Tasmanian Times

Economy

It’s time to look forward

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ABARES, the Australian Bureau of Agricultural and Resource Economics and Sciences, has just released its latest assessment of the state of agriculture in Tasmania. Largely, it does what you would expect it to do; it confirms what we suspected, but it puts numbers to the theories. Perhaps the most significant statistic is that Tasmanian farms have become more profitable than the national average.

Overall, we punch above our weight, just. Our farmers account for three per cent of the nation’s agricultural production, $1152 million in 2010/11, and we have three per cent of the farms, 3348 of them.

Of those farms, 64 per cent of them produce less than $150,000 of commodities a year, but 15 per cent produce more than $500,000 a year.

Milk is king. It is worth $312 million a year, which is more than a quarter of all agricultural production here. Tasmania accounts for eight per cent of national milk production. About 93 per cent of that is used to manufacture cheese, butter and milk powders.

Vegetables constitute 16 per cent, cattle and calves also 16 per cent, wool eight per cent, fruit nearly eight per cent and sheep and lambs 3.7 per cent.

However, the outlook for dairy everywhere is not great. ABARES predicts lower average dairy prices in 2012/13 in the light of the economic downturn in Europe and weaker demand growth in Asia.

All dairy-exporting nations will feel the pinch. European production is expected to be limited to one per cent, US production is expected to fall by 1.4 per cent while New Zealand’s should be unchanged. ABARES predicts the Australian farm gate price for milk will fall by seven per cent to average 39 cents a litre.

What does this mean in terms of money in the bank? The take home message is that over the last three years things have got a lot better for the average Tasmanian farm, but they certainly needed to. In 2009/10, the average farm cash income was only $53,240. In 2010/11 it was up to $100,600. This year it is predicted to be $105,000.

With that improvement in cash income, the average profit has grown from just $11,250 to $54,000 last year and an estimated $71,000 this year. Nationally, the current average is $48,000. But, at the same time, average farm debt in Tasmania has grown in those three years from $244,170 to $291,200 to $326,000.

I think that lends weight to the adage that to make more you have to invest more. You would anticipate that the debt levels would increase in the next few years, particularly with so many farmers outlaying considerable sums to take advantage of the irrigation infrastructure. To improve farm productivity you have to invest your time and your capital.

The ABARES report, which is called Commodity outlook and financial performance of key agricultural industries in Tasmania, records the demise of one of our most valuable long-term crops, trees.

In 2006, it says, 6510 people were directly employed in forestry in Tasmania. In the next five years it fell 47 per cent to 3460 people. In Burnie the fall was dramatic, from 455 to 124.
The problem for plantations on private land is clear. In the five years to 2010/11 woodchip exports fell by 34 per cent, to 1.5 million tones, but in the last 12 months they fell 75 per cent to just 360,000 tonnes.

From all of that, you deduce that the future looks bright if you, as a Tasmanian farmer, look forward rather than back, look to new commodities, to new markets, and that you back your judgment through sound investment in infrastructure and the means of production.

The ABARES report can be found here:
http://adl.brs.gov.au/data/warehouse/cofp_d9abcc006/cofp_d9abcc006Tas/CP12.13_OutlookTas_v.1.0.0.pdf

TFGA organises Tuesday Gunns meeting, here

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10 Comments

10 Comments

  1. Simon Warriner

    October 12, 2012 at 9:27 pm

    re 8, there was an entry path, but all those rough blocks got sold to tree farms and planted in Nitens. Now if a young bloke wants to go farming he either has to be dating the bank manager’s daughter, inherit the family farm or go share milking. The days of going mining for a few years and buying a back block, doing beef and seed spuds and then moving forward to better ground have gone. For now.

    Re 9, Nicole, if you think it is bad now, it will get worse as the duopoly ratchet up their control of the supply chain. It makes the management of local quarantine operations look rather important, doesn’t it

  2. Nicole Anderson

    October 12, 2012 at 6:24 pm

    Agree #1 and you echo some of my concerns about the expansion of dairy. My first thought was the vulnerability of this industry to disease when we have genetically similar animals in vast herds across small districts. One only has to recall the recent disease outbreaks in Japan’s waigyu and the prion disease in the British Isles which destroyed these industries. I sincerely hope our eggs are not all in one basket, so to speak. It surely must be safer for farmers to be encouraged to diversify their livestock and crops? It would be one hell of a disaster if Circular Head were to experience cattle disease on the scale seen elsewhere in the world.

  3. alan

    October 12, 2012 at 5:47 pm

    Frankly,many of of our farmers are old and what we need are government policies and assistance for young individuals to up farm ownership and not have the government coffers wasted on the likes of the MIS schemes that just promoted corporate communism with disastrous consequences.

  4. mike seabrook

    October 12, 2012 at 4:41 pm

    suggest check out new zealand situation before progress any further with dairying – be very alert if not alarmed

  5. Carol Rea

    October 12, 2012 at 11:39 am

    #5 Interesting comment. I actually emailed Jan Davis today suggesting that the TFGA get a little more vocal about hemp. She replied that they had lobbyed parliament and gave me links to a number of submissions. But she said “there’s no point applying for grant money if the licence laws are so strict that farmers can’t make any money growing it. For the time being, this is all about getting legislation changed at both state and federal levels.”

  6. digital_dirt

    October 12, 2012 at 10:34 am

    Hemp for victory! With perhaps a dash of blueberries which will thrive in acid soils.

  7. Steve

    October 12, 2012 at 12:19 am

    The simplistic view might be that as forestry has gone down, farm profits have gone up.
    Lies, damn lies and statistics!

  8. Robin Halton

    October 11, 2012 at 11:51 pm

    A brief analysis of private forestry:
    Those owning Radiata stands if thinned on schedule and having a bonus of timely pruned stems on good sites will probably be able to manage to hang on to their stands to be made available for pulpwood for Norske Skog and sawlog for timber.
    This is assuming the Federal Government is prepared / the IGA to give Norske Skog at Boyer $28M for the change over from producing newsprint to glossy paper otherwise it will consolidate its operation in New Zealand.
    I am also assuming that the Boyer Mill’s furnish will remain as radiata!
    For those holding nitens plantations, I cannot comment but I am not aware of any takers for eucalypt as the international market is
    dominated if not flooded by the S Americas!

    Another piece of information has come to hand for Jan and the farmers to be aware of:
    Chinese multi national conglomerate CHEVALIER with construction, property, insurance,IT and food businesses in China, SE Asia, Europe, North America and Australia intends to buy Moraitis an Aust. Coy. which grows, packs and wholesales at least 16 fruit/veg commodities into WW, Coles and Indep supermarkets and markets.
    Moritais has a huge influence on market prices and significant stakes in the most popular varities of potatoes and about 90% of WW’s onion and potato trade.
    49% of potato farms in NSW and SA supply Moraitis.
    Motaitis has growers along the E and W Coasts of Aust with 11 packing ops in Vic, Qld, SA and WA as well as subsidary companies.
    So far only Nationals Senate Leader Barnaby Joyce has called on Treasurer Wayne Swan to how Moraitis and Cubbie stattion sales were in Australia’s interest!
    For full story: Ref Weekly Times Oct 10th pge7
    “CHINA’S VEGIE MIGHT”

  9. john hayward

    October 11, 2012 at 8:37 pm

    A Pied Piper who first promoted ” farm forestry” has now switched to “dairy”, after the former crashed in scandal. While there may well be opportunities in dairy, it’s also time to seek genuinely disinterested and professional advice.

    John Hayward

  10. Sue DeNim

    October 11, 2012 at 4:43 pm

    Seems to me the take home message is we should be wary of putting all our eggs in one basket again with dairy, like we did with woodchip,
    especially if the asian region is developing its own dairy market. If we wish to maintain our high quality product to continue to compete,
    we should also protect our ‘clean, green’ image to the hilt to ensure we can continue to claim a high quality product against an asian market that may struggle in this regard.
    One must then move to the conclusion that this should include protection of our farmland and waterways (from whence we derive irrigation), from excess chemicals
    hmmm Jan? Yes we may very well say that forestry is the bigger culprit in this regard, and with regards to certain chemicals this may be so, but while we are championing
    irrigation, I hope we are keeping an eye on nutrient inputs and run-off ramifications of irrigation.

    I look forward to the new commodities and new markets the TFGA are investigating and championing to assist farmers in diversifying and hence future proofing our important agricultural industry.
    I await eagerly the news of organic, polyculture, multi-use plantation schemes coming online to increase our private land agro-forestry percentages.
    I am sure Jan is looking into it.

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