DAIRY INDUSTRY

In reply to the Hon. R.G. KERIN (Frome) (25 October 2006).

The Hon. R.J. McEWEN (Mount Gambier—Minister for Agriculture, Food and Fisheries, Minister for Forests): The rehabilitation and restructuring program in the Lower Murray Reclaimed Irrigation Area has resulted in a reduction of irrigated area available for dairying from around 5,000 ha to 4,000 ha. The major community benefits for this program are to increase water use efficiency for irrigation and improve water quality by limiting farm run-off and significantly reducing pollutants such as nutrients and bacteria from entering the River Murray.

Restructure assistance measures applied through this program and other factors such as drought impacts, lower milk prices in 2002 and 2003, together with consolidation of some smaller dairy farms into larger and more viable businesses, has resulted in a greater exit of dairy farmers than initially anticipated. A number of farmers decided to take advantage of the high value of water and their new permanent water allocations by selling this asset and retiring from dairying.

In the five years to June 2006, dairy farmer numbers on the swamps have reduced from over 100 to 55. At the same time dairy farm numbers in SA have reduced from 538 to 383.

The combined impact of reduced land available for irrigation, restructuring of the farm sector and other issues described has resulted in a 20 percent reduction in milk production from this area, or around 24 million litres. This lost production which is approximately three percent of State milk production was factored into the revised Dairy Plan Update in 2005.

In the 2005 Update to the State Dairy Plan led by the Dairy Industry Development Board, the very challenging target to double milk production potential from 700 million litres to 1.5 billion litres by 2010 was revised to a more achievable 1.2 billion litres by 2013. This latter target is consistent with the State Export Plan for 2013.

The Government, through the Dairy Industry Development Board, and various projects in PIRSA and other agencies will continue to work with industry towards achieving the potential identified in the revised State Dairy Plan.