An Agricultural Profile of the Midlands Region, Tasmania

Prepared for the Department of Economic Development, Tourism and the Arts by

AK Consultants as part of the Tasmanian Government’s Wealth from Water Pilot Program.

October 2012

A snapshot of the Midlands region in Tasmania – an area with new irrigation resources – including demographic, land, climatic, irrigation and infrastructure information, along with

commentary on prospective farming enterprises and potential returns.

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Contents

Executive Summary ................................................................................................................................. 3

Location ................................................................................................................................................... 4

Demographics ......................................................................................................................................... 5

Climate .................................................................................................................................................... 8

Land classification and soil types .......................................................................................................... 10

Water resources .................................................................................................................................... 14

Irrigation schemes ............................................................................................................................. 15

Infrastructure, packing and processing................................................................................................. 19

Potential investment opportunities ..................................................................................................... 21

Further information .............................................................................................................................. 25

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Executive summary

The Midlands region is made up of the municipalities of the Northern and Southern Midlands and lies between the state’s largest cities of Launceston and Hobart. The total area of the Midlands region is 7,746 square kilometres and contributes 16 per cent of the total value of agricultural production in the state.

The Midlands region is comprised of the basin in the valley between the major landforms of the Great Western Tiers, the Ben Lomond Plateau and the Eastern Tiers. The South Esk River and its tributaries drain all the northern portion of the Midlands area. In the south, the Jordan River and tributaries drain the western portion, the Coal River drains towards the south, and the headwaters of the Prosser and Little Swanport Rivers drain towards the east.

The Midlands climate is reasonably variable, however the majority of the agricultural areas occur at lower altitudes where the climate is more favourable. Although the lower-lying areas are generally warmer, they experience lower rainfall and are also prone to severe frosts. The extensive flood plains in the lower altitude areas are prone to short-duration flooding from rainfall in the higher catchments, particularly during winter and spring. Maximum and minimum temperatures and the incidence of frost must be taken into consideration in determining agricultural pursuits.

The majority of the intensive cropping land is confined to an area in the north of the Midlands region around Cressy - Longford. For the remainder of the Midlands region, there are extensive areas suitable for cropping, but there are important limitations that restrict the length of cropping phase and/or the range of crops that can be grown. Conservation treatments and/or careful management are required to minimise degradation.

Pasture-based enterprises account for more than 75 per cent of the total farmed area and contribute more than half of the gross value of agricultural production. The balance of the agricultural production comes from cropping, with cereals being the major crop, followed by poppies, pasture seed, and potatoes and other vegetables with perennial horticulture (mainly cherries, vines, stone fruit and walnuts) being a significant contributor in the south of the region.

Many farms in Tasmania are generally thought of as mixed farms, because they combine a range of enterprises including grazing, vegetable growing, grain and oil poppy growing. The Midlands region commonly supports larger holdings than the rest of the state. With an increased investment in water resource development through various government and private projects, there is an increased opportunity for further diversification, with a range of enterprises potentially suitable for the region, including high-value enterprise options such as vegetable seed, wine grapes, stone fruit and berry fruit.

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Location

The Midlands region is comprised of the Northern and Southern Midlands municipalities, with the Southern Midlands municipality being approximately half the size of the Northern Midlands. The region is located in the central east, between the two largest cities of Launceston and Hobart in Tasmania. The Midlands region covers an area of approximately 7,746 square kilometres and is bounded by the Great Western Tiers to the west, the Ben Lomond Plateau to the north-east, the Eastern Tiers to the east and the Jordan River to the south-west.

Figure 1. Midlands region comprised of Northern and Southern Midlands municipalities

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Demographics

The Northern Midlands municipality includes the towns of Longford, Perth, Evandale and Campbell Town, while the main towns in the Southern Midlands are Oatlands, Colebrook, Campania, Kempton and Bagdad.

The 2011 census data indicates the population of the Northern Midlands was 12,228 and the Southern Midlands’ was 6,049. Growth from the previous census in 2005-06 was 137 in the Northern Midlands and 381 in the Southern Midlands1. Hence there was a population growth of 2.8 per cent over the intervening five-year period for the Midlands region. The median age of residents in the two regions is 43. Unemployment within the region was 5.2 per cent for the Northern Midlands municipality and 8.6 per cent for the Southern Midlands municipality in the March quarter of 2012. Unemployment in the Southern Midlands municipality is substantially higher than Tasmania as a whole, with 5.9 per cent, and Australia as a whole with 5.1 per cent 2.

The labour force in the region is 8,411, which is 3.6 per cent of the total labour force of 232,126 in Tasmania1. The population census of 2010-11 indicated the agricultural sector (sheep, beef cattle and grain farming) was one of the main employers, employing 462 people in the Northern Midlands and 298 in the Southern Midlands, meaning a total of 9 per cent of the regional labour force. In addition to its direct on-farm employment, agriculture also contributes to employment in the industry sector, with poppy-processing company TPI Enterprises at Cressy, the Swift Australia (Southern) Pty Ltd abattoir at Longford, Tas Quality Meats abattoir at Cressy, Inghams egg production, chicken rearing and feed pellet processing facility near Longford, and Tasmania Feedlot Pty Ltd at Powranna all being major employers. Of these, the Swift Australia (Southern) Pty Ltd abattoir, with approximately 300 employees with seasonal fluctuations, is probably the largest private agricultural sector employer in the two municipalities.

The Midlands region is home to around 541 rural businesses, farming a total area of over 547,328 hectares3. The average establishment size is 1,000 ha, which in comparison to other areas in Tasmania is relatively large. For example, in the Circular Head municipality the average establishment size is 363 ha, and in the Latrobe Municipality the average establishment size is 120 ha. This reflects the type of agriculture that is associated with these regions with dairy enterprises dominating the

1 2001011 Census QuickStats: Northern Midlands and Southern Midlands (Local Government Area)

2 Small Area Labour Market data, DEEWR March 2012

3 Australian Bureau of Statistics 71210DO018_201011 Agricultural Commodities: SA4/SA2. Released 9 Nov 2012

Figure 2. Grazing land in Southern Midlands. Source AK Consultants.

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Circular Head municipality and cropping and grazing enterprises being very prevalent in the Latrobe Municipality.

The lower rainfall and land capability limitations (see land classification and soil types section of this report) mean that sheep and beef grazing with dryland cropping have traditionally dominated in the Midlands region, and to be viable these farms have needed to be larger.

The value of agricultural production varies considerably between the 29 municipalities in Tasmania and the Northern Midlands municipality has the third-highest total value of agricultural production in the state, with only Circular Head and Meander Valley municipalities being greater. The total value of agricultural production in the state is $1,151.6 million, of which the Midlands region represents 16 per cent.

Table 1. Value of agricultural production (excluding plantation forestry) in the Midlands region based on ABS 2010-11 data. Source: 75030DO16_201011. Released November 2012.

Category

Value ($m)

Northern Midlands

Value ($m)

Southern Midlands

Livestock slaughterings1 $23.6 $12

Livestock products $39.2 $20.5

Broadacre crops (including hay, nurseries and cut flowers and vegetables for human consumption poppies)

$67.7 $16.8

Poppie 2 $0.08 $3

TOTAL $130.58m $52.3m

1 This does not include value of livestock sold interstate. In 2010-11 some 320 000 sheep from Tasmania were sold interstate. The Department of Primary Industries, Parks, Water and Environment (DPIPWE) has the estimated value of those sales at $18 million. It is also estimated that 60 per cent of those sales were from the Midlands districts and that might account for a further $11 million in farm livestock sales. In addition, a significant number of beef cattle would normally be sold to interstate buyers. It is therefore expected that total annual sheep and cattle farm sales might be of the order of $48 million.

2 The value of poppy production is not publicly available. An estimate has been included based on area of poppies at $3 500 per hectare.

Pasture-based enterprises account for more than 75 per cent of the total farmed area and contribute more than half of the gross value of agricultural production. The balance of the agricultural production comes from cropping, with cereals being the major crop, followed by poppies, pasture seed and potatoes and other vegetables. Of these, potatoes and beef are in Tasmania’s top 10 food and beverage production and trade revenue items4.

4 DPIPWE, Tasmania Food and Beverage Industry Score Card 2009-10. Available on line from http://www.dpipwe.tas.gov.au/inter.nsf/WebPages/LBUN-8MAVWX?open

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Perennial horticulture in the region5 consists of cherries, vines, stone fruit and walnuts6. The majority of this produce is grown in the drier southern part of the Midlands and the majority of these are irrigated enterprises.

Plantation forestry is also an agricultural activity7, however it is not included in the ABS data on the value of agricultural production for several reasons. It is difficult to provide an analysis of the contribution of plantation forestry to the rural economy, because the returns are often variable as activities such as thinning and harvesting occur at varying times throughout the rotation. Thus there is no annual harvest for any defined management unit. Nor is there clear differentiation between the contribution of the value of products obtained from plantation forestry on private land, or the value of products sourced from native forest harvesting and regeneration on either private land or state forest. ABS data does provide data on the spatial extent of plantation forestry and approximately three per cent of farming land in the Midlands region is under commercial plantation. In comparison, the area used for cropping is approximately six per cent of the farming land.

5 Note the majority of the Coal River Valley is south of the Southern Midlands municipal boundary

6 Reported in Table 1 and Figure 4 as crops.

7 As defined under the State Policy on the Protection of Agricultural Land 2009. Available on line at http://www.dpac.tas.gov.au/__data/assets/pdf_file/0004/82714/State_Policy_on_the_Protection_of_Agricultural_Land_2009.pdf

Figure 3. Agricultural enterprises in the Midlands region by share of value based on ABS 2010-11 data. Source: 75030DO16_201011. Released Nov 2012

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Based on ABARE Regional Outlook data, Tasmanian broad acre farm cash incomes8 increase modestly to an average $100,600 per farm in 2010-2011, further building on the improvement recorded in 2009-10. Improved seasonal conditions in 2009-10 and 2010-11 have enabled sheep numbers to rise by 460,000 head in the State, and increased wool production following several years of dry seasonal conditions that constrained crop and livestock production. Most of the increase in average farm cash income for Tasmanian broad acre farms in 2010-11 resulted from increased turn-off of beef cattle, combined with increased wool production and higher wool prices.

Many farms in Tasmania are generally thought of as mixed farms, because they combine a range of enterprises including grazing, vegetable growing, grain and oil poppy growing. ABARE statistics show that a very high proportion of farms in Tasmania are relatively small and a lot of the small farms are reliant on off-farm income. In contrast, the largest one per cent of farms produce 30 per cent of Tasmania’s agricultural output in value terms9. As discussed previously, the Midlands commonly supports large holdings and with an increased investment in water-resource development through various government and private projects, there is an increased opportunity for further diversification.

Climate

The Midlands climate is reasonably diverse and varies from high rainfall (1,600 mm in the north-east of the Northern Midlands municipality on Ben Lomond) and relatively cool areas on the elevated areas of the Western Tiers with winter snow falls, to the warmer and drier areas (500 mm of rain or less annually) in the southern parts of the Midlands, which are the driest areas of Tasmania.

Generally the areas above 500 metres experience cool temperatures and moderate rainfall, while the warmer drier areas occur below the 500 metre contour. Although the lower-lying areas are generally warmer, they experience lower rainfall and are also prone to severe frosts. The extensive flood plains in the lower-altitude areas are prone to short-duration flooding from rainfall in the hills and higher catchments, particularly during winter and spring.

8 Note; ABS data is Gross Farm Income. ABARE reports on Farm Cash Income which is Gross Farm Income less Cash Costs.

9 Australian Bureau of Agricultural and Resource Economics and Sciences, Australian commodities, March quarter 2011), Vol 18 no1. Canberra. Available online at http://adl.brs.gov.au/data/warehouse/pe_abares99001790/AC11.1_March_part_1_REPORT.pdf

Figure 4. Rainfall 1971 -2010. Data Source: Bureau of Meteorology Cressy and Oatlands, 39 years from 1971

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Temperature

Maximum and minimum temperatures and the incidence of frost have significant implications for current and proposed agricultural pursuits in the area. In general, the main agricultural areas occur at lower altitudes where the climate is more favourable.

Modelling results from the ‘Climate Futures for Tasmania’ project indicate that both temperature and rainfall in the Midlands are expected to increase in the near future (2010 – 2039). Under the low-emissions scenario, mean annual temperatures are expected to increase by 0.3 – 0.6 degrees Celsius and under the high-emissions scenario, mean annual temperatures are expected to increase by 0.3 – 0.9 degrees Celsius.

Under both scenarios, there is variation across the region in mean annual rainfall changes. Some areas will experience a slight overall reduction in annual rainfall of 20 mm per year, whereas other areas will experience an increase of 40 mm. Generally though, there will be an overall increase in mean annual rainfall of around 20 mm per year. More detailed data on projected pan evaporation, relative humidity, annual rainfall and mean temperature is available for grid squares of approximately 10 square kilometres for the whole of Tasmania, for both low-emission and high-emission scenarios from the Land Information System Tasmania (LIST), available at http://www.thelist.tas.gov.au/. Each attribute is displayed in map format and projections are available for three time frames: near future, medium term and turn of the century.

The Department of Primary Industries, Parks, Water and Environment (DPIPWE) is currently undertaking land and enterprise suitability mapping in parts of the Midlands region. This is based on new digital soil-mapping techniques and combined with local climate-modelling information, is being gathered for an area of 25,000 hectares around Tunbridge, Woodbury, York Plains, Nala, Pawtella and Andover. This information will be used to define areas of relative suitability for about 20 annual and perennial crops. Further information is available via the DPIPWE website www.dpipwe.tas.gov.au/wealthfromwater. The mapping data will progressively be made available from late 2012 on the Land Information System Tasmania, www.thelist.tas.gov.au.

Figure 5. Mean maximum and minimum temperatures for Cressy, Oatlands and Hobart Airport. Although Hobart Airport is

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Figure 6. South Esk River. Source D. Sprod

Land classification and soil types 10

The northern portion of the region is bounded by the dolerite-capped escarpment of the Great Western Tiers to the west, and the Ben Lomond Plateau in the north-east. The Midlands region includes the Fingal and St Pauls valleys, with the eastern boundary of the region defined by the rolling hills of the Eastern Tiers. To the south the Jordan River forms part of the western boundary. This extends to the east just north of Tea Tree and south of Campania.

The Midlands region is comprised of the basin in the valley between these landforms. The South Esk River and its tributaries (including the Lake, Macquarie, St Pauls, Elizabeth and the Blackman Rivers) drain all the northern portion of the Midlands area. In the south, the Jordan River and tributaries drain the western portion, the Coal River drains towards the south, and the headwaters of the Prosser and Little Swanport Rivers drain towards the east.

Table 2 describes the land capability classifications of the private land in the rural zone of the Northern and Southern Midlands municipalities. The majority of the region has been surveyed at a scale of 1:100 000. Some areas (such as Cressy-Longford and the Coal River Valley) have been surveyed at a scale of 1:25 000. Land capability of the majority of the Midlands’ southern portion has been modelled at a scale of 1:100 000.

10 DPIF, Land Capability Survey of Tasmania 1996, South Esk Report, State Digital data Surveyed (1:100 000 and 1:25 000) and Modelled 1:100 000 from the LIST and Grose 1999, Land Capability Handbook of Tasmania.

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The Midlands region has very little prime agricultural land (meaning land capability classes 1 to 311). The majority of this land is confined to an area in the north around Cressy-Longford. The soils (known as the Cressy Association) are gradational reddish-brown to grey-brown friable clays, with a reasonably developed structure. They occupy gently to moderately sloping country. These soils are less well-drained than the basalt soils of the North-West Coast of Tasmania. Although class 3 land has some limitations for the range of crops that can be grown, and a cropping intensity compared to class 1 and 2, with careful management of

these limitations, these soils are suitable for cropping two to five years out of ten with pasture or the equivalent in the rotation (or more frequently with management techniques to protect the soil structure).

More than 50 per cent of the Midlands region is comprised of class 4 and 5 land, and that is where the majority of the cropping enterprises are undertaken. Grazing also occurs mainly on the class 4 and 5 land, with some on class 6. The majority of soils used for cropping are defined as duplex (meaning two layers). These soils have an abrupt texture change, for example sand or sandy loam over clay. The weak structure of the surface soils means they are easily overworked.

There are also areas of class 4 land on basalt in the area from Breadalbane to Campbell Town and surrounding areas. The main limitation of these basalt soils is stone in the profile. The class 4 land is suitable for cropping but there are important limitations that restrict the length of cropping phase and/or the range of crops that can be grown. Conservation treatments and/or careful management are required to minimise degradation. Cropping rotations are normally restricted to one to two years out of ten in a rotation with pasture or equivalent, during ‘normal’ years to avoid damage to the soil resource, although depending on the limitations cropping frequency may be increased in some instances with appropriate management practices.

Class 5 land occurs on tertiary sediments, recent alluvium, dolerite and some areas of basalt, south of Ross. This land is unsuitable for cropping, although some areas on easier slopes may be cultivated for pasture establishment or renewal and occasional fodder crops. The land may have slight to moderate limitations for pastoral use, generally because areas cannot be cultivated for pasture improvement.

11 The classification of the land is based on characteristics of soil type, drainage/soil erosion, slope, stoniness and the climatic limitations (for instance frost) in the region. The land capability classification system categorises land into seven capability classes, with increasing degrees of limitation for agriculture production or a decreasing range of crops that can be grown as the system progresses from class 1 to class 7. Classes 1 to 4 are considered suitable for cropping activities, classes 5 to 6 suitable for pastoral activities only and class 7 is considered unsuitable for agricultural use.

Figure 7. Rocky outcrop. Source AK Consultants

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Figure 8. Stooks of hay. Source AK Consultants

Figure 9. Land capability in the Midlands region

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Table 2. Land Capability in the Midlands region from State Digital Data. Source; DPIPWE Land Capability Data

Description

Northern Midlands

Municipality

Southern Midlands Municipality Northern + Southern

Area (ha) Area (ha) Area (ha) Per cent

Class 3 9 233 72 9 305 1%

Class 4, 4+3, 4+5 164 977 45 321 210 298 27%

Class 5, 5+4, 5+6 96 406 92 648 189 054 24%

Class 6, 6+5, 6+7 138 052 107 068 245 120 32%

Class 7 3 693 892 4 585 1%

Not classified

(including non-private land)

100 869 15 342 116 211 15%

TOTAL 513 230 261 343 774 573 100

Much of the class 6 land occurs on dolerite. Slopes are generally steep (30 per cent plus) and soils are shallow, stony and of low fertility, making the land marginally suitable for grazing purposes. Mostly, this land has been retained under its natural vegetation cover.

There are small areas of land mapped as class 7. These areas are not suitable for agriculture.

DPIPWE is currently undertaking land and enterprise suitability-mapping in parts of the Midlands region. This is based on new digital soil-mapping techniques and combined with local climate modelling. Further information is available via the Department’s website www.dpipwe.tas.gov.au/wealthfromwater. The mapping data will progressively be made available from late 2012 on the Land Information System Tasmania, www.thelist.tas.gov.au.

Figure 8. Pasture in Midlands. Source AK Consultants

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Salinity is a natural process whereby salt accumulates in the landscape. In Tasmania, salinity hazards generally only occur where average annual rainfall is less than 800 mm. This includes the majority of the Midlands agricultural region. Four other key factors influence the expression of salinity. These are the position in the landscape, the amount of salt stored in the soil, the depth to saline groundwater and the impact of land uses that change the hydrology, for example the clearing of native vegetation, cropping and irrigation. Through monitoring and establishing baselines for indicators such as groundwater (both salinity and depth) and soil salinity, the risks associated with any potential land-use changes can be ascertained.

Management techniques to mitigate the risks are all based on managing the hydrology, and in particular minimising the amount of water that drains through the root zone of crops and pastures to raise the level of the water table. These techniques include growing deep-rooted perennials, minimising the length of fallows, and scheduling irrigation applications so that over-watering is avoided. Salt-tolerant species are sown to saline drainage lines, to maximise water use. In some circumstances engineering techniques are appropriate, such as surface drainage, but underground drains are rare because the sub-surface clays restrict water movement.

Water Resources

Agriculture is a priority sector identified in the Tasmanian Government’s Economic Development Plan and new irrigation infrastructure development is integral to this plan. The Tasmanian and Australian Governments, along with private investors have committed in excess of $400 million to the development of the state’s irrigation infrastructure.

The state accounts for approximately two per cent of Australia's land mass but has almost 12 per cent of the nation's total annual water run-off. The investment has the potential to double agricultural production in Tasmania.

Access to reliable irrigation water is a major factor limiting the growth of the primary production sector. This water is being secured through a number of water development projects. As well as individual farm developments, there are private collaborative projects by groups of neighbouring farmers and public-private partnerships. This will enable the amount of irrigable land to double for production purposes. Tasmanian Irrigation Pty Ltd is a state-owned company responsible for developing and operating public irrigation schemes in Tasmania. In the Midlands there are 3 new schemes in various stages of development.

In Tasmania water resources are managed under the Water Management Act 1999 and is administered by DPIPWE. Approvals are required to extract or store water for irrigation. Hydro Tasmania holds a special licence under the Water Management Act 1999, which gives the Hydro-Electric Commission the right to the majority of the water resources of the South Esk catchment. Only the southern part of the Midlands region, which drains towards the east and south, is excluded

Figure 9. Dam under construction. Source W. O’Connor

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from the South Esk River Hydro-Electric District. This means that all water in the South Esk basin effectively ‘belongs’ to Hydro Tasmania and commercial arrangements are required to transfer water which could be used for power generation from Hydro Tasmania.

In addition, some historical arrangements between Hydro Tasmania and irrigators exist. For example all properties that are riparian to the Lake River have a special right to water from the Lake River (Loan (Hydro-Electric Commission) Act 1957). Negotiations between Hydro Tasmania and the irrigators on the Lake River and downstream on the South Esk River to Hadspen, have been underway for some time to establish a cap on these special rights.

For the majority of the Midlands region, there is a number of different potential irrigation water resources, including irrigations schemes (both private and Tasmanian Irrigation Pty Ltd.), on-farm storage, and direct summer takes from major rivers and ground water. There are some large private storages (such as Trefusis dam with 7,000 mega litres) which provide opportunities for private water sales. Many farms also have their own storages, which are either filled from catchment flows or pump-filled from a larger stream. There are also direct summer takes from the larger streams; although summer restrictions are common in some areas, for example the Macquarie River Basin. Groundwater is also sourced in some areas, although generally yields are low and salinity levels marginal. Occasionally, groundwater is used as a supplement to other sources of irrigation water.

The preferred water resource in any given part of the Midlands region depends on geographic location and which resource is most accessible.

Irrigation Schemes

There are several current and proposed irrigation schemes and water districts in the Midlands region and the geographic extent of some of these overlap.

Whitemore Irrigation District

The Whitemore Irrigation Scheme (WIS) brings up to 5 500 mega litres of water over a 150-day irrigation season, from the Poatina tailrace, to farmland stretching from the foot of the Great Western Tiers, to just north of Carrick. The majority of this district lies outside the Northern Midlands municipality and only the southern and eastern portions are within the Northern Midlands municipality. The scheme is owned and operated by Tasmanian Irrigation Pty Ltd.

Cressy-Longford Irrigation Water District

This district was officially established in 1999, although the development of the scheme occurred in the late ‘60s and early ’70s. The infrastructure assets are owned by Tasmanian Irrigation Pty Ltd and the district is administered by the Cressy Longford Irrigation Scheme Ltd, which was declared a water entity in 2002. The scheme delivers 155 mega litres per day. The total delivered annually varies depending on demand and can be up to 16 000 mega litres per year.

Figure 10. Irrigation Scheme pipe laying. Source Tasmania Irrigation

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Lower South Esk Irrigation District

This scheme is currently under construction. It will harvest winter flood flows from the South Esk River for storage off-river in the 5 300 mega litre Milford dam, for delivery downstream during the irrigation season. The water will be transferred from the South Esk River to the off-stream dam via a 1.3 kilometre pipeline and pump station.

Lake Leake, Elizabeth – Macquarie River Irrigation District

The Lake Leake/ Elizabeth/ Macquarie River Irrigation District is administered by the Elizabeth Macquarie Irrigation Trust, which was declared a water entity in 2006. The trust manages the delivery of 14 551 mega litres of irrigation water released from Lake Leake over summer.

Tooms Lake – Macquarie River Irrigation District

The Tooms Lake/ Macquarie River Irrigation District is administered by the Elizabeth Macquarie Irrigation Trust. The trust manages the delivery of 9 099 mega litres of irrigation water released from Tooms Lake over summer.

Midlands Water Scheme

The Midlands Irrigation Scheme is based on 140 kilometres of pipelines taking water from Arthurs Lake. Several branch mains will be constructed, including one which takes water from Oatlands to Lower Marshes, to supply additional flow to the Jordan River as far south as Kempton. The capacity of the Arthurs Lake pipeline is 38 500 mega litres (28 600 mega litres summer water and 10 000 mega litres winter water) for an irrigable area of approximately 55 500 hectares. The Arthurs Lake Pipeline does not require additional water to be taken from the lake, as it will use water which Hydro Tasmania has agreed to forgo for power generation purposes. A two-year construction phase is scheduled, with anticipated completion in 2014.

Macquarie Settlement Scheme

This is a privately funded pipeline, which draws water from the Poatina power station re-regulation pond. It supplies 18 000 – 20 000 mega litres annually (365 days per year) to approximately 12 900 hectares of farmland, from south of Cressy to west of Stewarton Bridge. The delivery capacity of the pipeline is 48 mega litres per day. The scheme is administered by an official entity that sits under the Elizabeth Macquarie Irrigation Trust. The scheme has three pipelines side by side for 4.5 kilometres to the Lake River, reducing to two pipes and then to one, which discharges into the Macquarie River. The scheme has been fully operational since late 2011.

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Figure 11. Irrigation Schemes in the Midlands region

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Blackman Water Pty Ltd

The Blackman River dam is a 6 500 mega litre privately funded storage, which stores water for delivery downstream via the Blackman River and Lowes Park and Glen Morey channels. There are 13 shareholders who each have a storage space within the dam. The scheme is operated by Blackman Water Pty Ltd. The dam can be supplemented with water from the proposed Arthurs Lake pipeline.

South-East Irrigation Water District Stage 1 (2 605ML) and 2 (1 975ML)

The Coal River Irrigation Scheme formed the precursor to the South-East Irrigation Scheme which services the Coal River Valley. The Craigbourne Dam was constructed in 1986 and supplies water into the Coal River for extraction by irrigators downstream. The northern portion of this district is within the Midlands region. The increased productivity and innovation demonstrated in the Coal River Valley as a result of the irrigation scheme is a show case of the potential benefits that investment in irrigation can bring to a region. The Coal River Valley experience demonstrates that it is not only the addition of irrigation water that is required, but also entrepreneurs and leaders in innovation, supported by a local productivity group that actively engages in sourcing information for growers, skills, training and markets12.

The district was extended in the mid-to-late 1990s, by the construction of the Daisy Bank Dam and a pipeline from Richmond to the south-west, supplying water to the land between Richmond and Cambridge, and later by a pipeline and storage with water from Hobart Water (now Southern Water) (outside the Midlands region).

South-East Irrigation Scheme Stage 3

The proposed stage 3 extension to the South-East Irrigation Scheme offers a solution to irrigation needs in the south-east, from Forcett, through Sorell, Richmond, Tea Tree and Brighton. While most of this area is outside the Midlands region, the new proposal includes a pipeline with capacity to deliver water in winter from the Derwent River to the Craigbourne Dam. The additional volume of water the proposed scheme intends to deliver is in the order of 5 000 mega litres with additional capacity possible at a later stage subject to demand.

Further information on the public irrigation schemes operated by Tasmania Irrigation Pty Ltd (Whitemore, Lower South Esk, Midlands, Coal River Valley, South East, Cressy-Longford) and investing in irrigation is available from www.tasmanianirrigation.com.au .

12 More information can be found in a study undertaken by the University of Tasmania, 2009, Building Regional Innovation Capability: The impact of Irrigation in the Coal River Valley, Department of Economic Development and Tourism Government of Tas available online http://www.development.tas.gov.au/__data/assets/pdf_file/0006/55995/CRV_Study_27_May_09.pdf.

Figure 12. Pivot irrigator. Source AK Consultants

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Infrastructure, packing and processing 13

Tasmania is a net exporter of food products. The state relies on sea and air freight to access markets and it has the capacity to supply fresh product into the Northern Hemisphere in its off-season. The transport sector is a vital link in servicing the many different market segments which range from commodity through to premium and niche.

The food sector supplies local, national, domestic and international markets, and includes dairy products, meat, seafood, potatoes and other fresh and processed vegetables, stone fruits, confectionery, beer and wine. Tasmania also has a number of smaller producers of boutique products such as smallgoods, condiments, artisan cheeses, confectionery and craft beers. The Tasmanian food processing sector is small by national standards; however it is an important sector of the Tasmanian economy.

The sector is underpinned by the Tasmanian operations of a few large national or multi-national companies, which account for a large proportion of production and employment in Tasmanian food processing. In the Midlands region, the largest processing facility is the Longford abattoir. There are a number of other smaller seasonal packing and processing facilities, for example Somercotes Cherries near Ross.

The State Government’s Tasmanian Infrastructure Strategy coordinates efforts under the major economic sectors of transport, water, energy and digital infrastructure. These are linked with the State government Land Use Policy through Regional Land Use Strategies developed by the local councils14. Infrastructure and the way it is planned, provided, used and maintained, is one of the key levers that government has to increase productivity and economic growth and meet its policy objectives. Current reforms to the State Planning System including the use of a land use planning model are likely to lead to a rationalisation of decision making processes and greater efficiencies in ensuring optimal long-term planning for infrastructure.

Infrastructure planning in the transport sector focuses on better integration of transport planning with land use planning and locating producers, processors and export points closer to each other, connected by the States existing transport network. In the north of the region, the Western Junction Airport, TRANSlink Precinct is an industrial, business and transport centre (in the Northern Midlands municipality). This precinct is centrally located to a range of transport modes: two hours by road or rail to all other major centres in the state, less than one hour by air to Melbourne and less than two hours by road to deep water ports in Burnie or Bell Bay.

Just outside the southern boundary of the Midlands region is the Brighton Transport Hub. The transport hub is located to the west of the existing Brighton Industrial Estate. There are provisions for warehousing adjoining the rail intermodal and there will be additional land provided for freight related commercial development. This project is being integrated with the Brighton Bypass.

13 Based on information obtained from the DEDTA 2011 submission to the Senate Select Committee Inquiry into Australia’s Food Processing Sector and the Tasmanian Infrastructure Strategy.

14 Regional Land Use Planning Framework http://www.planning.tas.gov.au/the_planning_system/regional_planning

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Tasmania has diversified its electrical energy base through Basslink and alternative energy sources such as wind farms and the Natural Gas Project. The addition of these sources of energy to the State's energy mix has enabled Tasmania to survive the recent persistent drought conditions with minimal impacts on the community or economy15. The risks posed by climate change will continue to present challenges in the energy sector and although Tasmania’s latitude limits the solar options to some extent, Tasmania is well placed to exploit alternative renewable sources such as wind, geothermal, tidal and wave energy 14.

As well as developments in infrastructure and energy Tasmania is also moving towards a system-wide, integrated digital information system, through the roll out of the National Broadband Network. This includes digital delivery technologies via fixed and mobile broadband. With digital monitoring and control systems, there will be many benefits some of which are already being realised. For example remote control of farm equipment, gates, water and power infrastructure and online monitoring of weather conditions. Some rural areas of the Midlands region are

15 Department of Infrastructure, Energy and Resources, 2012, Tasmanian Infrastructure Strategy - Energy Overview, available online http://www.infrastructure.tas.gov.au/energy accessed 24/09/12.

Figure 14. Pump set being installed. Source AK Consultants

Figure 13. Brighton Transport hub. Source http://www.transport.tas.gov.au/infrastructure.

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currently isolated through limited network coverage and it is hoped that these limitation will be overcome by 2014 through the roll out of the National Broadband Network (NBN) including Midland’s towns such as Evandale, Longford, Perth, Campbell Town and Brighton. Some areas of the Midlands are likely to remain with fairly limited network coverage, because low population density. Further information on the NBN roll-out is available from http://www.nbnco.com.au/rollout/rollout-map.html.

Potential investment opportunities

The availability of additional water paves the way to increase production of a range of dairy, cropping and livestock finishing enterprises. The outlook for these enterprises appears favourable over the short-to-medium term, and investors are purchasing water in anticipation of growth in long-term, high-value horticultural enterprises in the region.

Gross margins represent the gross income from the crop or livestock activity, less the variable costs of production. These are the costs that vary with the size of the activity. With cropping activities, variable costs include seed, fertiliser and chemicals, and for livestock, variable costs include animal health and contracting services such as shearing. The total of the gross margins for a property is then applied to overhead costs, interest and capital expenses (capital purchases and loan principal payments), and to provide a return for the owner/managed.

Indicative gross margins for the livestock enterprises, likely to use water in the first instance, are around $200 to $1,700 per hectare16. Irrigation of fodders and pastures is commonly used to fatten and ’finish’ lambs and beef cattle to market weights and, in all but the wettest areas of Tasmania, is used to ensure reliable pasture production for dairy cattle.

Dairying is currently a minor enterprise in the Midlands. However, it is generally accepted that there is very significant potential for growth, based on the irrigation projects currently under development. In lower rainfall parts of the state such as the Midlands, irrigation is considered necessary.

Over the past 10 years, there has been a consistent upward trend in Tasmanian milk production, despite the volatility in milk prices in recent years. As production has grown, the number of dairy farms throughout the state has fallen, with the remaining farms becoming larger. Average farm size has grown through a combination of small farm exits and through an expansion in the area and stocking rate of those that remain.

Continued expansion of the dairy industry in places like the Midlands will depend primarily on two main factors – future milk prices and processing capacity. With the milk price this season returning to its longer-term trend (see below) and two of the three major dairy manufacturing companies in Tasmania (Fonterra Australia Pty Ltd, Lion and Murray Goulburn Co-operative Co. Limited) having committed to further expansion, there are definite opportunities for expansion of this industry within the Midlands. Developments in the Midlands region are expected to arise from conversion of current beef or cropping farms to dairying. Indicative dairy conversion costs have been prepared by Dairy Tasmania and are available at www.intodairy.com.au.

16 Calculations are estimates only and were prepared by Macquarie Franklin Pty Ltd in 2011.

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Figure 15. Tasmanian dairy farm numbers and production, and Tasmanian milk prices. Source Dairy Tas.

Expansion of dairying in the region will provide opportunities for other (non-dairy) farmers, such as the agistment of dairy heifers and dry cows during the non-milking period, and the production of fodders such as maize silage and lucerne.

Indicative gross margins for the cropping enterprises are presented below. These vary from around $240 to $10,500 per hectare17.

Processing potatoes is Tasmania’s most important crop, with factories at Ulverstone (Simplot Australia) and at Smithton (McCain Foods Limited). Farm production of processing potatoes occurs mainly across the north of the state. Recently, companies have reduced potato contracts and prices offered to participating farmers, this is reflective of cyclical demand/supply issues. It is anticipated

17 Calculations are estimates only and were prepared by Macquarie Franklin Pty Ltd in 2011.

Indicative crop gross margins 2011 ($/ha)

Figure 16. Indicative gross margins for crops in the Midlands. Source: Macquarie Franklin calculations 2011..

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that medium-term prospects will reflect growing world population and increasing demand from developing economies.

Fresh vegetable-packing firms operating on the North-West Coast had indicated an intention to expand production over the next few years. At this stage, production of fresh and processed vegetables in the Midlands is a minor activity. There are areas of fresh, processed and seed potatoes, fresh market carrots and onions for export. However, there are limited areas of suitable land for increased production, and that is expected to occur if markets and marketing chains are developed.

In terms of value, poppies are currently Tasmania’s second-most important crop after processing potatoes, and are grown throughout the state. The total area grown is currently around 25,000 hectares, but the areas vary from year to year providing a gross margin commonly of around $2,000 to $2,500 per hectare18.

On suitable ground, the crop can be grown on a three-year rotation (that is class 3 or class 4 with appropriate management). With the need for reliable supply, most poppy crops are irrigated.

Pasture seed prices have fallen in recent years, due to excess supply, a reduction in demand from the dairy industry following the milk price decline in 2008-09, and on the back of mainland drought conditions. While a high Australian dollar impacts negatively on the competitiveness of this sector, most pasture seed companies expect a significant increase in demand in the short-to-medium term as other conditions improve.

Production of a wide range of pasture and vegetables is increasing, for example beetroot, carrots and cabbages. Areas with irrigation necessary for reliable production are relatively small, and a dry summer is favoured so that harvesting is not compromised by rainfall.

Lucerne is another important rotational crop, which provides good summer forage for livestock enterprises, promoting and improving production vigour within livestock systems. Dairy production is one of the largest users of lucerne and the anticipated expansion of dairy operations may result in some growth in demand.

With speciality crops such as hazelnuts, there is some potential to access the premium quality end of the market, such as value-added snacks and health foods, specialist bakery items and chocolate-coated nut confectionery. Indicative gross margins (assuming trees are fully mature) for hazelnuts are estimated at around $6,800 per hectare19.

18 Gross margin = Gross income –Variable costs. Variable costs typically account for 1/3 of the income. The Value of Agricultural Production in Table 1 uses Gross Income for poppies.

19 Calculations are estimates only and were prepared by AK Consultants in 2011.

Figure 17. Poppy Crop in Midlands. Source Simon de Salis

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There appears to be further potential for berry production in Tasmania, as the current production levels are relatively small but increasing. A number of producers in the berry sector have successfully incorporated tourism and visitor experiences into their businesses through cafes, retail outlets and ‘pick your own’ experiences. The farm-gate value of the Tasmanian berry sector is estimated at $13.8 million20.

Indicative berry gross margins 2011 ($/ha)

Figure 18. Indicative gross margins for berries. Source AK Consultants calculations 2011

The incidence and severity of frosts is a key parameter in determining the ability to successfully produce a range of crops in the Midlands irrigation districts. While frosts at flowering and fruit set phases can be very harmful, some fruit trees and berry fruits need cold chilling to achieve good bud formation. Assessment of frost is part of the current soil and climate-mapping work being undertaken by DPIPWE.

Fig

20 This figure is taken from preliminary, unpublished data provided by the Department of Primary Industries, Parks, Water and Environment, from the Tasmanian Food and Beverage Industry Scorecard 2008-09.

Figure 19. Farm dam in Southern Midlands. Source AK Consultants

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Further information

Further information on the agricultural enterprises potentially suited to the Midlands region is available from DPIPWE. The Wealth from Water pilot program provides information and tools on a range of potential enterprises including barley, carrots, hazelnuts, poppies, pyrethrum, industrial hemp, wine grapes, cherries, olives, blueberries, strawberries, raspberries, ryegrass for dairy, vegetable seed, onions, potatoes, lucerne, wheat and linseed. New enterprise suitability mapping is complemented by enterprise analysis and gross margin tools, market research and related information. For more information refer to the DPIPWE website www.dpipwe.tas.gov.au/wealthfromwater.

Invest Tasmania GPO Box 646, Hobart TAS 7000 Phone: +61 3 6233 5728 Email: invest@investtasmania.tas.gov.au Website: www.investtasmania.com.au

Department of Primary Industries, Parks, Water and Environment GPO Box 44, Hobart TAS 7001 Phone: +61 3 6233 8011 Email: agpolicyadmin@dpipwe.tas.gov.au Website: www.dpipwe.tas.gov.au Northern Midlands Council 13 Smith Street, Longford PO Box 156, Longford TAS 7301 Phone: (03) 6397 7303 Email: council@nmc.tas.gov.au Website: www.northernmidlands.tas.gov.au/ Northern Tasmanian Development Level 1, Cornwall Square Transit, 12 – 16 St John Street, Launceston 7250 Post: PO Box 603, Launceston TAS 7250 Phone: (03) 6380 6800 Website: www.northerntasmania.org.au Southern Midlands Council Email: info@southernmidlands.tas.gov.au Website: www.southernmidlands.tas.gov.au/

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Kempton Office Development and Environmental Services, Community and Corporate Development 85 Main Street, Kempton TAS 7030 Phone: (03) 6259 3011 Oatlands Office Corporate Services, Works and technical Services, Natural resource Management 71 High Street, Oatlands PO Box 21, Oatlands TAS 7030 Phone: (03) 6254 5000 Tasmanian Irrigation Pty Ltd PO Box 84 Evandale TAS 7212 Phone: 03 6398 8433 Email: enquiries@tasmanianirrigation.com.au Website: www.tasmanianirrigation.com.au

Disclaimer

Information in this publication is intended for general information only and does not constitute professional advice and should not be relied upon as such. No representation or warranty is made as to the accuracy, reliability or completeness of any information in this publication. Readers should make their own enquiries and seek independent professional advice before acting on, or relying on, any of the information provided.

AK Consultants, the Crown, its officers, employees and agents do not accept liability however arising, including liability for negligence, for any loss resulting from the use of or reliance upon information in this publication.