Tasmania has emerged as a "standout success story" in Australian agriculture, powered by a vibrant and varied farming sector which has experienced sustained and widespread growth in recent decades, according to a new report.
In the report, Gearing up for mature growth in Tasmanian agriculture, agribusiness banking specialist Rabobank says agriculture remains the cornerstone of Tasmania's economy, with combined agriculture, forestry and fishing representing the second-largest contributor to gross state product, surpassed only by health care.
The report, by the bank's RaboResearch division, says there have been widespread increases in the farmgate value of Tasmania's agricultural production in recent years, with the expansion "underpinned by strategic investments in irrigation infrastructure and supply chains, enabling land use change and productivity gains across a wide range of commodities".
Between 2012/13 and 2022/23, total value of Tasmanian farmgate production –excluding seafood – increased by an average of 6.5 per cent annually.
The report – launched to coincide with the 30th anniversary of Rabobank's Tasmanian operations – says the strength of Tasmanian agriculture's success has been "rooted in greater access to irrigation water to complement other competitive advantages, its diversified growth across livestock and fresh produce, and fast-growing primary production sectors".
Among highlights for the state's agricultural sector, the report says Tasmania:
- has emerged as a key driver of growth within the Australian dairy industry within the past three decades, with the state's milk pool nearly doubling in that period compared with a 25 per cent decline in the national milk pool
- remains Australia's leading vegetable producer
- stands out as Australia's leading cherry-producing region, accounting for 31 per cent of national output in 2023/24 and
- is the largest producer of Atlantic salmon, accounting for more than 90 per cent of national output.
Report co-author, RaboResearch senior analyst Michael Harvey says Tasmania's agricultural sector has "shown notable resilience and growth over a long period".
"On the back of strong investment momentum, there have been widespread increases in farmgate value of agricultural production," he said. "As of 2022/23, the sector's farmgate value stood at around AUD 2.5 billion (approximately double the value seen a decade ago), with the seafood sector adding a further AUD 1.6 billion."
Future growth "mature"
The opportunity to continue to grow the state's agricultural production remains achievable across most sectors, the report says, however the nature of this growth is expected to be "more mature". This reflects the "stabilisation of irrigation water access and the need for deeper investment in productivity-enhancing technologies and practices".
"Tasmanian agriculture still has room to meet the growing local, Australian and global demand for its agricultural output, but the production outlook is more mature across some of the sectors and will require changes to continue growth," Mr Harvey said. "This will include investment across the supply chain and must address infrastructure, labour and environmental issues."
Irrigation "backbone for growth"
The report says irrigation water capacity has been the "backbone for growth" of Tasmanian agriculture. Along the way, there have also been advancements in agricultural technology, climate adaptation and sustainability, it says.
Major irrigation infrastructure investments have been a "game changer for Tasmania", Mr Harvey said, with record volumes of irrigation water delivered in 2023/24 across active schemes.
"However, the rate of expansion in access to irrigation water is unlikely to match previous levels. As a result, there will be an increased emphasis on productivity improvements and optimising irrigation," he said.
Moving forward, Mr Harvey said, there will also be further investment required downstream in the supply chain, as agricultural production grows. This will include in areas such as production capabilities, innovation and market development.
Markets opportunities
The report says long-term market opportunities remain positive for Tasmanian agriculture.
When it comes to markets for agricultural production, the state has a mix of local consumption, interstate trade and overseas exports, RaboResearch says, with growth in the sector largely export-led.
Mr Harvey said seafood (especially salmon), dairy products, red meat, onions and cherries "have notable export sectors, underpinned by rising demand across a number of Asian economies".
Amid a growing global focus, Tasmania will need to continue to focus on actively leveraging its 'unique brand proposition', marketing the strong regional identity and quality assurance, the report says.
"One thing is constant, Tasmania's solid brand reputation for sustainability, quality and biosecurity credentials remains critical in the quest for market differentiation," Mr Harvey said.
Sectors
For dairy, the report says, the sector has enjoyed a period of above-average profitability in Tasmania in recent years. Between 2019/20 and 2023/24, the Tasmanian dairy industry had four out of five seasons of profitability above the long-term average, buoyed by elevated milk prices.
Despite a decline in the number of operating dairy farms, the state's dairy herd has grown at an average rate of 1.1 per cent per year over two decades while milk yield per cow has increased by 1.2 per cent annually over the same period, RaboResearch says.
With a relatively small domestic market for drinking milk, approximately 95 per cent of Tasmania's milk is directed towards manufacturing, primarily for export.
