Agriculture a cornerstone of Tasmanian economy, new report confirms

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.

RaboBank’s Gearing Up For Mature Growth in Tasmanian Agriculture report said 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.

General manager of the Australian & NZ RaboResearch team Stefan Vogel visited a range of farms in northern Tasmania on Wednesday and Thursday and said it was fantastic to celebrate 30 years of Rabobank in the state with the farming community.

“It’s so different to other places, with the amazing diversity – I can see one farm with 12 different crops, lambs and cattle and that is what really works,” he said.

“Water and technology have been a huge part of the growth of farming in Tasmania and that is evident in our latest report.”

Salmon remains Tasmania’s largest primary production industry, with a farmgate value of $1.4 billion, and while it’s currently going through some difficulties, the potato sector is the standout performer, contributing the bulk of 568,000 metric tonnes of vegetables grown in the state overall, generating a farmgate value of $630 million.

The report said 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, the 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, said 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”.

It also states that 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 said Tasmania’s agricultural sector has “shown notable resilience and growth over a long period”.

As of 2022/23, the sector’s farmgate value stood at around $2.5 billion (approximately double the value seen a decade ago), with the seafood sector adding a further $1.6 billion.

“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.

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 so there will be an increased emphasis on productivity improvements and optimising irrigation,” he said.

When it comes to markets for agricultural production, the state has a mix of local consumption, interstate trade and overseas exports, 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”.

“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.

The report showed that the dairy 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.

Tasmania’s vegetable industry boasts a diverse product mix, including substantial crops of carrots, peas, onions and leafy greens, according to the report, however, it is the potato industry that continues to be the standout performer.

In 2023/24, Tasmania produced over 568,000 metric tonnes of vegetables overall, generating a farmgate value of $630 million - punching above its weight in terms of share of national production in onions, beans, potatoes and peas.

In 2023/24, the Tasmanian fruit sector achieved a combined farmgate value of $223 million, reflecting an impressive average annual growth rate of 7.6 per cent since 2012/13, the report said.

Salmon remains Tasmania’s largest primary production industry, having doubled over the previous decade.

In 2022/23, the farmgate value of Tasmanian salmon stood at $1.4 billion, contributing to a total Tasmanian seafood farmgate value of $1.56 billion.

 “Tasmania has been producing more than 80,000 metric tonnes of salmon annually in recent years, cementing its position as Australia’s largest producer, though growth is maturing,” he said

Tasmania’s sheep and beef sectors have “been a story of many parts” over the past two decades, the report says, with a gradual transition away from wool and a growing focus on natural attributes to leverage premiums.

The state’s beef sector has seen production increase to an estimated $420 million farmgate value in 2024/25, as increased volumes and improved prices have supported growth.

Higher prices in the lamb industry have also supported an increase in sheepmeat production value over the past 20 years, estimated at $80 million farmgate value in 2024/25.

The overall value of wool produced in the state has also increased, despite the drop in production volumes - driven by increased wool prices over that period.

A key to the growth of the Tasmanian cattle and sheep sectors in the future will be the ability to leverage the natural attributes associated with Tasmanian production, Mr Harvey said.