Dairy industry player and carbon plantation manager Alterra has purchased a 1,640 hectare property in Western Australia’s wheatbelt which the company believes will suit a new style of dairy farming known as “System 5.”
ASX listed Alterra, formerly Carbon Conscious, said on Wednesday it had settled on the purchase of the “Dambadjie Springs” property, located 165 kilometres north of Perth in Dandaragan Shire, on premium agricultural land.
Dambadjie Springs was previously part of the iconic “Yathroo” property and Alterra believes the prime location, soils and reliable 600 millimetre-per-year rainfall makes the land ideal for a System 5 dairy farm.
Alterra executive director Andrew McBain said: “The company has conducted extensive due diligence on the Dambadjie Springs and Yathroo properties over the past 12 months and based on the location within a major cropping region, water development potential, soil types and climate, Dambadjie Springs has been assessed as having the likely attributes required for the development of a green filed System-5 Dairy”.
The $4.2 million acquisition was funded from cash on hand of $2.1 million and a new $2.1 million debt facility with Bank West, company management said.
For the next 12 months, Dambadjie Springs will be leased allowing Alterra to continue due diligence and on-site development work at the property while also providing it an additional income stream.
The purcahase comes as Alterra carries out due diligence and feasibility studies on a number of prospective properties for a potential large-scale System 5 dairy project in WA
System 5 dairy farming is common in the US and there have been examples on Australia’s east coast, however it is still relatively uncommon in WA. It works on the theory that cows produce significantly more milk when they are made comfortable, and not exposed to the elements.
The method involves providing climate controlled barns for cows that offers them some respite from the elements and allows for them to be walked shorter distances every day to be milked.
Alterra has previously flagged big production upsides from the method, saying System 5 could lift the average milk production per cow from 6400 litres to around 10,000 litres per year.
In Wednesday’s update, Alterra also said it retained cash and receivables of circa $1.6 million and continued to receive circa $700,000 per quarter of contracted revenue out till December 2027 from existing agri-forestry contracts.
