more than ready to take advantage of the demand for more milk.

The Cadbury-supplier milks 440 cows across an effective area of 155ha.

Together with his parents Norm and Leslie, the Framptons recently invested in another dairy farm where they are hoping to milk a further 160 cows.

"We are very low-cost operators and farm in accordance with the season," Rob said.

"We are hoping to replicate that at our new farm."

According to a recent study, labour has been listed as the second biggest issue for Tasmanian dairy farmers, but Rob said the key to retaining labour was simple.

The family has employed Rodney and Sandra Poke in an equity partnership arrangement to manage the new farm.

"You have to look after your labour," he said.

"You need to give them some ownership in the business and something to aim for."

He said in order to meet future milk requirements, the industry needed to take a bigger role in addressing the shortage of dairy labour.

Back in the factory, Tasmanian Dairy Products chief operating officer Richard Fisher said he was excited about his new factory meant for the local dairy industry.

At the moment there is only so much milk that can fill vats, but he revealed the company had been in contact with most producers that are situated west of Wynyard to join the new venture.

Despite fierce competition from other companies, he remains confident the factory will be able to reach capacity levels quickly.

Another factory who has begun to grow is Fonterra.

Managing director Simon Bromell said the processor had already shelled out $24m on the Spreyton and Wynyard sites since 2010, upgrading the cheese and whey operations, as well as increasing capacity.

And it seems the rewards have also remained sweet at the farm-gate.

"Over the past three years, Fonterra has paid Tasmanian farmers $20 million more than if they were paid by a leading Victorian processor," Mr Bromell said.

He says Tasmania offers plenty of opportunities on the dairy scene, including copious amounts of water to lift production on-farm.

Meanwhile, the historic Van Diemen's Land milked its first cows on its Cape Barren dairy farm at Woolnorth last week.

The plan is part of a $180 million expansion that will push numbers to 40,000, with 29 farms expected to be built on the 19,000 hectare property.

With forestry operations fast winding up, premier Lara Giddings said the Woolnorth operation highlighted further opportunities for growth in the Circular Head region.

"We all realise that we are facing some very challenging times, but we need to look at where the niche areas are that we can tap into and turn our economy around, and this is an example," she said.

And finally, Lion (formerly known as National Foods) is also in the mix, aiming to spend $140m on a cheese operation at Burnie, after closing operations in Simpson last year.

Agricultural procurement director Murray Jeffrey said the choice to close the Victorian factories was a tough one, but Tasmania offered "untapped growth potential in specialty cheese".

"Tasmania holds that clean, green reputation and that was a major reason we invested here," he said.