WHILE it only has 12 dairy farms milking more than 100 cows, the Western Australia South Coast offers better potential for milk production expansion than the state's traditional west coast dairying areas near Harvey and Capel.
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That is the finding of a pre-feasibility study by agricultural and pastoral consultants Alan Peggs Rural.
The study into the potential of the Albany, Denmark and Plantagenet shires to accommodate significantly increased milk production was commissioned by the Great Southern Development Commission (GSDC).
GSDC chief executive officer Bruce Manning gave an overview of the report at the Dairy Innovation Day.
Pressure from hobby farm and other development is forcing land values up on the west coast.
In comparison, lower land values on the South Coast made the capital cost of expanding or relocating a dairy farm to the South West far more attractive than on the west coast, Mr Manning said.
The availability of relatively cheap land previously used for bluegum plantations “for those prepared to do the work to remove the stumps and plant pasture” added to the region’s cost-comparison attractiveness for expanded milk production, he said.
Mr Manning drew a dairy industry parallel with the wine industry where increasing land values in the South West had resulted in some producers moving or expanding into new areas further east.
The greater return on capital, derived from the lower land cost, would also make expansion or dairy farm relocation to the South Coast a “more bankable proposition” for financiers, he said.
Mild climates and feed growing seasons – with the South Coast receiving a more even annual rainfall spread – and most production costs were similar, apart from milk freight cost to Perth processors.
The report showed milk freight costs of up to 50 per cent higher at three cents a litre on the South Coast, but that disadvantage was easily outweighed by the better return on capital.
Restricted availability of three-phase power could be overcome by large capacity invertors, and the Water Corporation was doing more work to identify ground water and other water supply resources in the region, Mr Manning said.
He said the biggest surprise to come out of the report, was comparisons that showed greater potential profitability in the region from dairying than from small beef cattle enterprises, even at current beef prices.
