Victorian dairy land in demand from multiple sectors

Liz Wells June 30, 2021

Clydebank near Sale milks 2800 cows. Photo: LAWD

DAIRY country in Victoria is meeting renewed demand as the sector enters a period of confidence not seen for decades as milk prices firm and a painful rationalisation period comes to an end.

Supporting the market is demand from beef producers and dryland croppers looking for additional area, as well as private and institutional dairy investors.

Vegetable producers looking to relocate to cheaper well-watered country away from Melbourne are also in the mix, as are lifestyle buyers.

It means dairy farms large and small are spending little time on the market, as evidenced by the recent sale of Van Dairy titles to Prime Value, and sizeable holdings are attracting strong interest from private investors and funds.

Heading up the latest listings are Clydebank and ACE Farming, both in south-east Victoria’s Gippsland district.

Clydebank covers 1273 hectares, including 55ha of laser-levelled flood irrigation, and has 2375 megalitres of entitlements with the Macalister Irrigation District (MID).

Located near Sale, it milks 2800 cows, and is being offered through LAWD by Gray Wigg Gault, which last year sold the nearby Nambrok aggregation to the Warakirri-managed Aurora Dairies.

Duxton Asset Management has also listed its 4000-cow and 2040ha ACE Dairy Portfolio with LAWD and PwC.

The six-farm aggregation is centred in the Maffra district with total water entitlements of 7858ha, mostly from the MID.

LAWD agent Col Medway said their water entitlements, as well as the solid outlook for dairying were boosting.

“The profitability of dairying is on the up, and the outlook’s positive,” Mr Medway said.

“Across Australia, you’ve got pockets of reliable irrigation that are relatively underpriced, and really only trade for a couple of thousand dollars a megalitre.”

Mr Medway said the MID was one of them.

Melbourne sprawl pushes west

Mr Medway said vegetable producers looking to relocate from Melbourne’s south-west fringe were showing interest in MID dairy country.

“Its value for vegetable production may well be higher for people moving out of places like Werribee due to urban encroachment.”

Australia in 2019-20 produced 8.8 billion litres of milk, with Victoria on 5.6 billion litres producing around 64 per cent of the total.

Corporate dairy farmer Jeremy Bayard said the contraction of dairy farms seen Australian in the past 10-15 years had brought production to a level domestic needs were covered, and limited export markets could be serviced.

“That’s put resilience in the milk price,” Mr Bayard siaid.

He said production in northern Victoria had potential to move towards managed-environment dairying with sheds accessible to cows at all times, both south-west Victoria and Gippsland were likely to stay on pasture-based production.

“Northern Victoria is close to grain, and that’s one of the reasons we are going to see the emergence of managed-environment dairy farms.

“That will be where the growth in dairying comes from.”

The ACE Dairy Portfolio comprises six farms and milks 4000 cows. Photo: LAWD, PwC

He said Gippsland and south-west Victoria, the state’s other two big dairying regions, were “under siege” from beef producers looking for grazing security through having summer pasture.

Lifestyle buyers are also in the mix, and Mr Bayard said Gippsland dairy farms of 200ha or less were selling for around $30,000-$37,000/ha.

“Farmers are saying: ‘I’m not going to milk cows if my land’s worth that much” and are leaving.”

He said a duplication of the Princes Highway west of Melbourne had also had an impact in south-west Victoria.

“That’s brought all of that country closer to Melbourne.”

He said there was also a big push from beef producers based north of the Princes Highway looking for supplementary grazing area to its south.

“No fewer than 40 dairy farms in the past two years have been acquired in the south-west that have gone out of dairying.”

Nutrien Harcourts Shepparton agent Rob Bruns said Goulburn Valley and northern Victorian dairy country was being sought by dryland and irrigated croppers.

“Land values for dairy units are strong, and the primary driver is the cropping sector,” Mr Bruns said.

“I’ve seen people from the cropping sectors buy old dairies, rip out the infrastructure like fences and channels, and convert to cropping.”

For the privilege, those expanding croppers have been paying more than $8500/ha, and often put in overhead irrigation on top of that to add surety to their cropping with temporary water if it is priced right.

“They’ve had to pay for the price of a dairy farm, and most farms in northern Victoria aren’t sold with water attached.”

Mr Bruns said it meant what used to be a solid dairy-farming region now had cropping enterprises scattered throughout.

“There’s been a mass exodus over the past five years, and a lot are getting bought and converted into cropping.

“If you’ve got a tractor and an airseeder, having another 200-300 acres gives you more production, and it’s only another few days on the tractor to crop it.”

Mr Bruns said the region’s dairy farmers had found it difficult in recent years to keep operating because temporary water prices got up to $600/ML during the drought of recent years.

“That’s forced a lot of people out of dairying.

“It’s more attractive now that water is more like $100/ML.”



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