Prime Dairy optimising its assets; Tariffs not expected to impact Australian dairy
Prime Dairy’s development work is now complete across its farms in Northwest Tasmania and Southwest Victoria. We have grown our milking herd to ~10,000 and the focus has moved to optimising the farms, according to Gavin Beaumont, General Manager Operations, Prime Dairy.
“Our goal now is to strengthen the resilience of our dairy assets so they can continue to perform well even under challenging economic and climatic conditions.”
To that aim, the Fund has taken the decision to sell some of its support land which is used for wintering the milking herd and rearing young stock. Mr Beaumont said there are no plans to sell any of the dairy farms and we are planning for an increase in milk production in FY26. “We are selling support farms as we have the opportunity to lease land close to the dairies to meet our agistment needs.”
He said the support land for sale is quality, irrigated land with red basalt soils. “We have improved the land and there is great potential to use this land at its full value including for crops and vegetables.”
Meanwhile, the Prime Dairy focus is squarely on improving milk production across all assets. “We have the locations, we have the water, and we have good infrastructure in place. We now want to optimise the farms to maximise grass growth and our milk production.”
The new dairy infrastructure on the farms means it now takes less time to produce more milk, Beaumont said. “The more efficient the milking process, the more time our cows can spend in the paddock eating grass and producing milk.”
Tariffs not expected to have material impact on Australian dairy
President Trump’s trade tariffs are not expected to have a material impact on Australian dairy, and it’s possible that retaliatory tariffs on US dairy could even turn out to be a positive for local producers.
The US announced a 10% tariff on Australian Dairy commencing April 2025, but this should have little material impact given the US market accounts for just 0.6% of Australia’s total dairy exports and it ranks as our 20th largest export destination.
Volatility in the market could even bring a positive outcome, according to Harrison Stewart, Senior Investment Analyst, Alternative Assets at Prime Value Asset Management. “The United States exports dairy into Asian markets, which puts it in competition with Australian dairy exports.
“China has introduced retaliatory tariffs on US dairy imports, which could potentially benefit Australia’s dairy industry but we’re conscious there’s still a lot to unfold on that front”, he said.
Australia exported 185,466 tonnes of dairy products to Greater China in 2024 and there are currently no tariffs from China on Australian dairy.
Harrison Stewart said this will potentially lead to increased demand for Australian dairy as the local dairy price becomes more competitive on a global scale. “Australian agricultural exports continue to rise both in volume and price, driven by quality, location to Asia and global weather/climate. For example, the volume of Skim Milk Powder into Indonesia has increased by 70% in one year.”
Aside from improving exports to China, Australian dairy exports should be on the rise due to two significant Free Trade Agreements (FTA) with the United Arab Emirates (UAE) and India. “The UAE is considered the gateway to the Middle East, and agricultural exports to India have increased 138% since the signing of the India/Australia FTA in 2022”, he said.
Why dairy is a long-term play
Higher interest rates, weather conditions, and some softness in the milk price has made for challenging conditions over the past 12 months. However, Prime Dairy remains committed to Australian dairy and confident in the potential for strong performance over the longer term with income from milk sales and capital growth from the underlying land.
Elizabeth Blackhurst, Portfolio Manager Alternative Assets at Prime Value Asset Management, said: “We have high conviction in Australian dairy due to the global scarcity of prime agricultural land and water, and the growing demand for protein.
“Prime Dairy’s farms are in some of the best rainfall regions of Australia, we have top tier infrastructure on our farms, and we produce top quality milk from our pasture-raised herd. We firmly believe this will be recognised in the Dairy Trust unit pricing when the cycle turns.”
Exceptionally dry weather conditions across Victoria and Tasmania during 2024 put the farms slightly behind budgeted milk production for the year to date. But they are now in a strong position with excellent fodder growth thanks to ideal weather conditions and strong Spring rainfall.
“Milk production would generally be in decline at this time of year, but the Dairy Trust’s production is being sustained at a higher level, thanks to ample food that has been grown throughout the season.
“This has been the first year we have fully benefited from our new irrigation infrastructure, which helps us maintain milk production at a higher level for longer with cows still eating fresh grass through the drier period.
“We anticipate catching up most of the production missed through the first half of FY25 over the second half and in FY26 we will milk close to 10,000 cows, raising our production even higher.” Ms Blackhurst said.
Quality is key though
“High-quality milk ensures we receive the maximum farm gate price with no penalties applied and we receive a quality bonus.”
Prime Dairy is proud to have achieved eight Milk Quality Awards in 2024 across the Tasmanian farms, including an Australia-wide Dairy Australia Silver Award for Banksia Park.
To invest in the Prime Value Dairy Trusts please contact our Client Services Team at info@primevalue.com.au or call us on +61 3 9098 8088