Cream rises to the top

The expansion of blue gum plantations into vast areas of southwest Victoria has caused more than a ripple of concern among the region’s established dairy farmers who were worried about population decline as well as losses of productive agricultural land and infrastructure.

However, a collaborative research project involving Deakin University’s Associate Professor Kevin O’Toole has found that the cream is still rising to the top.

“Dairy farmers feared the blue gums were taking over,” says Associate Professor O’Toole, one of the authors of a report prepared by a Deakin University research team.

“The dairy farmers were afraid that blue gums were forcing up the land prices but it is dairy itself that is forcing up the prices, partly because some New Zealand farmers are coming here.

The 2006 figures for the two industries show clearly that dairy wins the day.

“Dairy is very strong at the moment because of the strong international demand for milk and the high milk prices.”

The study, the first to specifically investigate the economic comparisons in a dairy–predominant area, was funded by the Gardiner Foundation with additional support from the Corangamite Catchment Management Authority, Glenelg Hopkins Catchment Authority and Corangamite Shire.

The shires of Corangamite, Colac/Otway and Moyne were the focus of the study.

The dairy industry is a major contributor to the economies of southwest Victoria. Milk production and associated dairy manufacturing generated 21 per cent of the region’s output; added 16.5 per cent to Gross Regional Product (GRP), provided 13.7 per cent of the region’s employment, generated 8.8 per cent of the region’s income, and was responsible for 36 per cent of the region’s exports and 29 cent of the region’s imports.

In contrast, the forestry sector, including logging, generated 1.4 per cent of the region’s output, added 1.2 per cent to GRP, provided less than 1 per cent of the region’s employment and income, and was responsible for 2.7 per cent of the region’s exports and 2.3 per cent of its imports.

Value adding to an area is the most significant difference between the two industries.

“Since the dairy industry value adds significantly in the region, while the blue gum industry only extracts for export of the raw product, dairying will continue to add more to the local economy than blue gums,” Associate Professor O’Toole said.

As well as examining both the direct and indirect effects of the plantations, the report posed scenarios based on three different proposed growth rates in the period 2006-2020.

Even the assumption of high growth in the forestry industry (seven per cent) did not indicate a significant impact.

“Dairy looks like it will remain strong and competitive,” Associate Professor O’Toole said.

And all those who love nothing more than a great dollop of Western District cream on our scones and jam will give a little cheer.

Where it all began: www.gsdm.com.au/newsletters/deakin/march07/kevin%20otoole.html

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