An Agricultural Profile of the Meander Valley Region,

Prepared by the Tasmanian Department of Economic Development, Tourism and the Arts with contribution from Macquarie Franklin Pty Ltd. February 2012

A snapshot of the Meander Valley Region in northern Tasmania – an irrigation‐prepared local area – including demographic, climatic, irrigation and infrastructure information, along with commentary on potential returns from farming activities.

Wealth from Water: providing farmers and agribusiness with the information they need to confidently invest in irrigated agriculture in Tasmania

Location The municipality of Meander Valley is opportunely located in the central north of Tasmania and covers an area of approximately 3 821 square kilometres, stretching east to west from the outskirts of Launceston to the centre of National Park.

The Meander Valley

Demographic and agricultural profile Growth in population within the municipality over the five years to 2010 compares favourably with the state average. Over this period annual population growth averaged 0.94 per cent per year, compared with a state average of 0.88 per cent. In 2010 the estimated population of the municipality was 19 649, which equates to 3.9 per cent of the state total. During this period the median age of residents increased from 38 years to 42 years.

Unemployment within the municipality was running at 4.6 per cent in the September quarter of 2011. This compares favourably with 5.4 per cent for Tasmania and 5.1 per cent for as a whole1.

The last population census in 2006 indicated agriculture was one of the main employers in the municipality, employing some 667 people. In addition to its direct on‐farm employment, agriculture

1 Small Area Labour Market data, DEEWR September 2011.

Regional Profile – Meander Valley, Tasmania 1 also contributes to employment in the manufacturing sector with Tasmanian Alkaloids and Ashgrove Cheese being major employers.

The Meander Valley municipality is home to around 435 rural businesses farming an area of over 105 000 hectares in total.

The predominant form of agriculture within the municipality is livestock (dairy, beef and sheep). This accounts for almost 75 per cent of the total farmed area and contributes 60 per cent of the gross value of agricultural production. The remaining 40 per cent of the gross value of agricultural production comes from cropping with vegetables being the major crop, followed by potatoes, poppies, pasture seed and cereals. This is outlined in the figure below:

Agricultural enterprises in Meander Valley by share of value

Source:ABS 7503.0, Macquarie Franklin Estimate 2011

Perennial horticulture in the region is limited and consists of berries (mainly raspberries), grapes, some orchard fruit (apples and cherries) and nuts (hazelnuts)2.

Climate The Meander Valley climate is reasonably diverse and varies from high rainfall and relatively cool areas in the south and west to warmer and drier areas in the east towards Launceston. As has been experienced throughout much of south‐east Australia, there has been a reduction in rainfall over the past 30 to 40 years which has, in part, contributed to an increase in the demand for irrigation.

With an average of 1 100 mm in the upper (south and west) part of the valley falling to around 600‐ 700 mm in the areas in the east towards Launceston – the rainfall gradient, along with soil types,

2 Reported in the chart above as part of other crops.

Regional Profile – Meander Valley, Tasmania 2 largely accounts for the prevalence of dairying to the south‐west of Deloraine and cropping to the east.

Rainfall 1971 ‐ 20103

Source: Bureau of Meteorology Deloraine and Cressy, 39 years from 1971

Maximum and minimum temperatures and the incidence of frost have significant implications for current and proposed agricultural pursuits in the area. In general terms, the eastern end of the municipality has higher maximum and minimum temperatures throughout the year, which also tends to favour cropping towards that part of the municipality. The work being carried out under the Tasmanian Government’s ‘Wealth from Water’ initiative should provide some increasingly useful micro‐climatic data.

Modelling results from the ‘Climate Futures for Tasmania’ project indicate that both temperature and rainfall in the Meander Valley area are expected to increase over the coming century. Mean annual temperatures are expected to increase from 10.7 C to 11.7 C mid‐century, and further increase to a mean of 13.5 C by the end of the century. Mean annual rainfall in the Meander Valley is expected to increase 5.4 per cent by the end of the century, mostly due to an increase in winter rainfall.

Temperature3

Source: DairyTas into Dairy – Bureau of Meteorology data

3 Cressy Research Station lies outside the eastern end of the municipality. Climate data for Cressy is included in this profile as a proxy for the areas around Carrick, Hadspen & Westbury in the east.

Regional Profile – Meander Valley, Tasmania 3 Land classification and soil types in the region4 As with Tasmania generally, the geological structure of the Meander Valley largely determines the pattern of soils because of the strong influence of the rock type on soil formation. The escarpment of the dominates the landscape in this area. It divides the central plateau to the south from the Launceston Tertiary Basin and associated country of low relief to the north. The and its tributaries drain about 88 per cent of the area. The soils are built on rock foundations of dolerite, mudstone, sandstone, tillite and shale.

The table below describes the private land in the rural zone of Meander Valley municipality (ie. excluding industrial, residential, recreational and community zones) which is available for agricultural use; is a parcel of more than one hectare in size; and is currently utilised for agriculture or has no restrictions for conversion to agriculture use. An area of approximately 100 000 hectare has been defined spatially as primary (Class 1‐3) and non‐primary (class 4‐6) land.

Capability of Land Available for Agricultural Use in the Meander Valley

Description Area (ha) Percentage

Class 2 242 <1%

Class 3, 3+4 15 876 16%

Class 4, 4+3, 4+5 60 041 60%

Class 5, 5+4, 5+6 19 206 19%

Class 6, 6+4, 6+5 3,711 4%

TOTAL 99 076 100%

Source: Agricultural Profile – Meander Valley municipality 2010, prepared by AK Consultants

Note: 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.

Meander Valley has significant areas of prime land: largely a strip from Kimberly in the north‐west through Dunloran, Deloraine, Westbury, Westwood and south east through Whitemore and Oaks Road towards Bracknell. Meander Valley has no Class 1 land and small areas of Class 2 land to the north of Deloraine. This land is on basalt, the soils are deep, well‐structured free draining and suitable for intensive cropping. Slopes are gentle (<5 per cent) and relatively free of stone.

The vast majority of prime land is Class 3 which occurs on basalt and tertiary sediment. These soils are similar to those of Class 2 with some variability in the range of slope angles, stone content, depth and type. These soils are suitable for intensive cropping and grazing. There are moderate levels of limitation restricting the choice of crops or reducing the level of productivity compared to Class 1 or Class 2 land. Soil conservation practices and sound management is needed to overcome these moderate limitations to cropping use. To prevent risk of damage to the soil resource, cropping

4 DPIPWE, Land Capability Survey of Tasmania 1993, Meander Report; and Grose C, Land Capability in Tasmania 1990.

Regional Profile – Meander Valley, Tasmania 4 should be confined to three to five years out of ten in a rotation with pasture or equivalent during normal years.

Productive agriculture in Meander Valley is not confined to prime land. Significant grazing and dairy occurs on land in Classes 4 and 5. The Class 4 land occurs on a wide range of parent material including Tertiary basalt, Tertiary sediments of the Launceston Basin, Permian and Triassic sandstones and mudstones, slates and quartzites, windblown sand and alluvium and gravels. This is land primarily suitable for grazing but may be used for occasional cropping. Severe limitations restrict the length of cropping phase and/or the range of crops that could be grown. Major conservation treatments and/or careful management are required to minimise degradation. Cropping rotations should be 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.

Class 5 land occurs on dolerite and dolerite talus, tertiary sediment, alluvium and gravels. This land is unsuitable for cropping, although some areas on easier slopes may be cultivated for pasture establishment or renewal and occasional fodder crops may be possible. The land may have slight to moderate limitations for pastoral use. The effects of limitations on the grazing potential may be reduced by applying appropriate soil conservation measures and land management practices.

Class 6 land occurs on dolerite, sandstone, mudstone, slates and quartzite, alluvium and basalt. Slopes are generally steep (30 per cent plus), shallow, stony and of low fertility making the land marginally suitable for grazing. Generally, this land should be retained under natural vegetation.

In addition, there is small area of land mapped as Class 7, this occur on dolerite and Permian and Triassic sandstone and these areas are not suitable for agriculture and therefore are not included in the table above. Localities include Great Western Tiers, Cluan Tiers and Central Plateau.

For more information on land capability in the Meander Valley see www.dpipwe.tas.gov.au

Irrigation scheme and water use Completed in late 2007, the 43 000 ML Meander Valley Dam supplies water to the Meander Valley Irrigation Scheme. The scheme supplies an area of 43 200 hectares with around one quarter of this land being Class 3 prime cropping land, and a further two thirds being Class 4 land suitable for irrigated pastures and some occasional cropping.

The area covered by the original Meander Valley Irrigation Scheme can be split into two land‐use categories: ‐ Meander West is the area to the south and west of Deloraine and Meander East which has a higher proportion of Class 3 land. Meander West and the Dairy Plains, both have limited Class 3 cropping land and generally higher rainfall than Meander East. This leads to a higher proportion of specialist dairy and beef farms locating in these areas. The Rubicon zone also has a high proportion of dairy and beef farms despite significant amounts of Class 3 land.

Originally designed to deliver 24 000 ML of high‐security irrigation water along the Meander River each year, the scheme was expanded to around 30 000 ML of first‐priority irrigation water by piping water into the following areas without direct access to the river:

 Caveside‐Dairy Plains  Rubicon  Quamby‐Osmaston  Hagley

Regional Profile – Meander Valley, Tasmania 5 A recent survey of water use intentions revealed that 60 per cent of the additional water will be used for dairy farming followed by cropping (30 per cent) and livestock finishing (10 per cent)5. ‘Livestock finishing’ here includes predominantly beef and sheep but also a component of horse breeding in the Carrick area. The main crop usage identified was processed potatoes, fresh vegetables, poppies and cereals.

The other irrigation scheme which services part of the Meander Valley municipality is the Whitemore Irrigation Scheme supplying water to the Whitemore and Hagley areas from the tailrace of Hydro Tasmania’s . This scheme has the capacity to deliver 5 500 ML of water for irrigation through 40 kilometres of pipeline across 12 000 ha of farmland stretching from the foot of the Western Tiers to just north of Hagley. Approximately 70 per cent of the irrigation district is within the Meander Valley municipality and 30 per cent in the northern midlands. It incorporates an existing on‐farm off‐stream dam of about 400 ML which will be used as community storage to enhance reliability when Poatina power station is turned off for maintenance. The scheme irrigates Whitemore, Oaks, Bracknell, Liffey and Glenore.

Both schemes are owned and operated by the Tasmanian Irrigation Pty Ltd a recently established state‐owned company created under the Irrigation Company Act 2011. For more information see www.tasmanianirrigation.com.au

The Meander Valley Irrigation Districts

5 Meander Valley Agricultural Study, Davey and Maynard 2010

The infrastructure development is funded through a partnership of private, state and federal government investment. Agriculture is a priority sector identified in the Tasmanian Government’s Economic Development Plan and irrigation development is integral to this plan.

Industrial precinct

A recent infrastructure investment in the region is the Valley Centre Industrial Estate (VCIE) ‐ a 130 hectare industrial and transport estate on Birralee Road at Westbury opposite the Tasmanian Alkaloids poppy processing facility. It has provided existing and new businesses with the capacity to produce, package and transport from a location central to the region.

The estate offers easy access to major Tasmanian road networks including the A1 Highway connecting the northern, north‐eastern, north‐western and southern regions, and close proximity to seaport facilities at Devonport and Burnie providing access for export to the Australian mainland and overseas markets.

Services include water, domestic sewer, storm water, underground power, natural gas and fibre‐ optic communications. The flexibility of the precinct allows for a wide range of industry uses and activities within the precinct can operate 24 hours daily, seven days per week without conflict with residential amenity.

Part of the industrial estate and utilising its access to natural gas, BOC has constructed a Micro liquid natural gas (LNG) production plant to provide an alternative to diesel for heavy‐duty vehicles. This LNG refuelling plant was opened in February 2011 and is the first of its kind in Australia. The plant has the capacity to produce 50 tonnes of LNG per day (equivalent to 70 000 litres of diesel). Currently production is being accessed by a consortium of seven transport businesses that operate over 120 transport vehicles.

In addition the has provided certainty in relation to planning approval processes on the estate, allowing permitted status across a broad range of industrial activities subject to conformance with base criteria being achieved.

The precinct presents opportunities to further expand agricultural value‐adding activities within the area. Possible new ventures at this site include vegetable packing, seed cleaning, although both of these are currently well catered for through existing businesses within the municipality (seed cleaning) or nearby (fresh vegetable packing). Alternatively, it could also be a base for agricultural services or training facilities. For more information see www.valleycentral.com.au

Investment potential The availability of additional water has paved 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.

The Tasmanian Government’s ‘Wealth from Water’ initiative aims to assist farmers and potential investors with information about a range of investment opportunities in irrigated agriculture. Enterprise Suitability Mapping is a new way of modelling the potential suitability of crops based on a range of land and climate data and optimal growing criteria. Initial enterprises being explored include barley, carrots, hazelnuts, poppies, pyrethrum, industrial hemp, pinot noir and chardonnay

Regional Profile – Meander Valley, Tasmania 1 wine grapes, cherries, olives; blueberries, strawberries, raspberries, ryegrass for dairy, vegetable seed, onions, potatoes, lucerne, wheat and linseed. This mapping is being complemented by enterprise analysis tools, market research and related information. For more information see website www.dpipwe.tas.gov.au/wealthfromwater. Dairying is a major enterprise in the Meander Valley. The area is an efficient low‐cost producer of milk and is one of three main dairy areas in the state along with the Circular Head and Dorset municipalities.

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.

Source: Dairy Tas

Continued expansion of the dairy industry in places like the Meaner Valley 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 above) 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 Meander Valley. This expansion may come through an increase in production on existing farms or by conversion of current beef or cropping farms to dairying. According to information prepared AK Consultants Pty Ltd for the ‘Wealth from Water’ program in 2011 indicative gross margins for dairy are in the order of $2 600 per hectare.

Indicative gross margins for the cropping enterprises likely to use water in the first instance are presented below. These vary from around $1 000 to $7 000 per hectare6.

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

Regional Profile – Meander Valley, Tasmania 2 Indicative gross margins ($/ha)

Source: Macquarie Franklin calculations for Meander Valley for Wealth from Water Program 2011

Processing potatoes are Tasmania’s most important crop, with factories at Ulverstone (Simplot Australia) and at Smithton (McCain Foods Ltd). Farm production of processing potatoes occurs mainly across the north of the state. Both companies have spare processing capacity but until recently had indicated that they were unlikely to increase throughput for the foreseeable future. However, more recently there has been an indication that this situation may change and that increased areas may be planted.

Fresh vegetable packing firms operating on the north‐west coast have indicated an intention to expand production over the next few years, and as part of this expansion an additional 10 000 tonnes of vegetables are expected to be sourced from the Meander Valley. This will include a wide range of fresh vegetable crops with carrots and onions likely to be major contributors.

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 around 25 000 hectares providing a gross margin commonly of around $2 000 to $2 500 per hectare. On suitable ground the crop can be grown on a three‐year rotation. With the need for reliable supply all poppy crops are now 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 high, 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.

There is greater 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

Regional Profile – Meander Valley, Tasmania 3 $13.8 million.7 The well‐drained red soils, cool winters and generally temperate climate in the Meander Valley are favourable for berry crops such as raspberries. The total area of raspberries in the region is about 10 ha. Water requirements for raspberries are fairly low, possibly no more than 1 – 2 ML per hectare. Indicative gross margins for berries vary from around $26 000 to $31 000 per hectare.

Indicative Gross Margins ($/ha)

$32,000 $31,000 $30,000 $29,000 $28,000 $27,000 $26,000 $25,000 $24,000 Blueberries Raspberries Strawberries

Source: AK Consultants Pty Ltd calculations for Meander Valley for Wealth from Water Program 2011 There are a number of new crops that could be suited to the area. One of these is hazelnuts. Small commercial hazelnut plantings of around 14 hectares are established in the Hagley area and in some other districts. 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) are estimated at around $6 800 per hectare8.

Further information on investing in irrigated agriculture in the Meander Valley Meander Valley Council 26 Lyall Street, Westbury PO Box 102, Westbury TAS 7303 Phone: (03) 6393 5300 Email: [email protected] Website: www.meander.tas.gov.au

Tasmanian Irrigation Pty Ltd PO Box 84 Evandale TAS 7212 Phone: 03 6398 8433 Email: [email protected] Website: www.tasmanianirrigation.com.au

7 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. 8 Calculations are estimates only and were prepared by AK Consultants in 2011.

Regional Profile – Meander Valley, Tasmania 4 Meander Valley Enterprise Centre Suite 10, 62‐64 Emu Bay Road Deloraine TAS 7304 Phone: +61 (03)6362 3456 Mobile: +61 (0)419 623 455 Email: mailto:[email protected] Website: www.mvec.com.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

Department of Economic Development, Tourism and the Arts 22 Elizabeth Street, , TAS 7000 Phone: 1800 440 026 Email: [email protected] Website: www.development.tas.gov.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 relying on any of the information provided.

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.

Wealth from Water local call 1300 368 550 email [email protected] or visit www.dpipwe.tas.gov.au/wealthfromwater

February 2012