New Zealand National Agricultural Fieldays scholar Thomas Macdonald has just issued findings from a survey he conducted on Waikato dairy farmers, determining how much they have invested in effluent management and compliant farm systems.
While effluent loss and its contribution to environmental degradation is well understood, Macdonald said his work was motivated by a lack of linkage between that understanding and the actual farm cost to meet Waikato Regional Council compliance requirements.
“I campaigned for the scholarship on grounds that we needed to have a clearer understanding of the economics behind this compliance and what farm systems were going to be more efficient under regulation, a piece of work that was missing up until now,” he said.
The $17,000 Fieldays scholarship enabled him to survey 50 farmers that represented the region’s cross-section of dairy operators in terms of farm size and operation intensity. He was also helped in the past two years of his study with a $4000 grant from Ballance.
His survey work determined that the average cost of installing compliant effluent management systems was $1.02/kg milksolids (MS), or $1490/ha for the region.
The average size of the farms was 107ha milking on average 353 cows, and closely represented the region’s actual average farm size of 112ha recorded by LIC.
“It is very much a back-of-envelope calculation, but with an average per farm cost of $138,000 a farm, we are looking at about $400 million of investment in the region recently in getting compliant farm systems in place.”
Macdonald has had first-hand contact on understanding compliance costs and issues, working as a dairy business manager for Landcorp in Taupo, while also studying towards his masters of management studies degree through the University of Waikato. His family also farm just north of Hamilton at Gordonton.
His survey work indicated that “medium input” farm systems, as most in the Waikato would be classified, become stuck with sub-optimal economics trying to meet effluent compliance standards.
These farms face an average cost of $167,000 to comply, more than double what those farms on “low” input systems face.
“These properties really fall into a difficult position where the marginal discharge of effluent and nitrogen is greater than the marginal additional milksolids it creates. For low-input farmers, the investment does not require that much to comply, while high-input operators have significantly greater milksolids over which to spread their higher infrastructure investment.”
Similarly larger farms, or those more than 150ha in Waikato, also had a greater asset base over which to spread their investment, making it almost half the average farm size cost.
Macdonald said this supported anecdotal evidence that smaller farms in the region were being folded into larger neighbouring operations, rather than the owner incurring significant costs to update their effluent systems.
His work also delves into the attitudes and perceptions of the farmers surveyed towards the sensitive issue of environmental compliance.
“It was pretty apparent one of the biggest areas of concern was farmers’ uncertainty with respect to compliance regulation. This was particularly around not knowing just how long their ‘compliant’ system would be compliant for, and when it would require another upgrade.”
He cited the need now for effluent ponds to be lined, after farmers being told earlier that lining was not required.
“They are putting this investment on the line, with no guarantee about how long it will be valid for.”
He said there was a recognition among farmers that “the costs to our business will be greater if we do nothing” and that exponential gains in the science underpinning the regulation have been made.
They were receptive to a type of fixed-term compliance certificate that would at least give some tenure to how long their systems were legal under council rules.
Perhaps surprisingly the survey indicated farmers generally found council staff helpful and constructive over compliance issues.
Macdonald said he was surprised only 44% of farmer respondents knew what the nitrogen losses were off their farms, despite efforts to improve understanding through Fonterra’s communications on that issue.
He also acknowledged that despite being the country’s largest dairying region, the Waikato lagged behind regions like Canterbury and Manawatu in getting to grips with the numbers on nutrient losses and limits farmers in those regions have on hand.
“I think, too, there has not been as much focus on diffuse nitrogen losses in the region; we have dealt with effluent losses from feedpads and dairies, but that is not the whole issue.”
Other work he has conducted suggests a lower stocking rate may be the first solution for many operators, and that evidence is increasingly supported by other industry research.
Macdonald said the survey provided a baseline for future discussion still to come on nitrogen loss limits.
