Tasmanian Dairy Industry | Financial Analysis
The returns to capital invested achieved on Tasmanian dairy farms are amongst the best in Australia and New Zealand. These returns are highly dependent on the management ability of the manager. The systems employed in Tasmania typically revolve around growing and grazing pasture. The skills associated with this ultimately determine year-in year-out performance of the business.
With some 90% of Tasmania's milk production exported the milk price is a function of world market demand for the products produced. The prices received by Tasmanian farms can, as a result, be quite volatile on a year to year basis.
Traditionally land prices in Tasmania have been relatively low when compared to other areas of Australia and New Zealand. In more recent times competition from other agricultural enterprises has resulted in an increase in land prices and good capital gains for farm owners. Land price is still considered to be reasonable given the returns that are achievable.