SOUTH-west dairy farmers have the capability to increase milk production by as much as 50 per cent “in a reasonably short period”, Great South Coast group chairman Chris O’Connor says.
But they would need good milk prices to encourage them to expand, the head of the south-west advocacy group and Corangamite Shire mayor said.
“That is the challenge for manufacturers, to set the price,” Cr O’Connor said.
He was commenting on Midfield managing director Colin McKenna’s call for the regional dairy industry to expand to supply a milk powder plant the company wants to establish near its McMeekin Road meat processing plant.
WestVic Dairy chairwoman Lisa Dwyer said south-west dairy farmers were likely to wait at least until next season before responding to Mr McKenna’s call.
Ms Dwyer, of Hawkesdale, said most south-west dairy farmers were still recovering from the poor returns of the 2012-2013 season, when low milk prices and high feed costs cut profits drastically.
Ms Dwyer said the continuation of existing milk prices into future seasons would be “the fundamental driver” of any increase in milk production.
She said that while the south-west was in the box seat to increase milk production, the export market for dairy products, which set the milk price paid to farmers, would determine production growth.
The south-west was presently Australia’s biggest milk producer, producing almost a quarter of the nation’s milk, Ms Dwyer said.
It has the opportunity to improve on that position because northern Victoria, which also produces big milk volumes, is restricted by challenges in accessing irrigation and Gippsland dairy farmers face encroachment from urban growth.
But any increase in milk production would still have to cope with seasonal climatic extremes and a restrictive regulatory environment, Ms Dwyer said. She hoped the federal government would deliver on its promises to streamline regulations to enable dairy farmers to do what they were good at, producing milk.
Ms Dwyer said any additional land required to expand milk production in the south-west was likely to come from the amalgamation of existing farms.
“Research does indicate there is going to be fewer and bigger farms,” Ms Dwyer said.
Mr McKenna also called on Sunday for federal government assistance to encourage farmers to expand and to attract young people into farming.
Ms Dwyer responded that “while there is some work that needs to be done in that area”, she did not believe government subsidies would be appropriate.