The push for continued dairy farm growth and expansion may not be a desirable path for New Zealand or NZ farmers. The concept that growth always leads to a better outcome is definitely misleading and probably incorrect. Those advocating a steady growth of say 4% in my view don’t fully understand what they are advocating. They don’t understand the "Exponential Function" a very simple but badly understood piece of arithmetic. If you are an advocate of the dairy industry growing, watch this very important video. Watch this YouTube http://www.youtube.com/watch?v=F-QA2rkpBSY Those people & industry groups advocating a steady growth of 4% in the dairy industry are in fact advocating a doubling of output in the next 17.5 years. Doubling time = 70 divided by 4% growth per year. That could mean a doubling of the number of cows too. Is that what we either mean or want? The recent film seen in NZ called “Growth Busters” also seriously questioned the concept that continued growth also led to either better economic or better environmental outcomes http://www.growthbusters.org/about-2/buy-the-film/ So why are we advocating continued growth in the dairy industry in NZ. Part of the reason is clearly that all New Zealanders gain from a strong profitable dairy industry but is that a reason to advocate further growth. Are we now confusing growth with profit.
What is required in NZ is a greater focus on smarter Farm Business Management practices and cost control to increase the profitability & the well-being of farming families & hopefully all New Zealanders will benefit. Dairy farmers are now faced with a lower farm gate milk price and possibly a period of instability both in costs & income. Dairy farm businesses will be vulnerable & must show resilience. Few we are told have greatly reduced on farm debt during the past two years. So the smarter businesses will need to reduce operating costs to maintain profitability. Expansion if you are not already highly profitable, if you don't know your costs(per litre or per kg MS), if you have excessive debt or if you don't have a clear precise business plan is outright dangerous. We have plenty promoting the upside opportunities but few talking about the downside risks. At an industry level a call for continued growth means each farm increasing output or more farms being converted to dairying. Continued growth in output can be achieved in two different ways, either with greater inputs (cows, purchased feed or fertilizer) or with less inputs i.e. extracting greater efficiency from the resources currently being used.(pasture consumption & production or feed efficiency use by genetically superior cows).
There is a limit to dairying growth in NZ. Where is that limit & how will we know what that limit is? Growth is limited with a fixed finite physical environmental resource. New Zealand is a very small country with wonderful pristine natural resources but they are not inexhaustible. Here I’m talking about good quality land, water, soil carbon & land capability. Historically there are very good reasons why some farms & some land has not been farmed for dairying. Simply adding irrigation water or farm tracks doesn’t necessarily change the soil capabilities. I would argue that few long term irrigation schemes around the world have in the long term either been successful or not been environmentally damaging. Some like in California are now desperately short of available water. In Marlborough there is no more available water for additional dairy farms.
It is clear that dairy cow intensity (numbers of dairy cows & stocking rates) is linked to nitrate levels & nitrate leaching. I’m not sure we fully understand this relationship with regard to NZ river & stream water quality. The maps seem to indicate a close relationship i.e. the higher nitrate levels are where the higher dairy cow densities exist. So if this is the case now how can we continue to grow numbers of dairy cows without environmental damage? One possible answer is through better on farm management & technical scientific research break-throughs that will reduce the impact & mitigate the damage. Personally I am concerned that environmental research will not deliver any short term silver bullet answers. The problems are complex & not fully understood yet. It is not easy to separate the impact of farming from the impact of a higher urban population & the impact of towns & cities on the environment. If NZ is to manage & improve the environment everyone in the community must contribute. Is the change in water quality in NZ an “exponential function” of changes that have already happened to dairy cow numbers & practices? (described by Prof Al Bartlett in the video….see earlier in the blog)
There seems to me an unhealthy push to increase per cow production in NZ. There is very good evidence of “Systems creep”. By that I mean farmers moving from Systems 1 & 2 (low input systems) to higher input systems 3, 4 & 5. Why is this happening? Is it peer group driven or debt driven? Often farmers seem unaware they have quietly moved into a more intense system. Per cow production on dairy farms is very rarely related to profitability. This is true on any pasture based dairy farm in the world. NZ is losing the competitive edge of being the lowest cost producer of milk. NZ is no longer the lowest cost producer of milk & we are rapidly becoming like other dairying nations. We seem to be hell bent increasing per cow production. Ask yourself does NZ have a competitive advantage in grain feeding or PKE? No we have a competitive advantage producing pasture. Why are we not concentrating on our competitive strengths & low input simple pasture systems?
Time for a strategic rethink? Time to carefully rethink the direction you are driving your dairy farm business. Time to rethink profitability!What really is the best option for NZ?
I think the dairying growth strategy might be flawed.What do you think?
Tom Phillips proudly a Kiwi. I'm based at the New Centre of Excellence in Farm Business Management, Massey University, New Zealand.The Centre is a joint project of both Massey & Lincoln Universities. International Low Cost Pasture based Dairy Industry Consultant has worked in New Zealand, Australia, Taiwan, United Kingdom, Ireland & France.Expert in grazing management & dairy farm business management,Onfarm Discussion Group facilitation & training.
I am a strong advocate for pasture based dairy farming partly because it is environmentally & animal friendly with a low carbon footprint but also it creates a profitable strong business which is family friendly.