3 May 2002


Fed up with the pressures

of UK dairying holding back

your business? Then, there

may be another way to

continue producing milk for

a growing market, as

Jessica Buss finds out

WESTERN Australia wants you! It has a growing market for milk and is seeking another 300 producers to help double output to meet demand.

It is so keen to recruit UK producers that the Western Australia government recently held a conference at Cirencester, Gloucester.

Maria Hamilton, of the federal company Invest Australia, explained that there were major growth opportunities for dairy products in Asia, that Australia was in the best position to supply. "It is already well integrated in the Asian region and it accounts for 60% of dairy exports now. The population in that market is 2032m.

Jessica Purbrick-Herbst, Government of Western Australia, London, added that Western Australias location was key to developing the Asian market. "One of its prime successes is its close proximity to Asia , its on a similar time zone and there is daily shipping to allow dairy exports."

Other dairying countries, including the rest of Australia, are not interested in SE Asia because they are too far away, said David Windsor of WAs department of agriculture.

"The industry believes it needs to double in size in the next 10 years to meet demand. Currently it has 350 producers with 70,000 cows, yielding 400m litres/year. About half the milk is sold locally, with the rest exported," he said.

WA has four main processors, two bottling and heat treating milk and two majoring in manufacturing products for export. "The latter two are looking for more milk to increase exports," explained Dr Windsor. These have been offering free delivery rights – unlike New Zealand.

"Existing farms can grow, as they have the opportunity to increase stocking rates with a current range in output of 2000-10,000 litres/ha."

Until recently quotas prevented many farms increasing output, but these are now gone, so output is expected to increase.

However, there is scope for new dairy farms, mainly in the south west of the state, added Dr Windsor. Dairying offers higher returns than current beef or sheep enterprises on many of these farms.

A typical viable sized dairy unit would be 317ha (780 acres) with 200 cows and a 1.5m litre output, from pasture and 1.6t of bought in concentrate a cow.

Profit, after an operators allowance of £22,000, would typically be £22,000. Milk prices are not high, at about 11.5p/litre, however, costs tend to be lower than in the UK. "But converting farms requires new investment."

However, investors in WA can expect low interest rates and good support from the banks, explained Brad Ritchings of the National Australia Bank. "Farmers are key customers and we like to lend to them. They are offered lower interest rates than other businesses."

Unlike the UK, Australian banks set their own interest rates, but farmers are often offered a lower base rate and a low margin above that rate on borrowing – typically 0-1.5% depending on the business. NABs business base rate in March was 8.6% and the farmers rate 6.6%, he added.

"Banks also offer one-on-one access to an agricultural specialist, who understands the needs of the business and takes an active interest."

Banks will lend up to 70% on property purchases, but investors are expected to hold 70% equity in their businesses.

But you will need a VISA, explained Stuart Russell of the trade and investment department, Government of WA. However, there are a number of options.

To obtain permanent residency, the decision will be based on business performance in the UK, age and assets – subject to a points test system.

The alternative is temporary residency for up to four years to set up a business, for which assets of about £100,000 are preferred. A business background in the intended area must also be proven.

Imigrants granted temporary residency as independent executives can apply for permanent residency after two years, providing they have a business turnover of £28,000, employ two full-time equivalents and have assets worth £80,000.

He advises interested applicants to seek advice from the Australian High Commission in London, which can also provide a list of registered migration consultants.

Ms Hamilton also explained that among the positives, WA could offer milk producers modern efficient factories, no BSE and no foot-and-mouth. A survey of ex-patriate life, put Australia just ahead of the US on quality of life, including cost of living and house prices. "Its a great place to live."

Whats the catch? Its a long way and ideally you need about £100,000. However, there may be opportunities for herd managers and share farming. &#42

Most Western Australia dairy farms are in the south west corner between Perth and Albany, and there is room for more.

&#8226 Milk market expanding.

&#8226 Dairy land avaialble.

&#8226 Investors needed.

A producerss perspective

Larry Brennen believes that Western Australia can produce milk as well as anywhere else in the world. It has a suitable climate and is a nice place to live.

There are two production systems, supplying factories 365 days/year, he explains. One in the flood irrigation areas and one on dry land. He farms on dry land, where there is huge spring growth from September to November and grass is conserved for the summer. "We have a hot dry drought, whereas the UK has a cold wet drought each winter."

Cows are, therefore, supplemented on a feed-lot type system outside in summer. Farms do not need cover for stock in winter and there are few excessively hot days in summer, as the area has low humidity and sea breezes.

Dry land costs about £2900/ha (£1170/acre) and irrigation land £1800/acre (£730/acre). A rotary parlour can be built from scratch for £245,000 or a herringbone for £137,000. Cows cost £320 each and heifers nearer £400/head, he added.

Larry Brenan believes Western Australia is a good place to produce milk.

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