Irrigated agriculture profile: dairy

Irrigated agriculture profile: dairy

Industry snapshot

  • Around 28% of Australia’s dairy products is produced on about 1,700 dairy farms in the Murray–Darling Basin.
  • The majority of dairy farmers have adapted to changes in the basin by increasing their herd size and intensity of their operations.
  • Dairy farms are more diverse than they have been in the past, with dairy farms taking different approaches around scale of the farm and water ownership.
  • Dairy farmers make decisions, based on climate and market conditions, to retain or buy water to grow feed, or to sell or not buy water and buy feed instead.
  • Many dairy farmers now trade water as part of routine farm business activities.

ABARES dairy report

ABARES full report on irrigated agriculture in the basin

 

Irrigated agriculture is a major industry in the Murray–Darling Basin. To help build a picture of how irrigated farms are changing across time we are working to identify the social and economic effects of the Basin Plan and water recovery.

Dairy farming is a significant irrigated agricultural industry in the southern Murray–Darling Basin. Over time dairy farmers have been adapting to a range of factors including deregulation, drought, varying export demand and prices, changes to technology and herd management as well as water reforms such as the Basin Plan. The combination of these changes is putting many dairy farmers under pressure and/or reducing farmers’ capacity to further adapt.

The MDBA is using a range of sources to build a picture of the changes happening in the dairy industry, including working with industry groups, the Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) and the University of Canberra.

The next stage of this work is to analyse this information to assess what the causes of change are and the likely contribution of the Basin Plan.

Key facts 2015

Information commissioned by the MDBA to date includes an ABARES report on dairy farming in the Murray–Darling Basin, a workshop held with dairy farmers, and one-on-one interviews with dairy farmers. Additional information and analysis will be completed in 2016 to understand the causes of trends and changes in the dairy industry in the southern basin.

ABARES has conducted surveys of irrigation farms in selected industries and regions in the basin since 2006–07. Their latest report, Dairy farms in the Murray–Darling Basin, presents a range of data collected from dairy farms in the southern basin since 2006. The report describes the characteristics of dairy production, farm financial performance, water use and efficiency, water trading and irrigation technologies and investment.

In June 2015 the MDBA and ABARES held a workshop with dairy farmers from the southern basin to test the data trends of the ABARES report. Key messages from the workshop included:

  • dairy farmers are feeling real and significant pressures from a range of sources
  • there are still challenges ahead for many in the industry
  • some farmers don’t want to be water traders
  • dairy farmers have a number of strategies when planning to purchase temporary water depending on their risk profile and farm system
  • the temporary water price has a significant influence on decisions to buy or sell water
  • dairy farmers have had to deal with many reforms over the past 15 years and would like to see more stability
  • the dairy industry is highly reliant on purchased feeds
  • dairy farmers, have increased their dependence on the temporary water market over the last three to four years. This has coincided with falling dairy prices, increased water prices and reduced water availability (caused by drier conditions), higher demand for water and recovery of some water for the environment.

By using a combination of information sources the MDBA is gaining a much deeper knowledge of the dairy industry in the southern basin from both an industry and individual perspective. This mix of knowledge will help us to better understand how water reforms are affecting the industry. We will continue to work closely with industry on monitoring and evaluating the social and economic effects of the Basin Plan, including in the next stage of analysis to identify the causes of change and the contribution of the Basin Plan.

Studies and reports

Government agencies, industry organisations and others are also commissioning studies about the dairy industry and/or Basin Plan indicators that contribute information to building this picture.

Other reports providing background to the MDBA’s social and economic assessment work, while not commissioned by MDBA, provide important context and may be referenced here as they become available, for example:

  • a report commissioned by the Department of the Environment on the supply side drivers in the water market
  • the University of Canberra’s Regional Wellbeing Survey report on the wellbeing of dairy farmers
  • Dairy Australia’s dairy market situation and outlook updates.