The dairy industry's biggest event kicked off in Hobart on Thursday

Even for those in Tasmania, where milk output has been soaring, your morning cereal, or even the occasional guilty milkshake, now costs a lot more than it did a year ago.

The Australian Bureau of Statistics consumer price index data released in December put food inflation for that quarter at an annualised increase of over 9 per cent, but for dairy products, it was a much higher 14 per cent - the biggest increase on record.

If there were any place to seek an explanation for this, it would be the Australian Dairy Conference, the national industry's biggest annual event, which kicked off in Hobart on Thursday.

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It was the ADC's first time in the island state, which has defied a national trend of plummeting milk production in recent years.

While national output has fallen by about a third in the past 20 years, Tasmania is one of the only regions in the country where dairy output has expanded. Despite its small population, the state's share of national milk production is now at 10 per cent.

Among the reasons for that has been the lower farm land values in the state, which, along with Tasmania's ample rainfall, attracted new farmers in.

One of those was young Dutch immigrant, Jeffrey Gijsbers, who came to Tasmania about a decade ago pursuing a dream of owning a dairy farm.

"If I had stayed in the Netherlands, I would never have been able to afford to buy a farm," he said on the sidelines of the conference on Thursday.

Arriving with no English-language skills and few farming skills, 10 years later, he is about to begin life with his wife farming 650 dairy cows on their own property in Circular Head.

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Cressy farmers Rob and George Rigney similarly arrived in dairy without much experience.

They took over the family's crop farm in 2008, and made the decision to convert it to a dairy farming business, taking advantage of an irrigation scheme that brought water from Poatina to their area.

"We invested in water and worked out how we could best utilise it, it was a challenge, we had to learn the ropes of the new industry along the way," George said.

These included keeping skilled labour on the farm, and dealing with the sometimes low farmgate milk prices over the past decade.

George said dairy farming in Tasmania was easier than in Victoria because of the reduced need for purchasing feed and the lower cost of water.

Tasmanian farmers have benefited from higher farm gate milk prices in the past year, but they have fallen back in recent months.

Unfortunately for the rest of us milk drinkers, lower farm gate prices probably won't lead to cheaper milk at the supermarket, said Michael Harvey, a food analyst with Rabobank.

Speaking on the sidelines of the conference, he said dairy products at the supermarket increased by a record 14 per cent last year.

And while the we are near the peak of this inflationary period, he didn't think it would result in prices going down.

For now, we'll have to cope with slightly less soggy bowls of Weet-Bix and cornflakes.

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