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Will milk be the next commodity to turn sour?
PETER CAI BUSINESS SPECTATOR JANUARY 12, 2015 2:30PM
Milking the free trade agreement
ONE of the major focal points for the recently concluded China Australia Free Trade Agreement is the dairy industry. Trade Minister Andrew Robb fought hard for the “New Zealand plus” treatment for Australian farmers and he got it.
Many commentators and analysts have been excited about the prospect for much freer access to one of the world’s largest consumer markets for dairy products. There are many stories of the insatiable demand for baby formula and the jaw-droppingly high prices that Chinese people are willing to pay for airfreighted fresh milk.
However, the reality of Chinese demand and global supply is much more sobering and it doesn’t justify the much-hyped optimism we have seen recently. In fact, there is a lot to worry about when it comes to the future of the dairy industry here in Australia and across the Tasman given the global supply glut and not so bullish demand in China.
In recent days, there has been widespread coverage of Chinese farmers dumping fresh milk into fields and turning cows into Big Macs and Quarter Pounders due to depressed milk prices. For example, the purchasing price for fresh milk in Shandong province has been reduced from 4.5 yuan per litre a year ago to about 1.5 yuan per litre at the moment.
The Ministry of Agriculture has urged local governments to support dairy farmers at a time of rapidly falling prices, asking food processors to do whatever they can to buy fresh milk from farmers.
The price of milk powder has also been slashed from about 50,000 yuan a tonne at the beginning of 2014 to less than 20,000 a tonne currently. Globally, milk prices fell 50 per cent in 2014. The dramatic fall in prices is largely due to a glut of global supply as a result of strong international production, high inventory levels in China and Russia’s ban on US and European dairy products.
The global oversupply problem could get worse in 2015 once the European Union removes production quotas on milk, allowing farmers to increase production without buying quota rights. South Asia and 25 countries in the EU account for 44 per cent of global milk production, according to the Food and Agriculture Organisation of the United Nations.
The global supply glut is already hurting New Zealand — the Saudi Arabia of milk production. Export to China boomed following the signing of a free-trade agreement in 2008 and export volumes have increased eightfold. In 2014, New Zealand alone accounted for 85 per cent of total imported fresh milk in China.
For the last decade, the country dramatically scaled up its production and dairy cow numbers increased from 1.5 million to 6.5 million. However, the global oversupply is turning New Zealand’s China boom a bit sour. Fonterra, which buys 90 per cent of New Zealand’s milk production, slashed its forecast payout for the current season to $NZ4.7 per kilo of milk solids in December, from $NZ8.65 in February 2014.
“There is still considerable volatility in global dairy markets, said John Wilson, chairman of Fonterra, “falling oil prices, geopolitical uncertainty in Russia and Ukraine, and subdued demand from China as it continues to work through inventory are all contributing to ongoing volatility and weak demand.”
We can see an analogy between falling iron ore and milk prices. The initial, China-fuelled demand has triggered a global increase in production and the resulting expansion in production is putting pressure on prices. The price squeeze is putting more pressure on small producers who don’t enjoy the benefits of economies of scale.
While the free trade agreement has finally levelled the playing field for Australia, the timing is terrible. Australian dairy farmers have to confront a new reality of falling milk prices, a global supply glut, geopolitical uncertainty as well as subdued demand from China. These market conditions don’t bode well for the sector, which needs farmers to make investment in herds.
The much-promised benefits of the free trade agreement for the dairy sector may not materialise in the short to medium term.
Australian dairy farmers don’t have much confidence to invest in herds at the moment in face of failing milk prices and subdued demand from China.
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Warrnambool warns dairy prices will stay weak until 2016
THE AUSTRALIAN JULY 14, 2015 12:00AM
Eli Greenblat
Senior Business Reporter
Melbourne
Dairy producer Warrnambool Cheese & Butter Factory, which is controlled by Canadian diary giant Saputo, has warned shareholders it expects dairy prices to remain weak for the rest of the year, with an improvement not expected until 2016.
Speaking at the company’s annual meeting yesterday, Warrnambool Cheese chairman Lino Saputo Jr reconfirmed the gloomy outlook provided in May for global milk prices as unexpectedly higher production from key producer New Zealand and growing supply out of Europe pushed down prices.
“Currently, and in line with our expectations, dairy prices remain weak,” Mr Saputo told investors in the ASX-listed Warrnambool Cheese.
“And in particular, the price of certain dairy products has fallen again in recent weeks, putting additional downward pressure on the company’s profitability.”
The comments come as the local dairy industry gains the attention and capital of investors, with dairy co-operative Murray Goulburn completing its partial $500 million float this month and shares in organic baby milk formula company Bellamy’s up 350 per cent in the past 12 months.
However, despite growing demand for dairy products from China, international prices have slumped with key commodities such as milk powder falling by half in the past few years and other products such as cheese and butter under pressure.
Last year Warrnambool Cheese posted revenue of $454.1m, down 25.4 per cent, while net profit lifted 61 per cent to $13m.
After a bitter takeover battle last year, Canadian giant Saputo gained an 87.9 per cent stake in Warrnambool Cheese with rival milk producer Lion grabbing a 10.22 per cent stake and together with other smaller investors, many of them dairy farmers, blocking Saputo from mopping up minorities.
In March, Warrnambool Cheese purchased Lion’s everyday cheese business, which cuts, wraps and distributes the Coon, Cracker Barrel and Mil Lel brands, for $137.5m.
Dairy Australia industry analyst John Droppert said milk prices came off in early 2014 but had a short-lived spike in February and March this year after a drought in New Zealand pointed to a supply shortage.
“Since then that hasn’t happened, and as it turned out they over-estimated the impact,” Mr Droppert said.
“The rains came and conditions were pretty good across the rest of the country, not the drought-affected part, and New Zealand actually finished the season up 2 per cent — near a record for milk production.
“That means there is a lot of New Zealand product that needs to be sold and at the same time you have quotas coming off in Europe and they can’t sell enough product for love nor money over there either.”
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MG warns on cut to milk price
Damon Kitney
[Image: damon_kitney.png]
Victorian Business Editor
Melbourne
[Image: 726953-fae13b68-4f71-11e5-8dd1-2cb6f8d6caf8.jpg]
Murray Goulburn MD Gary Helou at the companies Melbourne HQ Source: News Corp Australia
[b]Australia’s biggest farming co-operative, Murray Goulburn, has warned it may be forced to cut the milk price it pays to farmers below the crucial $6 mark following an unexpected ongoing decline in commodity prices.[/b]
Murray Goulburn has previously said it planned to maintain a $6 a kilo farmgate milk price for the third successive year in 2016 following its planned $500 million capital raising and listing of a unit trust on the Australian Securities Exchange.
But in its 2015 profit result released this morning, the group said the forecast remained subject to certain assumptions including a material strengthening of commodity prices during the balance of 2016, foreign exchange and other risk factors.
“If these factors do not materialise, Murray Goulburn’s FY16 Available Southern Milk Region FMP is more likely to be in the range of $5.60 to $5.90 per kg and net profit attributable to shareholders and unitholders between $66 million and $79 million,’’ the company told the ASX this morning.
Chief executive Gary Helou stressed the co-op was still confident of maintaining the $6 price.
“We assumed a strengthening of commodity prices in our forecasts ... That still is our assumption,’’ he said this morning, noting that supply from New Zealand, the United States and Europe had fallen in response to slowing global demand.
He also noted MG had benefited from a more-favourable exchange rate than forecast in documentation for its raising and that the company had reduced its exposure to commodity-based products to 30 per cent, down from 50 per cent a year ago.
“What is important for us is that we have shifted our business into less volatile and higher price, higher value products,’’ he said.
Asked about suggestions that MG was now bowing to the inevitable after keeping the forecast artificially high to bolster the recent capital raising, Mr Helou replied: “We take our obligations very seriously. You don’t put out a PDS with a cynical number. This was a PDS that had
a lot of scrutiny applied to it ... When the PDS was put together we thought commodities had bottomed, but they had clearly fallen further.’’
MG collects and processes more than a third of Australia’s 9.3 billion-litre milk pool and maintaining a high milk price has put pressure on its competitors, who have been forced to slash costs to compete.
Fonterra chief executive Theo Spierings said last week Australian dairy farmers were being paid too much for their milk.
Mr Helou declined to comment directly on his claims, but said there were key differences between MG and Fonterra.
“It is a different business and our business is a different industry to New Zealand. Fifity-five per cent of our business is in the domestic market,’’ he said.
“We have a bigger orientation towards value add. Only 30 per cent of our business is in these volatile commodities. For those reasons we don’t think we are overpaying our dairy farmers.’’
MG this morning reported a profit after income tax of $21.2 million, down from $29.3 million, but slightly above the forecasts in documentation for its capital raising.
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US demand lifts Australian beef prices 40pc
- LUCY CRAYMER
- DOW JONES
- SEPTEMBER 11, 2015 1:14PM
[Image: 404337-48ec79fe-5813-11e5-81af-05aeacc1e5bf.jpg]
Australian beef farmer Lindsay Marriott says there’s considerable demand in the US for his grass-fed only cattle. Source: News Corp Australia
[b]Americans’ love of hamburgers and good steak is keeping beef prices at records in Australia and New Zealand, even as China’s economic slowdown eats away at demand for other agricultural commodities.[/b]
Thanks to surging US demand, Australian beef prices are up 40 per cent this year, while New Zealand prices are 17 per cent higher.
Australia and New Zealand are among the world’s top exporters of beef. Only India and Brazil export more, according to the US Department of Agriculture.
The US, meanwhile, accounts for 25 per cent of the world’s beef consumption, making it the single largest buyer. It ranks ahead of China, the biggest consumer of commodities like dairy goods and rubber.
“We’re thankful that the US wants our beef ... because some of our beef farmers have been through some really trying times in recent years,” said Rick Powdrell, who heads the New Zealand Meat and Fibre section of Federated Farmers, a lobby group. Beef prices were low for years before starting to rise in 2014.
AUSSIE EXPORT: Our best lamb racks off overseas
Mr Powdrell runs 100 beef cattle and 3,000 sheep on a farm in Te Puke on the east coast of New Zealand.
The Australian-based Eastern Young Cattle Index — the benchmark for Australian beef cattle pricing — is trading at 584 Australian cents per kilogram, up 90 per cent from where it was two years ago. ANZ’s beef-price index shows a 64 per cent gain in New Zealand since August 2013.
The gains show no signs of stopping, given the US demand, although the upswing is partly due to declines in the Australian and New Zealand dollars. The New Zealand dollar is down 19 per cent this year against the US dollar, while the Australian dollar has dropped 14 per cent, making exports from those countries cheaper for US buyers.
Droughts in the US, Canada and Australia have reduced cattle numbers globally, making beef from down under a hot commodity. Australian drought-stricken farmers have used the high prices as an opportunity to increase profits by reducing herds that they are struggling to feed.
Americans are eating imported beef like never before, according to Paul Deane, a senior agricultural economist at ANZ in Melbourne. The country is producing less for domestic consumption and more people are dining out, bolstering demand at the top end of the market, he said.
So far this year, frozen-beef exports to the US from Australia are up 83 per cent at $US1.11 billion, while New Zealand’s exports have risen 38 per cent to $US890 million. The two countries lead the world in shipments of frozen beef to the US.
“The US herd just got so low” that the supply of beef for supermarkets and restaurants has become incredibly tight, said Mr Deane.
The strong beef prices come amid a slump in commodity prices globally as China’s slowing economy takes a toll on demand for everything from dairy goods to iron ore to rubber. Dairy prices are down 18 per cent this year, while Australian wheat prices have fallen 11 per cent.
The surprise devaluation of the yuan last month is expected to make imported goods more costly in China, a setback for consumers. That has raised concern that prices will fall further for several agricultural commodities whose fortunes are tied to Chinese demand.
Cattle farmers in the US and Australia are rebuilding their herds following a drought that reduced stock numbers to the lowest level since 1951 in January 2014. Analysts said farmers are likely to keep more breeding heifers on hand, leaving fewer cows available for slaughter. That should provide support for prices.
“Prices are slowing nudging up but it’s not at the same rate that it was at the start of the year,” said Angus Gidley-Baird, senior animal proteins analyst at Rabobank in Australia. “It will find a bit of a new normal ... and we still see strong demand from the US given the exchange rate.”
The surge in beef demand is good news for agricultural investment funds that opted for large cattle farms across Australia and New Zealand, diversifying away from the once-hot dairy sector. These funds buy farms across the globe in hopes of benefiting from strong prices for some agricultural commodities.
“We’re very happy about this,” said Nick Tapp, chairman at Craigmore Sustainables, adding that Craigmore’s beef farms are benefiting from the price increase. The firm has a diversified agricultural portfolio, with 32,123 acres of beef, sheep and dairy farmland in New Zealand.
“Dairy had a wonderful period, but the inevitable outcome was that too much milk would be produced so prices have gone down, and the same for grains,” said Mr. Tapp. “All commodities are cyclical and at some point beef prices will respond (and fall) because the incentive is there for people to produce more.”
Dow Jones
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Murray Goulburn eyes firmer dairy prices
- AAP
- OCTOBER 26, 2015 12:18PM
[b]Dairy prices are finally showing signs of recovering from their recent lows, Australia’s largest dairy producer, Murray Goulburn, says.[/b]
“We do expect this upward trend to continue as we progress through the remainder of this financial year,” chairman Philip Tracy told shareholders at the dairy co-operative’s annual meeting today.
Mr Tracy also said current dry conditions were a concern, but the strength of farm gate milk prices over the past few years meant most farmers could manage the dry spell.
Mr Tracy said Murray Goulburn, whose brands include Devondale, was still attracting new suppliers of milk.
“Murray Goulburn needs more milk and remains focused on growing milk supply,” he said.
Managing director Gary Helou said the Australian dairy industry had underlying strength.
Demand from Asia was strong and Australia was a trusted source of dairy products.
“Asia is dependent on imports in dairy,” Mr Helou said.
Mr Helou said Murray Goulburn believed that dairy commodity prices had bottomed and were strengthening as producers cut production and supply tightened.
He confirmed Murray Goulburn’s expectation of paying a farm gate milk price of $6.05 per kilogram of milk solids in the current financial year, and the forecast of an annual net profit of $86 million in 2015-16.
Murray Goulburn securities were 1c higher at $2.30 at 11.57am (AEDT).
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Price is secondary; check out the quality of proteins in the milk, for example. Here's a singular reference (on the quality of proteins in general): http://www.inffoundation.org/research/pqwg.htm
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Bega Cheese says dairy recovery uncertain
- AAP
- OCTOBER 27, 2015 11:57AM
[Image: 844045-a6005078-7c46-11e5-80ed-95011193132b.jpg]
“The sustainability of the recovery is yet to be established,” says Bega Cheese chairman Barry Irvin.Source: News Limited
[b]Dairy producer Bega Cheese says prices for dairy commodities have improved but the recovery is still uncertain.[/b]
“Commodity prices have improved, albeit on reduced volumes and the sustainability of the recovery is yet to be established,” Bega chairman Barry Irvin told shareholders at the company’s annual general meeting at Kalaru in New South Wales.
Mr Irvin said Bega (BGA) expects increased price competition and price pressure as a result of lower farmgate milk prices from competing regions such as New Zealand.
While global market volatility affected Bega’s business last year, demand for quality, competitive, sustainably-produced dairy products was expected to continue to grow.
Bega chief executive Aidan Coleman said 60 per cent of Bega’s output was in consumer or food service pack formats.
Bega’s objective was to expand this further by 2020.
“At the same time, we will continue to seek ways to better utilise our dairy component streams that do not currently find their way into consumer packaged goods, in order to decrease our exposure to commodity cycles,” Mr Coleman said.
Mr Coleman said Bega was seeking to develop a new business platform: bionutrients.
Bionutrients include such products as milk protein hydrolysates, nutritional proteins, lactoferrin-based ingredients and specialised milk protein extracts.
Non-dairy bionutrients include plant extracts and marine bionutrients.
“The initial foundation of our bionutrient platform will be lactoferrin,” Mr Coleman said.
“The company is one of the world’s largest producers of lactoferrin, and from that base we intend to expand the capacity at Tatura Milk with ongoing research and development in value-added derivatives.”
Mr Coleman said Bega would also invest in new capacity in micronutrient extraction at its Bega facility, utilising the whey stream available there from cheese manufacturing.
Shares in Bega were 2.00 cents higher at $5.07 at 10.55am (AEDT).
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Farmers forced to slaughter cows as El Nino leaves 'no room for passengers'
NaN of
[Image: 1445668483732.jpg]Some dairy farmers have begun to cull their cows to combat dry weather from the El Nino. Louie Douvis
by Jared Lynch
Dairy farmers have begun slaughtering their cows as an El Nino sweeps across Australia, leaving "no room for passengers", the world's biggest dairy exporter, Fonterra, says.
The weather phenomenon is biting into key dairy producing areas, including western Victoria and the Murray region, which have experienced "non-existent rainfall" so far in October.
As a result, Fonterra national milk supply manager Matt Watt said the dairy season had been brought forward about a month, meaning many farmers would have to start using their fodder reserves earlier than expected.
Once that runs out, Mr Watt said farmers would have to make "some tough decisions" about whether to buy feed, which is costly, or slaughter cows while beef prices are still "reasonable".
"A lot of farmers are saying to me 'every cow we are carrying has to perform'. There is clearly no room for passengers in this kind of season," he said.
"With the uncertainty of rainfall and absolute lack of it, they'll have to make some tough decisions around culling cows as culled cow prices remain reasonable and that clearly impacts production."
Dairy Australia expects overall milk production to remain steady this season at about 9.8 billion to 10 billion litres, or about a 2 per cent increase on last season. But industry analyst Amy Bellhouse said the hot spring could dent that estimate.
STRONGEST SINCE 1997
This year's El Nino was the strongest since 1997, the Bureau of Meteorology said, and farmer advocacy group Australian Dairy Farmers said some farmers had already began reducing their herds to combat the dryness.
The El Nino weather phenomenon happens every three to five years and is normally associated with hot, dry weather through spring and summer.
Elders livestock manager Peter Homann said 2015's weather pattern had wiped out the important spring growing season.
"We have just gone from winter to summer," Mr Homann said. "We just haven't had that spring growth."
Cattle and sheep farmers were selling stock earlier than expected, which had weighed on prices, he said. The Australian benchmark cattle price, the Eastern Young Cattle Indicator, has fallen about 10 per cent since the start of October to 525.5¢ a kilogram.
But this is significantly higher than the same month in 2014 and 2013, when prices were about 350¢ a kilogram and 300¢ a kilogram respectively.
Sheep prices are also down 10 per cent for the month, fetching about 500¢ a kilogram. But, like beef, they are higher than 2014's and 2013's prices, which were about 450¢ a kilogram and 400¢ a kilogram respectively.
"We are in the Shangri La of livestock prices really," Mr Homann said, citing strong export demand from the Middle East, Asia and the United States.
"But in the end what happens above our heads has the biggest impact in the market."
BEGINNING TO REBOUND
Sheep and beef prices were beginning to rebound, as buyers became more concerned about supply shortages in early 2016, he said.
Grain Producers Australia chairman Andrew Weidemann and his family grow wheat on 3500 hectares near Rupanyup, about 300 kilometres north-west of Melbourne.
He also farms sheep and said solid livestock prices had helped insulate his family against the El Nino.
"Like any business, you need a diversity of income," Mr Weidemann said. "Sheep prices are pretty solid. We run livestock and we are making reasonable returns from our livestock."
But he said not all wheat growers had access to that additional income, adding sheep farming required added expertise.
[Image: rainfall2005-15.gif]Victoria is expected to bear the brunt of the El Nino and the state's wheat production was expected to tumble 47 per cent in 2015, ANZ said.
Mr Weidemann said a string of hot days earlier in October, when wheat began to flower, hurt the crop.
"That can be ... just as bad as a frost because it basically burns the … the head and stops the grain fill and the flowering. It's just such a massive thing.
"What I'm hearing further north, which generally trends south … is that in the grain that's been harvested there has been … a lot of small grain, which is an effect of that heat.
"You have got a percentage of the tonne that would be graded out and be a stock feed and in some cases they wouldn't be able to be used because they would have shrivelled up that much."
ANZ agriculture economist Paul Deane expected the national wheat crop to similar to 2014, about 23 million tonnes. He said the "worst of the dryness had been confined to Victoria", which produces about 12 per cent of the crop.
Meanwhile, above-average rainfall across parts of Western Australia, NSW and South Australia had ensured good subsoil moisture throughout September.
MUCH LESS SEVERE
Mr Deane therefore expected the flow-on effect to Australia's economy would be "much less severe" than in the 2002 and 2006 droughts, which wiped about 0.5 percentage points off economic growth.
"Our view is that in 2015, as in 1997, a strong El Nino event does not always correlate with a major decline in grain output and a large contraction in farm GDP," Mr Deane said.
But some parts of NSW were more fortunate that others, said Oscar Pearse, who operates a wheat farm near Moree, about 600 kilometres north-west of Sydney.
"It's a classic tale," Mr Pearse said. "East of Newell Highway seems pretty good because we had a significant rainfall from late January to March … and we've been coasting along.
"We will be getting significantly better crops than last year – probably double. The last two years have been pretty disappointing generally.
"But west of Moree, once you start heading towards Walgett, you start to get back into very dry conditions and there are guys there who are in their fourth year of no crop."
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ANZ: Dairy farmers should expand and meet Asian milk demand
Sue Neales
[Image: sue_neales.png]
Reporter - Rural/Regional Affairs
[Image: 637983-a6a87f80-7c89-11e5-9d9b-7b73a423a28f.jpg]
Source: TheAustralian
[b]Australia’s 6000 dairy farmers must be encouraged by a combination of carrot and stick approaches to dramatically fast-track increased milk production, or risk losing the Asian dairy food boom opportunity to European rivals.[/b]
A new paper from ANZ, “Looking for a sign: unlocking Australia’s dairy potential”, claims a lack of confidence, capital and scale among dairy farmers is holding back herd expansion and milk production.
But the ANZ report, to be released today, also claims Australia’s $4.7 billion dairy industry could see annual milk production rocket 15 per cent a year to 15 billion litres by 2018 if aggressive growth incentives and investment structures are put in place.
To achieve such rapid production growth, ANZ head of agribusiness Mark Bennett is adamant more funding, more cows, more dairy farmland, bigger herds and fewer farmers are required.
The report finds a big injection of $8.6bn of capital from super funds, foreign investors and banks is needed to reach the 15 billion litres of milk a year production target.
Intensive milking herds housed permanently in barns are also likely to proliferate at the bigger end of the industry, as are foreign joint venture opportunities.
Another key change must be to stop selling 80,000 young dairy heifers to China each year, which ANZ’s report found to be suppressing total milk production by 1 per cent a year.
Annual milk production in Australia has plummeted from 11 billion litres a year to 9.2 billion litres in the past decade, and is growing at a slow 2.5 per cent a year, despite recent strong demand in Asia for “clean, green and safe” Australian dairy foods.
Mr Bennett said the global financial crisis, the long millennium drought, water shortages and years of poor farmgate returns had provided little incentive for Australian dairy farmers to expand, especially in key irrigation-reliant areas such as northern Victoria.
“So we asked what will be the catalyst for producing more milk, and what are the answers for how to get to the 15 billion litres of annual milk production, because the China food boom has gone from sleeping giant to reality, yet it still isn’t happening,” Mr Bennett said.
“We are not about forcing farmers to do things; what we have tried to do in this report is look at how we could get to producing 15 billion litres of milk by 2025, or even quicker, and what is needed to achieve that.”
Mr Bennett believes it is vital Australia consider how it is going to grasp the potential opportunities offered by Asia’s growth and affluence, especially with the benefits of the new China-Australia Free Trade Agreement starting to flow over the next nine years. In ANZ’s most aggressive and bullish scenario, by 2018 Australia’s dairy industry would be a different place.
Heifer exports to China, which grew by 33 per cent in 2014 and are valued at $170 million, would have halted.
Despite the cash benefits to farmers, the damage they are doing to the growth and genetic gain of Australia’s dairy herd are too great, the ANZ report says.
Australia’s herd of 1.6 million milking dairy cows would have expanded by a million, requiring a $2 billion additional investment.
Farmers aged over 55 would be encouraged to leave the industry though government incentives.
This would leave fewer younger, keener and better-educated farmers, with different attitudes to risk, debt, taking on equity partners or forming local co-operatives with other farmers. Each farmer — and there might be only 1500 or 2000 left, compared to the current 6200 — would be running a bigger farm.
The average herd size would have grown from just 270 cows per farm to 730-825. More workers would be needed per farm, despite the introduction of automated and robotic dairies.
Through a focus on better pasture production, genetic improvement and management techniques — as achieved today by the nation’s top 25 per cent of dairy farmers — the number of cows supported by each hectare of farmland would have increased from 1.4 to 2.2.
Annual milk production per cow would have grown from 5611 litres a year to close to 10,000 litres.
In addition, government and private sector investment in land conversions and irrigation projects — as well as improved dairy profits through corporate focus on high value exports — would have enabled the total area of farmland suitable for profitable dairy farming to expand from 2.3 million hectares to 3.3 million, especially in higher rainfall areas, such as Tasmania.
The capital cost requirement of such dryland conversion, intensification and irrigation expansion is estimated at about $5.5 billion.
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