This could suggest the work is largely a waste of time, but I believe this is wrong.
The trial’s results could be of considerable value in charting the way ahead in the dairy industry.
New Zealand dairy farmers were traditionally pastoral, with our major advantage our clover-based pastures which produced high quality animal feed virtually all year round. We harvested the pastures at no cost with the grazing animal. The resulting products underwent minimal processing, being shipped mainly to the UK as bulk cheese and butter.
This gave us, in the 1950s and early 1960s, one of the best standards of living in the world, as well as a considerable degree of complacency. This was shattered in the 1970s when the United Kingdom decided the future lay in Europe, and joined the European Common Market.
The need for product diversification, and adding value also, in my opinion started the movement away from just thinking of ourselves as grassland farmers.
The assumption was if your pastures were performing optimally, everything else would fall into place.
In the UK, discussion centred on stock management, with pastures receiving scant attention, although in my opinion many of them were being appallingly managed.
Discussion was on cow condition and change, amount, quality and cost of supplementary feeding, animal health, milking plant and practices, stock housing and feeding systems.
The thought of working cattle to control poorer quality pasture growth would be a complete anathema to these people – they were truly livestock farmers.
That our thinking has now become more focused on stock management over the years is a good thing. That the emphasis has come off pasture – which is still our strength – is not.
The last 40 years have seen big changes. Intensification is the operative word, as typified by stocking rates. Forty years ago the target was generally 2.5 cows/ ha, now it’s generally four, and today’s cows operate at a higher level of feed consumption.
The intensification has come from a huge increase in the application of urea to produce more out of season grass, and a massive introduction of bought-in feeds – principally palm kernel – as well as genetically improved animals and plants, and better and more sophisticated management systems and practices.
The dairy industry is recognised as the main driver of the economy, and there’s a widespread belief that it will continue to enjoy ever-increasing prices and profits.
This should be questioned, as it flies in the face of history and reality.
There were three major occurrences in 2013 of profound significance to the dairy industry;
• Growing affluence in China led to burgeoning demand for dairy products, which combined with static international production resulted in record prices.
• The Fonterra botulism fiasco.
• The release of the report from the Parliamentary Commissioner for the Environment, Jan Wright, on the impact of intensive dairying on the nation’s waterways.
The gains in China have been spectacular, but at what cost?
Smog-filled skies
Horror pictures of urban congestion, smog-filled skies, virtually unbreathable air and waterways that amount to open sewers make China, by our standards, practically unlivable. In pursuit of the almighty dollar, the Chinese have sabotaged their home environment.
We should not allow them to do the same to ours by trying to meet an insatiable demand for dairy products at any cost, as the commissioner’s report warns could happen.
The high rate of investment in NZ dairying appears to be driven by the assumption that Chinese economic expansion will continue unabated, and that the high prices and strong demand for our products in that market are permanent. Anyone with this belief should take note of philosopher George Santayana’s observation that those who cannot remember the past are condemned to repeat it.
Prosperity growth in China must inevitably decline as no growth can continue unchecked indefinitely. More importantly, the Chinese are becoming increasingly aware of the degradation of their environment and are taking active steps to alleviate it.
This will require a massive shift of resources within the economy and a switch to more expensive energy sources, which will detract from consumer spending. However, the big factor is demand. International prices for dairy products have always been cyclic, as supply and demand often get out of kilter and in times of oversupply prices drop.
If the Europeans decided to go for the Asian market and take the brakes off their dairy production the supply deficiency would rapidly disappear and prices would drop. A similar scenario exists in the United States.
There is another factor here. Look at the features of our intensification efforts; increased nitrogen usage, a heavy reliance on bought-in feed, and increasing use of expensive housing and feeding systems.
This is definitely going away from our traditional strength and advantage in grassland farming – the efficient conversion of grass/clover pasture to animal products.
Intensification is leading to the adoption of northern hemisphere farming systems. We cannot compete with them on their terms. They are industrial economies. They produce and operate machinery and structures much cheaper than we can. Their bought-in feed costs are lower. Competing on a level playing field we will lose.
We need look no further than the kiwifruit industry. In its early days the fruit was in very limited supply and fetched astronomical prices. The income was very appealing so there was a scramble to get into the crop, with many syndicates investing. Intensification became the name of the game with every effort made to increase production – excessive chemical and fertiliser use, high labour inputs and high cost support structures.
Then the bubble burst. The vast quantity of new plantings, nationally and internationally, came on-stream with a rush and kiwifruit became just another commodity.
Those with debt servicing went to the wall. Those remaining, the more established growers, found that by adopting less intensive practices they could operate on about half their previous operating costs with little reduction in total yield, and survived.
Spin doctoring
No amount of spin doctoring can disguise the fact that the botulism scare introduced a very real risk to the industry – and the economy as a whole.
I suspect, like many other New Zealanders, if I am shopping and select a food item with Product of China on the label I quietly put it back, irrespective of its price. Put the boot on the other foot and visualise Chinese shoppers rejecting items with Product of NZ on them. Our markets would become dependent on third world countries – less sophisticated and fussy, but also less able to pay.
Asia presents a much bigger threat to our biosecurity than our more traditional trading partners. The huge amount of imported palm kernel certainly carries risk, and given the level of bribery and corruption in Asian countries one should not be too optimistic about any point of origin quality assurance.
The introduction of foot and mouth disease, for example, would cripple the dairy industry, and indeed the whole economy. Past governmental penny-pinching and cutbacks in biosecurity are nothing short of scandalous.
If anyone thinks the Chinese will give us preferential treatment if the terms of trade there move against us, they should get a job writing Tui ads.
Exacerbation
The Commissioner for the Environment’s report clearly identifies the leaching of nutrients from cows’ urine into the waterways as a major problem exacerbated by the much higher stocking rates arising from intensive dairying. While the Clean Streams Accord attempts to address the issues it is most unlikely to be the complete answer.
It has been suggested that the way forward is to really intensify and have cows standing off on platforms for all or most of the time, with their dung and urine being collected and stored and then returned to the paddocks in a controlled manner. While this could solve the problem, the cost of setting up and operating the system would be horrendous. This idea would certainly put us very firmly in the northern hemisphere farming camp.
Environmental degradation is going to be one of the biggest challenges facing the dairy industry over the next few years. It could well be that in attempting to alleviate the problem, controls and restrictions are introduced that will make intensification even more difficult and costly in which case the work at the Stratford Demonstration Farm could prove very valuable in showing low-cost systems can be economically competitive and much more environmentally friendly.
Many years ago I developed the theory, somewhat tongue in cheek, that if you wanted to tell the future always predict disaster. The rationale was that if you are right you will gain the reputation of being very wise and farseeing, while if you are wrong everyone will be so happy they will have forgotten all about it.
So I make the following predictions, fairly much with my tongue in the central position.
The main driver behind the push to intensification is the price of land. People want to get into the goldmine that dairying is perceived to be. To service the debt incurred production has to be intensified. However, at some future point prices will drop. Heavily indebted farms will be sold off. It won’t be profitable to buy in feed at 30-40c/kg drymatter when quality pasture can be produced at 3-5c/ kg DM.
I would suggest that anyone dairy farming who can budget a viable operation at a $5/kg milksolids payout need have no fears for the future.
It would be reasonable to suggest a significant drop in payout could be of long-term benefit to the industry. It would engender an easier style of farming, have profound effects on environmental and economic sustainability, decrease biosecurity risks and bring the price of land within reach of a new generation of farmers.
Brian Hockings is a member of the Stratford Demonstration Farm’s management committee.
