Tasmania’s dairy industry marked a significant milestone last Friday, with the official opening of a new dairy processing facility, built on a former forestry site in Smithton in the State’s North-west.

The new $80 million processing factory of Tasmanian Dairy Products (TDP), which received financial assistance from both the Federal and Tasmanian State governments. The plant is expected to develop an output of 40,000 tonnes of milk product from 300 million litres of milk a year.

TDP was established in early 2011 by local dairy farmer Bradley Watson and other associates. Later in 2011, dairy industry giant Murray Goulburn acquired a 80.1 per cent share of the milk powder exporting company. In June 2012, the Mitsubishi Corporation bought 24 per cent of TDP, and Murray Goulburn’s share went down to 56.1 per cent. The company’s CEO is Tony Catania.

TDP has signed on more than 60 Tasmanian farms to supply milk to the plant, and commenced operations in September 2012, processing an initial 150 million litres of milk a year into powdered milk products for export to the Asian and Middle Eastern markets.

“TDP has signed up more than 60 farms to supply milk and have commenced operations, processing an initial 150 million litres of milk per annum into powdered milk products for export to the Asian and Middle Eastern markets.

The TDP expansion of the dairy industry in Tasmania is expected to increase the State’s milk production by 12 per cent, create 135 new jobs and generate about $75 million net community benefit.

But the Australian Government has been strongly criticised by Tasmanian dairy representatives, and by Tasmania Liberal Senator Richard Colbeck, for what Senator Colbeck says is an “outrageous attempt to blackmail the Tasmanian Legislative Council and community over future dairy funding”.

Immediately after the official opening of the TDP factory, Federal Minister for Regional Development Simon Crean announced additional federal funds would be made available to the Tasmanian dairy industry only on the condition that the Tasmanian Legislative Council passes a forestry bill currently being tabled.

“We have got no money for the economic diversification unless the [forestry] package goes through,” Mr Crean told a press conference after the official opening. He said that Legislative Councillors should look at the forestry bill not only through the “prism of the forest industry”, but see that the forestry bill could also impact dairy, aquaculture, viticulture, cropping industries and the fresh produce industry, as well as non-food-producing industries.

Senator Richard Colbeck, who is the Coalition spokesperson on forestry issues, said that Tasmanians should be “disgusted” by what Crean said as the Labor government’s representative.

“His moves to link growth in one industry sector to the death of another are nothing short of a disgrace,” Senator Colbeck said. “Even worse is Minister Crean’s obvious lack of understanding of his sham forest deal,” he added.

Senator Colbeck said the proposed transition to plantation proposed under Federal Labor’s forest deal will require 130,000 hectares of agricultural land, or 20 per cent of agricultural land available in the State. Yet the proposed dairy expansion will require up to 40,000 hectares.

“When added to the increased demand for land for poppies, wine and a number of other commodities the conflict being created becomes painfully apparent,” said Senator Colbeck.

Like the rest of Australia, the food processing sector in Tasmania has had a difficult few years. Australian Food News reported in 2009 that frozen food manufacturer McCain had shut its manufacturing plant in Smithton.

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