The primary risk for dairy farming in the future continues to be water availability, a preliminary report prepared by Dairy Australia has found.
Although the report has noted that the elements for a robust and viable industry are present in the lower Murray-Darling Basin, there are specific risks.
Addressing the report, Dairy Australia's managing director Mike Ginnivan said the challenges included volatility of price and drought.
He said the industry would remain a major user of water in the basin for at least the next 10 years and would necessitate continued improvements in water use efficiency.
Questioned about the optimistic view in the face of current downturns, Mr Ginnivan said the purpose of the review was to go back to long-term trends to get a broader perspective for the future.
``So, we have looked at a whole range of scenarios and the majority of those showed there was opportunity for a viable dairy industry of significance in the region,'' he said.
``But it does mean that people will have to continue to learn and manage risks and look at alternative farming systems.''
The report, Lower Murray-Darling Basin: the facts, the future is a preliminary response to Dairy Australia's inquiry into dairying in the lower Murray-Darling Basin, a process of information collection, analysis, engagement and independent assessment with the community of the basin that took place in 2009.
Mr Ginnivan said the report would inform policy making and the on-going strategies of all those with an interest in the lower Murray-Darling Basin.
He said despite climate variability, the lowest ever recorded inflows, drastically reduced irrigation water allocations, emergent policies on water availability and increased farm debt, a number of dairy farms in the region had generated competitive rates of return during the past decade.
Accurate and timely pricing information is important for efficient water market function, and allows dairy farmers to make better informed decisions about their water requirements and market participation.
Murray Dairy chairman and Ardmona farmer Jeff Odgers said that in coping with the challenges of the past decade, the region's farming systems _ the bedrock of the supply chain _ had necessarily become more complex and challenging.
``Farmers have had to up-skill in order to successfully manage price volatility and on-going limited water availability,'' he said.
``As a result, farming systems are now more complex, but they are also more flexible and make risk manageable.''