South East Irrigation Scheme Stage-3
Overview of Agricultural
Opportunities
Snapshot1
Agriculture in the south east
4
Land capability4
Enterprise prospects6
Indicative margins and returns
9
Additional resources11
Disclaimer11
Industry Information11
Contact11
1
Snapshot
The south east of Tasmania has a unique climate
which favours a wide range of cool temperate
agricultural enterprises. Following the development
of the original South East Irrigation Scheme in
1986, the area is now renowned for its high-value
viticulture and perennial horticulture such as stone
fruit and salad leaf enterprises. Broad acre cropping
and livestock production also have a long and
successful history in the area.
Tasmania - Location of Irrigation Schemes
South East Irrigation Scheme
Stage 3
The current scheme operating in the Coal Valley
includes two discrete sections: the 2,625 megalitre
(ML) Coal Valley Irrigation District (Stage 1) and the
1,975 ML South East Irrigation District (Stage 2).
The new Stage 3 South East Irrigation Scheme (SEIS
3) will increase reliable water supply by an additional
5,000 ML. It will have the capacity to be augmented by
an additional 2,000 ML of winter capacity depending
on future demand.
Stage 3 water will be delivered within an irrigation
district covering 27,650 ha (including the current
Stage 1 area). The soil types spanning the region suit
the different requirements of perennial horticulture
and vegetable production. There is plenty of room
to expand: approximately 13,000 ha is potentially
irrigable land, of which approximately only 15 percent
is currently under irrigation.
“Condemned as “hopelessly uneconomic” prior to its
construction by the then Federal Minister for Resources
and Energy, the Coal River Valley irrigation project has
Centred around the historic town of Richmond, the other since its construction in 1986 proven a highly successful
population centres include Sorell and Brighton. Hobart
source of wealth for Tasmania’s economy.
– Tasmania’s capital city – is right on the doorstep. Air,
sea, road and rail transport links service the district
with Hobart airport and the Port of Hobart nearby.
Processing facilities in the south east include numerous
wineries, on-farm fruit packing-houses, a salad leaf
packaging facility and a steam-pelletisation plant for
lucerne stock feed. There is potential to further develop
down-stream processing and supply chain links for
food, wine and a range of agricultural products.
“...with the aim of expanding its (Tasmania’s)
position as a high-end food producer, the Coal River
experience stands as a model of what might be
achieved elsewhere...”
(Source: Australian Innovation Research Centre, May 2009. Building
regional innovation capability: the impact of irrigation in the
Coal River Valley.)
South East Irrigation Scheme Stage 3
Overview of Agricultural Opportunities
2
South East Irrigation Scheme Stage 3
Disclaimer: This map is for informational purposes only. It should not be relied upon to establish with certainty the location of any of the
features represented on it either absolutely or in relation to other features. This map is not suitable for site specific decision making.
South East Irrigation Scheme Stage 1
South East Irrigation Scheme Stage 3
An ideal cool climate production region
General soils and topography
Highly suited to temperate crops.
Hills – generally stony and shallow near tops.
Low risk from severe weather events:
Slopes – dolerite-derived slope deposits (brown soils in
well drained positions, black cracking in imperfectly drained
positions) both generally overlying sandstone or mudstone.
- Low number of heat events in summer.
- Low frost risk for autumn.
- Low hail risk, both frequency and size.
- Rainfall events low impact.
Range of fertile soil types and aspects.
Range of agricultural expertise and support.
Lower slopes – generally texture-contrast soils from
sandstone/mudstone but with areas of productive basalt soil.
Valley floor – generally texture-contrast with acid and/or
sodic subsoils with areas of clay dominated deeper soils.
Skilled resource base.
(Source: Macquarie Franklin 2012. Climate, soils,
advantages of the SEIS region.)
South East Irrigation Scheme Stage 3
Overview of Agricultural Opportunities
3
Competitive Advantages
The south east region of Tasmania has a strong broad acre,
horticultural and viticultural production base and is known
for high quality and reliable produce. The region’s key
advantage is a mild and relatively dry maritime climate with
a notable lack of extreme heat, frost, and high rainfall events.
With high reliability irrigation water (>95% surety), significant
parcels of suitable farmland and innovative landowners the
development of the Stage 3 South East Irrigation Scheme is
a significant opportunity for agricultural expansion.
The benefits of developing a diversified production base in
this area might include:
- A wider harvest window and prolonged market access.
- Seasonality of supply opportunities.
- Climate risk mitigation via multi region production.
- Gaining access to new markets via Tasmania’s fruit fly free
status.
- Proximity to Hobart airport and transport links.
South East Irrigation Scheme Stage 3
Overview of Agricultural Opportunities
4
Agriculture in the south east
The south east is a diverse agricultural region. Current
production includes wine grapes, apricots, cherries,
peas, cereals, vegetables (mainly lettuces, salad crops
and vegetables for seeds), olives, walnuts, lucerne, as
well as sheep and cattle farming.
Fruits and grapevines are usually grown on sloping
land above the valley floors to aid drainage and reduce
the potential impact of out-of-season frosts. The
highly fertile soils, more common in the Sorell area
are ideally suited for vegetable production. It is likely
that over time additional agricultural production will
be driven by increased plantings of higher value ($ per
megalitre) perennial horticulture and fresh vegetables
and to a lesser extent extensive cropping and livestock
enterprises. 1
Land capability
A land capability assessment identified that there is
approximately 13,000 ha of potentially irrigable land
in the irrigation district. 2 This includes allowances
for existing infrastructure, urban areas and extensive
native vegetation.
The land capability classes range from Class 4 to Class
6, with the majority being Class 4. While there is no
Class 3 land included in the current land capability
survey data there are some areas – specifically around
Forcett and Sorell – that are candidates for being
reclassified to this level with the addition of a reliable
water source. Table 1 provides the area of the various
land capability classes within the potentially irrigable
land. The land capability assessment, also considers
north and east facing slopes where wine grapes in
particular could be grown. Consequently some Class 6
land is included.
Maps of land capability, the potential irrigable land,
and soil types are available from the SEIS section on
the Tasmanian Irrigation website:
www.tasmanianirrigation.com.au.
1 Marsden Jacob Associates, 2012. Business Case for the proposed South East Irrigation Scheme – Final Report,
Tasmanian Irrigation.
2 Adapted from - Agricultural Resource Managment 2010. Assessment of current and potentially irrigable land in the south east
irrigation region of Tasmania, Tasmanian Irrigation.
South East Irrigation Scheme Stage 3
Overview of Agricultural Opportunities
5
Understanding land capability
and potential irrigable land
Potential irrigable land is calculated from an
assessment of land capability, contours, soil types,
zoning and field observations. It includes significant
areas of land capability Class 4 and 5 potentially suited
to perennial horticulture and viticulture enterprises.
In addition titles smaller than five hectares with
poor connectivity to larger areas of agricultural
land were excluded, as were easements and roads.
Native vegetation* was also mapped, and threatened
vegetation excluded.
Land capability is an internationally recognised means
of classification, used to evaluate the capability
of land to support a range of uses, on a long-term
sustainable basis. The classification system comprises
seven classes ranked in order of increasing degree of
limitation in relation to agricultural use and decreasing
order of agricultural versatility. Class 1 is the best land
and Class 7 the poorest. Classes 1-3 are considered
“prime agricultural land” suitable for intensive cropping (Source: Macquarie Franklin, 2011. South East Irrigation Proposal,
Enterprise Mix and Margin Assessment. Report prepared for
and more frequent cultivation. Class 4 is considered
Tasmanian Irrigation.)
marginal for cropping activities and Class 5 suited to
grazing and very limited cultivation. Generally Class
6 is considered marginal for grazing. Land capability
at a particular site and hence potential land use is
Table 1: Potential irrigable land in the new South East
influenced by a range of physical characteristics, as
Irrigation District (Stages 1 and 3)
well as the management practices employed.
Complex map units are recorded when two land
capability classes are identified in an area and occur
in such a pattern that it is not possible to separate
them at the scale of mapping being undertaken. For a
complex map unit to be mapped each land class must
occupy at least 40% of the map unit. In such cases the
dominant land class is recorded first, followed by the
subdominant land class – i.e. Class 3+2.
For further information refer to the Department of
Primary Industries, Parks, Water and Environment
website www.dpipwe.tas.gov.au
Land Capability
Class (Complex)
SEIS 3
(ha)
SEIS 1
(ha)
Total
4
7,086
4,696
11,782
4+5
93
58
151
5
651
249
900
5+4
14
93
107
6
33
3
36
Potential Irrigable
Land
7,877
5,099
12,975
(Source: Grose C (Ed) 1999. Land Capability Handbook – Guidelines
for the classification of agricultural land in Tasmania. Department of
Primary Industries, Water and Environment.)
*Refer to the Tasmanian Forest Practices Authority
www.fpa.tas.gov.au and Department of Primary Industries, Parks, Water and Environment www.dpipwe.tas.gov.au for further
information regarding Tasmanian legislation and policies on the protection of native vegetation and natural values.
Note: The land assessment information presented here and in any supporting maps published by Tasmanian Irrigation Pty Ltd
only takes into account the physical soil, topographic, zoning and related constraints, and does not include other parameters or
any legislative, regulatory and/or policy requirements of Federal, State or Local Governments that apply to the land in question
and/or which could affect a proposed land use or agricultural enterprise.
South East Irrigation Scheme Stage 3
Overview of Agricultural Opportunities
6
Enterprise prospects
3,4
The wider south east region of Tasmania is highly
suited to summer production of temperate horticultural
fruits and vegetable crops due to a favourable
combination of soil and climatic conditions. The
summer climate allows high quality and reliable
production and is somewhat unique for its positive
attributes as well as its general lack of negative ones.
The temperature profile between October and April
(inclusive), being below an average daily maximum of
24 degrees and above an average daily minimum of
7 degrees, is within the recommended optimal range
for temperate fruit and vegetable production over
this entire period. A combination of factors including
the region’s southerly latitude, low altitude and close
proximity to the sea moderates temperature and
reduces the risk of undersirable extremes of high or
low temperatures occuring. This advantage has been
realised over recent years where traditional summer
production areas on mainland Australia have often seen
unreliable production due to a number of prolonged
heat events (and, to a lesser extent, high rainfall).
The region’s climatic attributes also include a number
of other criteria favouring high quality and reliable
production. This includes low average rainfall (around
500 mm/year average), no high impact rainfall events
(in excess of 75 mm/day), low relative humidity, low
frost risk and limited damaging hail events.
The combination of these factors has underpinned the
expansion of wine, fruit and fresh vegetable production
in the Coal Valley and will help drive development
in the green field areas around Sorell, Orielton and
Forcett in the future.
Further information on the climate, soils and advantages
of the South East Irrigation District, including a frost
distribution assessment, is available from the SEIS
section on the Tasmanian Irrigation website.
Further information on the suitability factors for
assisting in site selection for a range of crops is
available from the Department of Primary Industries,
Parks, Water and Environment website:
www.dpipwe.tas.gov.au/wealthfromwater
This website also includes enterprise profiles of the
market opportunities for a range of potential crops in
Tasmania, fact sheets on irrigation management as well
as a host of other useful tools and information.
3 Unless otherwise stated, the information in the Enterprise Prospects section is reproduced from: Marsden Jacob Associates 2012,
Business Case for the proposed South East Irrigation Scheme – Final Report, Tasmanian Irrigation and Macquarie Franklin 2011,
South East Irrigation Proposal – Enterprise Mix and Margin Assessment, Report prepared for Tasmanian Irrigation.
4 This presents a general guide only to the current agricultural production in the South East Irrigation District, potential new
opportunities and some of the risks associated with agricultural production in the district. The information is not exhaustive, is not
an indication of likely success, and does not necessarily mean that there is an immediate market or processing capacity available to
take the product.
South East Irrigation Scheme Stage 3
Overview of Agricultural Opportunities
7
Wine grapes
The total area of bearing vineyards in Tasmania is
around 1,400ha. This has increased annually since
1994 when there were only 28ha.5 The Coal River
Valley contributes approximately 17% of the total
state yield – 237 bearing hectares in approximately 60
vineyards.
Total state production varies greatly between seasons.
It peaked at 9,630 tonnes in 2008 before falling to
5,050 tonnes in 2009 as a result of poor growing
conditions, and then recovered to 7,390 tonnes and
7,790 tonnes in 2010 and 2011 respectively.
At present, Tasmania seems to have been largely
immune from over-supply issues and associated
reduction in grape prices that have occurred in the main
grape growing areas of Australia and New Zealand.
While grape prices in some mainland areas have fallen
to below $500 per tonne, in 2011, prices of $2,350 to
$2,450 per tonne were received for Chardonnay, Pinot
Noir and Riesling grapes in Tasmania.6 Much higher
prices have been achieved in some years for small
quantities of very high quality grapes.
For a well-managed vineyard in the south east
an average yield of 8-10 tonnes per hectage is
achieveable for table wines and around 10-12 tonnes
per hectare for sparkling wines.
Cherries
The Coal River Valley is one of five main cherry
growing districts in Tasmania. There are approximately
560 ha of cherries in Tasmania, producing about 4,000
tonnes per annum.7 Total state-wide production is
expected to expand over the next few years, mainly
from current plantings. Around 50-60% of Tasmania’s
total production is exported to North East Asia and,
more recently, to Europe, with the remainder sold on
local and mainland markets.
fruit does not need to be fumigated which is costly and
can reduce fruit quality.
Favourable climatic conditions in south east Tasmania
result in the harvest season extending by at least four
to six weeks beyond mainland producers. There is
some overlap with late mainland production.
Local market prices are generally high from late
January but price can be affected by extra supply prior
to that. Presently average farm gate prices for cherries
are around $5-$6 per kilogram. However, this can vary
greatly, depending on pack-out and quality.
Yields can also vary greatly. An average pack-out
yield is around 10 and 14 tonnes per hectare. In recent
years unseasonal rain has reduced the actual yield and
both quality and pack-out was down.
Apricots
Tasmanian production of apricots was approximately
2,700 tonnes in 2009-10 but was down in 2010-11
as a result of the summer rain in that season. The
Coal River Valley climate is considered ideal for
apricot production (and peaches and nectarines), with
cool nights and warm days resulting in larger fruit
development and relatively late harvesting. Current
apricot orchards are mainly in the Richmond to
Campania area.
Season 2012 farm gate prices for first grade fruit are
around $5 per kilogram and $2-$3 per kilogram for
second grade and depend on pack-out percentages. As
was noted for cherries, yields can also vary greatly.
Tasmania’s late production season offers the
opportunity for premium prices on interstate markets
and potentially overseas where demand for counterseasonal apricots is reportedly strong, especially in
Europe and the Middle East.
The Tasmanian cherry season commences around
mid December and goes through until mid to
late February with peak season around the
second and third week of January.8 Tasmania’s
competitive advantage is for late season higher
quality (large) fruit. Being fruit fly free is also
a significant advantage to exporters. Tasmanian
5 Wine Tasmania, 2011 Tasmanian Vintage Report.
6 Wine Tasmania, Tasmanian Wine – 2011 in review.
7 http://www.cherrygrowers.org.au/regions/ accessed 22 August 2012
8 http://www.fruitgrowerstas.com.au accessed 22 August 2012
South East Irrigation Scheme Stage 3
Overview of Agricultural Opportunities
8
Fresh vegetables
There are currently approximately 530ha of fresh
vegetable production in the wider region. Around half
of that area is babyleaf salad crops (lettuce and herbs),
with the remainder made up of crops such as iceberg
lettuce, cauliflowers, broccoli and potatoes. The area’s
main advantage is its reliability, with the ability to
produce crops when other areas are either too wet or
too hot and dry. All products are for fresh markets both
locally and interstate.
There is scope for further production in the expanded
supply area, particularly the Coal River Valley and
in the Sorell/Orielton area where almost half of the
potential irrigable area consists of productive soils
derived from basalt.
Despite being an annual crop, there is still a very
high capital cost in establishing new fresh vegetable
production areas. Costs include land preparation,
irrigation, cool room facilities and specialised
cultivation, planting and harvesting equipment.
Apart from baby leaf salad crops, there is also
potential for expanded production of iceberg lettuce,
cauliflowers, broccoli, shoulder season carrots and
fresh potatoes. Again, the reliability of the area is a
key factor, with production not impacted by the hot dry
summer conditions that can affect other regions.
Crops and livestock
There is a range of ‘extensive crop’ and livestock
enterprises that might expand output with additional
irrigation water. These include cereals, alkaloid
poppies, peas, lucerne and finishing of store lambs or
cattle. Some of these are likely to be sensitive to water
prices and may be useful to transition to higher value
enterprises over time.
In addition, there are a number of grass and vegetable
seed crops grown in the area. While these tend to be
higher value, the total area and water use is small and
future expansion will be limited by requirements to
keep seed crops isolated.
A range of other crops
Based on existing production, other potential
enterprises could include nectarines, apples, berry
fruits, olives, walnuts, hazelnuts and turf, as well
as niche crops such as fresh and culinary herbs and
essential oils.
The Coal River Valley is a long established fruit growing
area in Tasmania, with any wider development being
hindered through the lack of irrigation supply. With
adequate and consistent water availability, the wider
area in the south-east will have the potential to increase
production of quality apple and stonefruit (includes
apricots, cherries, nectarines, peaches and plums) crops.
Tasmania, having a low level of pest incidence and being
fruit fly free, in particular, has access to many international markets. In cases such as cherries to Korea and
Japan, Tasmania has been able to stand aside from the mainland and secure market access.
The Tasmanian brand of clean and green growing conditions is very strong in international markets as well as
the mainland. The brand enables Tasmanian product to sell successfully against cheaper Southern Hemisphere
producers.
Compared with many stone fruit producing areas in the world, the Coal River Valley has an equitable climate in
that it does not suffer from climatic extremes.
Rainfall is limited and hence the requirement for irrigation. The upside of minimal rain is the reduction in disease
pressure and therefore the ability to reduce the use of pesticides. Low rainfall diminishes the risk of ‘wet feet’
which neither pip fruit nor stone fruit crops are able to tolerate.
There are a variety of soils in the south-east region. Cherries and apples in particular are suited to a full range of
soil types; however, apricots are a little fussier and dislike soil that is too heavy.
Source: Taken from note prepared for Tasmanian Irrigation Pty Ltd by Earnscy Weaver, Weaver Horticulture, Central
Otago, New Zealand, 16 August, 2010.
South East Irrigation Scheme Stage 3
Overview of Agricultural Opportunities
9
Indicative margins and returns
Table 2 provides indicative gross margins for a range
of potential enterprises in the south east region.
Annual gross margin is normally defined as the gross
income of a crop less the variable costs of production.
This is generally calculated on a per hectare basis for
ease of comparison with other enterprises.
Crops costs have been based on current values.
Crop prices used are generally those suggested
by a six-year trend – subject to the availability of
data. Otherwise they are based on discussions with
industry contacts. Where appropriate, costs include an
allowance for contract cultivation, planting, spraying
and harvesting and cartage, and own farm labour
is included as a variable costs. Irrigation costs for
extensive crop and livestock production are based on
centre pivot irrigation which has a lower operating
cost than travelling gun irrigators.9 These margins
include the costs of pumping and associated irrigation
activities, but do not include the annual cost of water.
Because of the large variation in environmental
conditions, farm management systems and crop
rotations, it is impossible to produce any gross margin
calculations or whole farm budget that has universal
application. The Gross Margin is highly dependent on
the yield and price received for the product.
Whilst enterprise gross margins are useful, the broad
range of both perennial and annual enterprises,
some of which have high capital requirements for
establishment and long lead time before full production
is achieved, are difficult to compare by using this
methodology. Other forms of investment analysis
may be more appropriate to compare potential longterm profitability. Interested parties should always
undertake their own investigations. Past performance
is not an indicator of future performance and every
agricultural enterprise will be different.
9 Macquarie Franklin, 2011. South East Irrigation Proposal, Enterprise Mix and Margin Assessment. Report prepared for
Tasmanian Irrigation.
South East Irrigation Scheme Stage 3
Overview of Agricultural Opportunities
10
Table 2: Indicative irrigated enterprise gross margins in
the south east region
Gross margin
per hectare
($/ha)
Water usage
per hectare
(ML/ha)
Gross margin per ML
($/ML)
Grapes (mechanical harvesting)
13,400
3.0
4,470
Cherries
38,000
4.0
9,500
Apricots
32,000
4.0
8,000
Baby leaf salad
15,000
3.8
3,950
Iceberg lettuce
11,900
2.4
4,960
Cauliflowers
4,400
3.6
1,220
Broccoli
3,500
3.0
1,170
Potatoes
10,100
3.0
3,370
Poppies
2,620
3.0
875
Cereals
880
2.5
350
Processing peas
1,060
2.5
425
Field Peas
760
2.5
305
Lucerne
1,600
6.0
270
Pasture – finish store cattle and lambs
550
3.5
160
Enterprise
Perennial Horticulture*
Fresh Vegetables
Extensive crop and livestock
*At full production
(Source: Macquarie Franklin, 2011. South East Irrigation Proposal, Enterprise Mix and Margin
Assessment. Report prepared for Tasmanian Irrigation.)
Enterprise analysis tools
Easy to use tools are available on-line to guide farmers and investors who are considering new higher return
enterprises and investing in irrigation in Tasmania.
Gross margin analysis – interactive gross margin analysis spreadsheets for a wide range of livestock, cash
crops, vegetables, extractive crops, fruits and nuts which can easily be adjusted for inputs, yields and prices.
Designing a Successful Business – Utilising the enterprise and gross margin analysis in a whole farm
budget. This will assist businesses in making a transition and guide farm management decisions for improved
profitability. It is an easy tool to help prepare a budget for a bank loan.
Profitability of irrigated perennial crops – An investment module for those perennial horticultural crops
where expenses are very high in the initial years and the majority of income is derived once the enterprise is fully
established.
Irrigation investment analysis – A worksheet to assist in planning investment in new irrigation infrastructure,
plant and equipment (e.g. dams, pump types). It also considers that a new irrigation development is not always
additional income – as income from current enterprises is forgone.
These tools are available from www.dpipwe.tas.gov.au/wealthfromwater
South East Irrigation Scheme Stage 3
Overview of Agricultural Opportunities
11
Additional resources
Industry Information
Tasmanian Irrigation website, South East Irrigation
Scheme (SEIS) section:
Coal River Products Association
www.coalriverproducts.com.au
- Maps of soil types, land capability and potential
irrigable land.
Wine Tasmania
www.winetasmania.com.au
- A frost distribution assessment of the South East
Irrigation Scheme, including viticultural potential.
Fruit Growers Tasmania
www.fruitgrowerstas.com.au
- Presentation: Climate, Soils, Advantages
of the SEIS region. Macquarie Franklin 2012.
Tasmanian Farmers and Graziers Association
www.tfga.com.au
www.tasmanianirrigation.com.au
Tasmanian Institute of Agriculture
www.tia.tas.edu.au
Department of Primary Industries, Parks,
Water and Environment
www.dpipwe.tas.gov.au/wealthfromwater
Invest Tasmania
www.investtasmania.com.au
Disclaimer
Contact
This document has been prepared by Tasmanian
Irrigation Pty Ltd and is intended to provide a general
overview only. Tasmanian Irrigation Pty Ltd gives no
warranty, expressed or implied, as to the accuracy
or completeness of the information contained in this
report or in the links or additional resources referred
to therein. Agricultural enterprises and irrigation
are subject to a range of production, financial and
environmental risks that are not covered in detail in
this report. Parties interested in investing in the South
East Irrigation Scheme should undertake their own
evaluation and not solely rely on this report.
Tasmanian Irrigation Pty Ltd
PO Box 84, Evandale, TAS 7212
Telephone: +61 3 63988433
Published: October 2012
Copyright © Tasmanian Irrigation.
South East Irrigation Scheme Stage 3
Overview of Agricultural Opportunities