Jason Limbrick: The future of Australia's dairy industry is at risk

Speaking at a recent water summit in Bendigo, organized by the Goulburn Murray Irrigation District (GMID) Water Leadership Group, Limbrick highlighted the critical role of the dairy industry in rural communities and warned that further reductions in water availability could have severe consequences.

ACM, which manages 400 million litres of milk annually from approximately 300 dairy farmers, plays a key role in northern Victoria's dairy industry. This region produces more than 85% of the milk in the Murray-Darling Basin, accounting for around 20% of Australia’s total milk production. Milk from northern Victoria also supports the northern states, with 250 to 300 million litres transported to these regions.

Limbrick emphasized the vital economic role the dairy industry plays, providing nearly 13,000 jobs in northern Victoria alone, including on-farm employment, dairy processing, and related industries. However, since the introduction of the Murray-Darling Basin Plan in 2012, the number of dairy farms in the basin has dropped by 47%, and milk production has decreased by 35%.

The Water Crisis and Its Impact on Dairy
The reduction in water availability due to the basin plan is a major factor behind the declining milk production in northern Victoria. Twenty years ago, the region produced approximately 2.7 billion litres of raw milk; today, that figure has fallen to around 1.4 billion litres. Limbrick noted that while there has been a slight recovery in raw milk production, the outlook remains uncertain due to ongoing concerns over water availability.

"Less water means less milk production, which in turn means fewer jobs and less processing capacity," Limbrick said. He stressed that the sustainability of the dairy industry is closely tied to water access, and further buybacks could destabilize an already fragile supply chain.

Limbrick voiced his disappointment over the omission of the dairy processing industry in a government-commissioned report by ABARES on the impact of water buybacks on irrigated agriculture. He argued that the report fails to provide a complete picture of how water buybacks will affect the dairy sector, particularly in regions like the GMID, which are heavily reliant on irrigation.

In response to this oversight, the dairy industry has been forced to commission its own research to assess the potential impact of water buybacks. Limbrick also criticized the recently announced $300 million compensation package, stating that the $100 million allocated to Victoria is inadequate to address the scale of the problem.

A Call for Collaboration
Limbrick called for greater collaboration between the government and the dairy industry to ensure the long-term viability of the sector. "Unsound water reform at this critical time could destabilize the industry, just when we need supply chain efficiency, value creation, and collaboration," he said.

With 11 dairy processors announcing closures over the past 18 months, Limbrick warned that the industry cannot afford further reductions in assets within the GMID footprint. He urged policymakers to recognize the significant contributions that dairy processors make to rural economies and to work closely with industry stakeholders to safeguard the future of the sector.