As the scope of farmers’ response to the M bovis incursion becomes clear, BNZ chief economist Doug Steele warned individual farm incomes will be hit by higher costs but longer term New Zealand’s dairy farming industry is changing and will become a more costly system.
“It is pretty clear to say the impact will be negative. The question is by how much?”
Farmers will have to develop new wintering and grazing systems and either grow or buy-in feed to lower the risk of contracting M bovis.
The planned cull of 152,000 cattle will reduce the combined beef and dairy herds by about 1.5% but the impact of lower milk production is unlikely to be nationally significant for the country’s accounts.
A possible consequence could be a rise in sheep numbers or at least a slow in the decline as dry stock farmers reduce the risk of contracting the disease by opting out of beef herds or beef finishing.
Real Estate Institute rural spokesman Brian Peacocke said interest in runoff blocks is pronounced in Southland but there is also renewed interest in Otago and Canterbury.
But few properties are available because any suitable has been bought.
“I get the feeling that farmers are looking for properties that can either carry replacements or alternatively be a self-contained operation so they can, therefore, avoid cross-infection or risk of infection from M bovis.”
Interest in runoff blocks was subdued until recently but evidence showed that trend reversing in the South Island.
Groups of large-scale dairy farmers are banding together to buy suitably sized farms that can be used as runoff or support blocks for several properties.
Peacock said integral to this is faith, trust and confidence in the biosecurity measures implemented by the shareholders on their milking platforms.
“They are pretty much people who have faith in one another in terms of hygiene.”
Such purchases by multiple investors were more common until the milk price fell but re-emerging in response to M bovis.
Southern Wide Real Estate rural managing director Dallas Lucas from Invercargill said southern farmers are looking to keep more control over their herds and one option is to buy runoff blocks, leading to increased interest.
“The availability of blocks is quietly reducing and tightening. More are being sold than coming on the market,” he said.
The arrival of M bovis was a factor in the interest but the high milk price has also spurred demand.
Dairy farm sales have picked up in recent months and buyers are recruiting vets to monitor management of the property in the period leading up to settlement to minimise the risk of M bovis infection, he said.
The M bovis outbreak had tempered interest in property purchases from non-farming investors with demand weighted towards practising farmers.
Agribusiness Consultants dairy farm management consultant Jolene Germann of Invercargill said the timing of the outbreak left little opportunity for farmers to adjust their plans for this winter but graziers have responded.
The arrival and departure of herds has been staggered so trucks and reception areas can be disinfected, feeding patterns adjusted to keep space between herds and boundaries double fenced.
Germann said farmers are considering more significant changes for next season to reduce the infection risk.
While that includes buying supporting land or wintering on the home farm they are also looking to use graziers who winter only one herd.
So graziers who take only one herd for wintering could prove valuable.
Baker Ag consultant Chris Lewis said dairy farmers regularly look at the merits of grazing off properties and financially it is more economical to lease than to buy.
