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Keith Woodford says the key issue for many dairy farmers now is survival with NZ farmers needing to wait out European dairy restructuring

Rural News
Keith Woodford says the key issue for many dairy farmers now is survival with NZ farmers needing to wait out European dairy restructuring

By Keith Woodford*

In recent weeks the short term dairy outlook has turned from bad to awful. Fonterra’s recently revised milksolids price estimate of $4.15 for the current 1015/16 season has already been overtaken by events, and is once again looking decidedly optimistic.

 I now see a figure of about $3.90 as being more likely, but still with plus or minus 40c around that. Even more important, no longer can we ignore the likelihood that dairy prices are going to stay low for at least the first half of the 2016/17 dairy season, and possibly for all of that season.

Most but not all of the farmers I have contact with are going to come through relatively unscathed. But that is not the case for those who have both high costs of production and high debt.  We are now facing a situation which New Zealand farmers have not faced since the 1980s.

The key issue is now survival. And the focus of farmers has to be on finding the right strategy the assist with their own individual situation. There is no one strategy that applies across all farms.

It is easy to blame others for the situation we are in. Increasingly, the bad guys are seen to be the European and American farmers who are supposedly subsidised, or the Chinese who are supposedly inconsistent in their buying behaviours.  Well, we need to get over using others as the fall guys.

The reality is that European farmers get very substantial support for environmental protection measures but this support is decoupled from production and milk prices. More importantly, it is WTO-compliant and we have no leverage to change those policies. To the extent our leaders choose to bang the table on such issues, then it is essentially just grandstanding for our own local New Zealand constituency.

Similarly, the notion that American dairy farmers receive substantial subsidies is largely a myth. Once again, the US would seem to be WTO compliant in relation to dairy support. The key so-called subsidy is a disaster insurance program. Anything beyond disaster level insurance and farmers have to buy into it. Many of them have not done so given the cost thereof.

As for the Chinese, well, it would be nice if there was more transparency as to what is happening over there. But the bottom line is that apart from 2013/14 when China’s own industry was in turmoil from local shortages, and the subsequent import step-down when those issues were resolved, the overall pattern remains one of onwards and upwards.

If we want to find the most important causes for the downturn then we first have to look at global geo-politics. The Russian ban on dairy imports from Europe was in response to European and American financial sanctions and trade embargoes imposed on Russia as so-called punishment for events in Ukraine.

The major downturn in oil prices also links into global politics. It is just unfortunate that the oil producing countries tend to be the countries that purchase our whole milk powder. So currently they are out of the market.

Whereas both of these factors were unpredictable, there is a third key factor which some people did recognise as a possibility. This factor was and is that the removal of milk quotas in Europe would  unleash entrepreneurial enthusiasm amongst some European farmers.

We all knew that production deregulation in Europe was coming, but there was no consensus as to what the market consequence would be.  Well, now we know.

In the Netherlands, some farmers have figured out that their marginal costs are less than the marginal returns, and so they have increased production. Overall, milk production in the Netherlands is up 9% since quotas came off in April.

In Ireland, farmers also thought they saw economic opportunity and have increased their production a remarkable 16%. But in most other parts of northern Europe production is also up, including the big producing countries of Germany, France and the UK.

My estimate is that it will be at least April before European production stabilises on a same-month basis and also year-on-year basis. Whether we will see declines thereafter is debatable. Some farmers with low marginal costs will continue to increase their production while eventually some smaller farmers will decide to get out of dairy altogether.  But the timing is unknown.

Currently we are still at a very early stage of major European dairy industry restructuring that the removal of quotas has unleashed. There is turmoil ahead for European dairy.

Here in New Zealand, our industry has always argued for deregulation of both the European and Canadian dairy industries in the naïve belief we would somehow benefit. Well, in Europe it is occurring and we are now reaping the bitter harvest thereof.

Looking beyond the European restructuring, the reality is that there are always going to be unexpected global events, some of which stimulate demand for commodities and some of which depress that demand.  At the moment we are in a big trough.

What has been poorly understood in New Zealand is that whole milk powder and skim milk powder are the most volatile of all dairy products. Echoing that Longfellow nursery rhyme about the girl with the curl on her forehead, when milk powder is good it is very good indeed and when it is bad it is horrid.

Back in the days when I was lecturing at Lincoln, I always used to say to farm management students that some time in their career they would face a big downturn. This was regardless of whether they were producing milk, lamb or beef. Neither I nor anyone else could tell them when that would be, so it was a case of following the scout motto of ‘be prepared’.  Of course that is easier said than done. In these matters, timing of major investments is crucial.

Given the situation we are now in, it is no good crying over spilled milk.  For those who are in difficulty, the focus has to be on finding a path to survival.

The starting point is to recognise that it is the banks who will make the key decision as to who survives and who fails.  So all farmers needs to be presenting their banks with their survival strategies.  Banks need to see that there is indeed a plan.

It is not the banks job to produce that plan and they will not do so. The only decisions they will make are whether or not to provide ongoing finance.

Fortunately, it is not in banks’ own interest to put the squeeze on productive farmers, as they do not want their own asset protection values to fall. We all have to hope that the overseas-based CEOs and governance boards of our major banks will, in that regard, get it right.

The second point is that cash is king.  What does a specific reduction in cost do to income? Most farmers have already made the easy cost reductions.

The third point is that now is the time to be setting up for next season. In some cases that will mean selling cull cows early to ensure more feed available for wintering cows on the home farm. In many other cases it will mean wintering less cows and going into next season with lower numbers.

One of the fascinating outcomes from this current year is that despite cow numbers being down markedly, overall seasonal production is looking like being remarkably close to last season. This is despite the poor start to spring. There have to be some lessons in there.

I continue to hear poor advice in relation to supplementary feed. We all know that pasture is the lowest cost feed – as long as the fixed costs of land ownership are not included.  But pasture does not always grow when we need it.

I know of one large farming group that works on the basis of feeding only half the calculated deficit.  That can and does work in some circumstances and for short periods. But hungry cows always find a way to penalise their owners.  In broad terms, for every 7kg of feed deficit, a cow either produces 1kg less milksolids, or loses 2kg of liveweight, or some combination thereof.

Every farmer needs to work out for his or her own situation what are the best methods of dealing with a feed deficit. The cheapest way to produce additional feed is often to apply nitrogen fertiliser, but of course there are limits.  In other cases, there is definitely a place for the sometimes maligned PKE. Or it may be best to take another look at cow numbers.

The key point is that reducing feed in isolation from other system changes is a recipe for disaster.

Also, many farmers and rural professionals are prisoners to the notion that a low input system will be a low cost system.  The evidence I have seen over the years shows very clearly that most of the differences in cost of production are due to factors other than system intensity.

My concluding message is to emphasise that right now is the time to get plans in place for next season.  And it is much better to plan on the assumption that it is indeed going to be a very tough year, and then be proven wrong, than to assume the reverse and be proven wrong.

In particular, don’t be mislaid by early estimates of the payout for 2016/17. Quite simply, no one can predict prices for 2016/17 with any confidence. All we can say it that it is more than possible that the early season payments will be distressingly low, and that the view beyond there is totally foggy. That is the nature of commodity markets.


Keith Woodford is Honorary Professor of Agri-Food Systems at Lincoln University. He combines this with project and consulting work in agri-food systems. His archived writings are available at http://keithwoodford.wordpress.com

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99 Comments

This is onw of the best items I have seen on the topic; much more realistic than the usual 'prices will recover soon' narrative that is usually churned out.

Of course the dairy sector has no long term future because it is dependent on rapidly depleting fossil fuels, rapidly vanishing climate stability and rapidly depleting phosphate (which is dependent on fossil fuels for extraction, processing and transport).

'Nobody' likes to look more than a year ahead these days. And some not even that far ahead.

We will have to wait to see how the current round of financial-economic meltdown pans out to know whether there will be ANY overseas buyers a few months from now.

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There is something seriously wrong with the NZ economy when a dairy farmer would be much better financially to sell up and put all of his money into existing houses in Auckland.
He would receive 25% tax free capital gain, at least 5% rental return and he would not have to put in any hard work.
Existing houses do nothing for our economy whereas dairy is still one of our exporting backbones.
When we have this scenario, we are indeed heading into a downward spiral.

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So $35bn of debt, decades to come of freshwater and soil degradation, the destruction of rare ecologies - as in the Mackenzie Basin and the Southland wetlands - and all those championed expansionist and intensification strategies have created an industry in which 'the key issue now is survival'.

If this is not a model of abject failure, for farmers and for the wider New Zealand economy, I don't know what is. Perhaps, circumstances such as these will enable the emergence of new thinking and new leadership, with the courage to examine the premises on which this industry has been built, and establish a course towards genuine 21st century value.

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...yep, the riducled greens being proven correct, the so called business astute right being proved wrong. Who looks like the radical wacky brigade know?

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Who are the real wacky brigade? Reserve bankers, banks and corporates ( thinking they are farmers), the globalists, (JK included). The problems are just beginning for everyone.

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Well said.

It may well be a case of the Phoenix rising from the ashes of this dairy downturn but we have lost so much more than the livelihoods of the 'at risk' group of farmers.

In many cases, we have degraded our soils and waterways and the recovery will be long and slow. That is, unless another speculative bubble is created along the way.

In Gore Vidal's last interview he was asked for a final quote. His was, the four sweetest words ever uttered ... "I told you so!"

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That's a damn harsh critique of dairying workingman......would you rather have people manually pulling the house cow teet twice a day? Do hope you don't have one item in your ownership that is imported as that would make you a hypocrite now wouldn't it !!!!

The world economies are in chaos and it is our farming communities who like usual do all the suffering mentally, physically and emotionally and then have to suffer the crap dished out by people who have no skin in the game and have most likely never run a business in their entire life. The abject failure is Government spending and debts and bureaucrats who skimmed off too much cream. It is far too easy for armchair critics to rush their fingers over keyboards dishing up tripe on their perceptions.......no one wants to mention all the bleeding bureaucrats who suck a living of farming.......expansionist and intensification strategies by parasites who might have taken too much off their host......and you waffle on about genuine 21st century values......go take your teeth out you'll get more in your mouth......you can only bleed em dry once!!

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While I agree there is a human factor to the decline in milk prices and it's effect's on the farmers and the farming community - it was not unforeseeable that there would be a drop in milk prices at some point - the further you are into the price cycle the more cautious you should become. As someone else has noted - people don't seem to look that far ahead. Banks as far as I can tell don't mind lending you the money so long as they think they will get their money back - even if you loose all of yours...

There is no problem with commodities - there are lots of them and some one has to produce them - humans don't run very well on water only. Be it grain, meat or milk - some one has to produce these food products. The problem is the price of the land (which is the main capital input to most farming ). If land prices hadn't appreciated so much in the past few years - and farmers had refused to pay exorbitant land prices - the good years would have allowed farmers to weather the bad years. My father was fortunate to have been a farmer during the Korean War wool boom of the early 50's (according to Wikipedia one of the greatest economic booms in NZ history) - he paid off his farm from the money he received, he was prudent, he under stocked his farm and when he sold in the early 80's until his death would receive calls from people who took over the farm, when it was subsequently sold, by the next farmer asking how to mange the land. He didn't take unnecessary risks - I think this mainly came from growing up during the depression and the war - and even in his old age - he was prudent with his money , he didn't make big gains but he didn't loose money either - slow and steady growth. Same applies to all types of farming ( called organic growth).

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Too few people have read the story of the "Tortoise and the Hare".

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Badrobot - farmers do not budget on one years good prices or even last years prices. Most farmers whether they are dairy, sheep and beef etc still run 10 year averages through their budget programmes as an aside measure.....so I think they are a very cautious bunch of people already...........farmers are very good at slashing spending immediately when prices change. It is the new entrants that are going to do the most suffering as they do not have the benefit of much trading time under their belt to cushion the blow.

The 1950's NZ farming scene was very different to today.....and the one thing that most people forget is there was a world-wide population boom at the same time and farming didn't have the massive bureaucracy sucking the life out of it either. One only has to go back and look over the financial records of farmers at the time and the overheads are incredibly low.

Your father has had the luck of timing on his side....being in the right era at the right time is the luck of one's birth time.......if he had been farming 20 years earlier he would have hit the depression or 30 years later he would have hit the 1980's.........
https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0…

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Many farms need much more than the average payout to survive.
I am in the Waikato, and I would say from talking to farmers that maybe 10% need in excess of $6 to break even, and 30% would need somewhere between $5 and $6.
In the South island that figure would be higher again for their higher cost of production.

I know some large Waikato farms are planning to go back to drystock at the end of this season, their interest bills might still kill them, but at least they won't be losing $2+/kg in running costs.

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Where are they planning to get their stock from Just a Farmer? Things are getting pretty heated in the store stock market, not a lot in it.

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I am finding the same thing, just loving all the long dry grass blowing in the wind.
Still looking at the chart and hmmm..
http://finviz.com/futures_charts.ashx?t=LC&p=m1

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For some people they are planning to do a changeover period, keeping their bull calves (that will keep SAFE happy), and culling significant cow numbers.

I bet that as soon as they get bulls ready to kill, the beef market will have cooled and dairy might be picking up though. Chasing trends is often a recipe for disaster in farming but it goes to show the extent of the trouble quite a few dairy farmers are in.
The main goal is to be able to present a profitable business plan to the bank to keep their support.

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In Southland MA cows have now dropped - absolute top stock $1600. IMO it is still too high. Young stock you can hardly give away. What are you hearing up there J A F?

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stories of people turning the power off when they are out of the house.
- minding every penny

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Care to explain 'the destruction of rare ecologies - as in ............. the Southland wetlands', workingman? The government drained very significant land areas.

Then we turn to the Cinderella of Southland, the disappearing dairy cow. I must admit that in this case the potential is unpredictable, due mainly to the human factor. After all, Southland has consistently held the South Island record for production per cow.

Government land development should be concentrated where most capital is needed and where returns may be slower.

http://www.grassland.org.nz/publications/nzgrassland_publication_1820.p…

The Waituna Lagoon is currently producing excellent fish, in size and health, ruppia (also known as weed to boaties ;-) ) is doing so well it is near impossible to get around in a boat on parts of the lagoon now. :-)

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Sure, CO. Eg, this from http://robertguyton.blogspot.co.nz/2012/06/farming-destroys-wetlands.ht…

'If you live in Southland you'll probably know that much of the network of wetlands that once graced the plains, are gone. Most of the wetlands that served for millenia to protect the environment from scouring and flooding were drained by farmers as they sought to convert a vibrant mahi nga kai resource into production pasture. The consequences of that clearing has been devastating to many components of the broader environment; fish, birds and people, not to mention plants and untold trillions of smaller players.' Of course, I'm always happy to be corrected, but it's an example of the stories I've seen.

I should add that the article quoted features a landowner who (as quoted) "turned the dairy 'machine' from its path of wetland destruction and saved his wetland, Big Lagoon from ruination... Originally the lagoon covered an area of 17 hectares, but after major drainage efforts were made by dairy farmers in the early 1980's to expand grazing lands, all that remained in 2003 when he brought the property was a mudhole one hectare in size."

In three brief sentences from The Waituna Lagoon Guidelines (pdf online, Environment Southland, etc, Dec 2013): 'Waituna Lagoon is in an unstable ecological state and requires active management to improve its ecological condition and reduce the risk of further degradation. Waituna Lagoon currently exhibits symptoms of eutrophication that are consistent with a high risk of this highly valued system shifting to an algal-dominated state. These symptoms of eutrophication are commonly experienced in systems where intensive forms of agriculture dominate in the catchment, which is the case for Waituna.'

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DOC don't seem to be seeing your "destruction of rare ecologies" in Waituna. Given we have the largest conservation area in the OECD I think NZ is doing its bit. For every ha of dairy there is 4 ha of administered by DOC. Not a bad effort.

"Ecological guidelines for Waituna Lagoon specifies a recommended target of > 30-60% cover of
Ruppia spp. and other native macrophytes as a basis for an ecological health objective (LTG 2013).
During the 2014-2015 growth season this target was just achieved with a 30% lagoon-wide macrophyte cover, despite many sites supporting cover > 50%. However, given that a number of sites that did not support macrophyte cover during the February 2015 survey had been un-vegetated over several surveys, re-colonisation of these sites, from either the seedbank or from fragment dispersal, may take some time."

http://www.doc.govt.nz/Documents/conservation/land-and-freshwater/wetla…

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That 1:4 ratio is probably somewhat influenced by NZ topography?

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...and our low population density. We don't feature in the top 20 for % land area in mountains but we top the OECD for protected areas. So not a strong link. We just have a lot of protected areas. Nothing wrong with that but a lot of workingmans rhetoric - take the Southland wetlands for instance - doesn't stack up.

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Ah, Robert Guyton. ;-) That link wouldn't work for me. I get 'Sorry the page you are looking for in this blog does not exist'. Perhaps once Robert became a Regional Council Councillor he pulled it down?

The draining of land is a recurrent story throughout New Zealand - it isn't only in Southland. I grew up on the edge of a significant NI swampland that was drained while I was a kid. Nothing special about the draining of Southland swamps - from a national perspective.

Big Lagoon is a success story - as are many others too.
http://www.stuff.co.nz/southland-times/news/7149820/Tony-has-to-move-on…
A check of the QEII website will show that there are over 300 covenants in Southland and some of these will be on dairy farms. :-)

The current catchcry is for farmers riparian plantings/strips to become biodiversity corridors. Sometimes many small endeavours can cumulatively, be just as significant as one large endeavour. I am as proud of our neighbour fencing off his very small ad hoc stands of red tussock as I am of our more substantial QEII covenant.

There is now a Strategy and Action Plan for the Waituna. http://www.es.govt.nz/publications/plans/strategy-action-plan-for-waitu…

Waituna is a rather complex waterway as for it to be good for fishing it requires the lagoon to be opened to the sea so that sea run trout and flounder can enter it and nutrients flushed. The NIWA report (refer to 'profile's link) acknowledges the opening regime is important with their statement: Managing both the lagoon opening regime and nutrient loads entering into the lagoon from freshwater inputs is vital for ensuring the lagoon remains in a macrophyte dominated state.

Thanks to the sterling work of both Landcare Trust and DairyNZ there are now catchment care groups springing up throughout Southland. Communities are taking responsibility for 'their waterway(s)'. You won't hear a lot about them but they are out there quietly working on improving water quality.

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Thanks, CO. I appreciate there is much work going on in environmental support and remediation. However we start from a very low position and there is a generation of thought that simply does not get the economic and business imperatives of genuine environmental care.

We lack political understanding and leadership – to quote Judith Collins, possibly a future PM, 4th May 14: “I don’t like wetlands. They’re swamps”, and, “Go and find someone who actually does care about this, because I don’t.” It is not the wetlands that are the issue here (though these are invaluable); it is the blind, almost 19th century, disregard of environmental custodianship and husbandry.

And we appear to lack industry understanding and leadership – to quote Professor Woodford, 14th Nov 15: “Do not build ideas about what the world will pay premiums for based on New Zealand experiences. We think we are world famous for our clean green image. But we are only world famous in New Zealand.” In fact, almost the only thing people internationally know about New Zealand, rightly or wrongly, is that our country has a special natural environment (3mn visit us each year for just this reason).

The next wave of value, which is arriving in force right now, in everything from vehicles to aircraft and FMCG, is in products that are born in and convey environmental consideration. Everything not born in environmental consideration will remain in, or descend to, the lowest value markets.

Environmentalism is mainstream business thinking, and for very good reasons. New Zealand will either understand and respond to this challenge, in dairy and in its other product sectors, or it will slide inexorably into the bottom of the value basket – with immeasurably adverse consequences for our economy, environment and society.

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Thanks workingman. The Fonterra guideline of 3kgPKE/cow could be seen as a testing of the waters to see how suppliers would react to environmental considerations. Given the abysmal way in which it was communicated, it wasn't well received. Look to see these sorts of discussions take place in the co-ops over the next 18-24months. How we as farmers respond to the challenges will be the telling part.

Have you heard of this:

Three years ago DairyNZ started an annual Dairy Environmental Leaders Forum with the aim to build up to 1000 dairy environmental farming leaders. It won't happen overnight but it will happen. ;-) http://www.dairyatwork.co.nz/land-water/dairy-environment-leaders-forum…
http://www.dairyatwork.co.nz/land-water/environment-leaders/

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Workingman - so you gone from "destruction of rare ecologies - as in the Mackenzie Basin and the Southland wetlands" and "abject failure" above to "there is much work going on in environmental support and remediation". Perhaps lay off the rhetoric if you see so much work going on or perhaps broaden your research base before writing off entire industries.

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No rhetoric, Profile. I acknowledge the work that's going on (and we work to support it). But the facts remain. The destruction has happened and is continuing. We have less than 10% of our original wetlands remaining, and this percentage has been fast reduced via deeper drain digging and increased fertiliser inflow in recent years. What remains - among which five areas are listed as internationally significant - is in no safe state, although there are local successes.

I do not write off the entire industry. As I've commented often, New Zealand needs a prosperous and forward looking agriculture sector, including dairy. The abject failure is one of national policy - putting volume above value. This policy and the resulting status quo has no sustainable future, although influential others apparently believe it has.

Wetlands are one issue. The key point is this. New Zealand agri-products can only be differentiated - if they are to achieve any differentiation - via the premium given to environmental care, responsibility and sustainability. This is New Zealand's only available distinguishing value, and it is under increasing pressure. Just making stuff more cheaply than others, or making more of it than others, is no way to climb the value chain. - which we must do, for our national wellbeing.

It's worth asking ourselves - if we were consumers in any other country - why we would choose to buy New Zealand agri and hort products before those from another place. There aren't many reasons that don't involve re-examining the way we run things here.

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Workingman - Profile is a dairy factory farmer and an extreme climate change denier - I really don't think you need to justify yourself to the likes of him.

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Kotw - as I've said before you know nothing about me so don't try and pretend you do. Or are you having an Alinsky moment - personalise, isolate da da da. There is more to my life than cows includes a lot of conservation/humanitarian work. FYI In the big world some locations need cow housing for security and climatic reasons. The project referred to has cows with 24 hour vet care, cleaner water and better nutrition than the locals. And as for the the woefully treated, malnourished local cows, and people for that matter, don't get me started - our cows are not hard done by. What is better for the planet one healthy cow or five malnourished bags of bones? But at least the locals shortened lives are all in the utopia of eating 100% organically and being vaccine free. A true green paradise.

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Chuckle - a factory farmer trying to justify his occupation to himself - now that is amusing.

So richly ironic that you claim to do 'humanitarian' work when your major input into this site is climate change denialism. Just a tiny bit of conflict there..........

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If some conservation groups and probably, a number of commentators on this site, had their way NZ dairy would be barned. (factory farming). In order to save the environment is their usual argument

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o^O

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I love it how you are so caring because you believe in the runaway global warming hypothesis. I can tell you who doesn't care about it is people on less than $3 a day with no access to electricity and basic sanitation. Much more pressing needs at hand than computer model projections and carbon trading. I guess maybe you could give them all jobs on the global warming gravy train where they could just spend all day caring about fellow man?

Just out of interest how would you keep cows alive in adverse weather conditions without a barn? You should get on to it - organically of course - and make a fortune.

Ah snow that rare and exciting event that our children are just not going to know about...

http://tuoitrenews.vn/society/32979/2000-cattle-die-in-cold-weather-in-…

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Workingman you are selling your opinion not facts!!

You have glaring gaps in your information and opinions offered here......which makes me think you have a personal agenda based upon your perception. No one is stopping you from buying land, farming it the way you think best and finding your niche market for your products based upon your farming methods!!

Before you go slamming NZ farmers get your butt out of the country and go have a look at the rest of world,.........it is attitudes and opinions like you have shared here that are unsustainable and irresponsible........the biggest threat to national well-being is Government debts, out of control bureaucrats. leftist policies and failure to adhere to the NZ constitutional arrangement.........

The fastest growing food trend around the world (which is the biggest indication of what food people really want) is organics.......people don't want pesticides, herbicides. heavy metal contaminants in their food.........and I should add GE foods to that list........

I think you completely misunderstand the cultures of the people and countries NZ is exporting into.

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notaneconomist, I work internationally, and have international and New Zealand business interests. I'm aware of emerging business thought, or try to be. I bring back what I learn. My agenda is New Zealand prosperity.

Your mention of food trends - and organics as an example of environmentally considerate production - is precisely in line with my comments.

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If you work internationally then I would suggest you take some time and go and see what is happening beyond the hotels and city boundaries of the countries you visit........

The world has moved past organics.....people want nutrient dense foods.....and farming is responding to that issue......it is all about microbes and some people calling themselves environmentalists are hell bent on ensuring they destroy the life supporting necessities of healthy microbes......

If you want clean waterways then test for the residues from pesticides, herbicides and heavy metals.......it is these things which upset the biological balance of the microbes that are essential to health. Starving the good microbes is not a good environmental policy.

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five areas are listed as internationally significant

One of which is the Waituna Lagoon which was accepted as a Ramsar site due to migrant wading birds in 1976. The lagoon is no longer relevant to these birds as they now use Toe Toe Bay and Awarua Point. Why? Because these wading birds need mud foreshores which only happens when the lagoon is open to the sea and DoC has a policy of prioritising ruppia and therefore not wanting it open to the sea, so the birds have moved.

In 2008 DoC extended the site to include Toe Toe's and Awarua Bay. One could question if that was because the original mandate for the designation was no longer valid. After all you can lose Ramsar designations and be held accountable for showing it is still worthy of the designation.

Also one can question whether DoC manages this site within the Ramsar guidelines which state:
Section 4.2.3 Page 49 states “Maintenance of the ecological functioning of a wetland requires an integrated, catchment approach to management, incorporating the different uses and activities that are compatible with sustainability. Such management must take an interdisciplinary approach drawing upon the principles of biology, economics, policy and social services.

As someone who farms in such a catchment I could argue that they haven't. Ramsar not only values the ecological aspects of a site it also places a value on the catchment communities and their social and economic well being. Something many appear to conveniently ignore. As a note I would say that when it is a locals only discussion good work between all parties happen, it is when 'outsiders' come in that the problems arise.

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Interesting, CO, your observations regarding Ramsar and DoC, and locals versus outsiders. DoC are the 'outsiders'? I was at another of the Ramsar sites yesterday - Miranda on the Firth of Thames, managed by a local Trust. It appears to have a very uncertain future for its tens of thousands of seasonal and resident shorebirds, as mangroves close off the ancient shell (or 'chenier') banks. To quote from a booklet, 'Small chenier plains are rare, and Miranda is thought to be the finest example in the world'. Mangroves, fed by sedimentation and fertiliser flowing into the Firth, are radically changing the eco-system - although they, of course, provide support for other life. DoC, I'm aware, prioritise mangroves elsewhere. However, the major new concern is the likely impact of extensive fish farming in the Firth.

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Many DoC staff have never truly had to work collaboratively with the community. By that I mean they are used to working in the community with only like minded people and they struggle to work with people who may challenge their views. They are so focused on their own viewpoint that they don't realise there is stuff on the periphery that also needs to be considered. They now have partnership liaison people and this position in Southland has a person who is absolutely brilliant at bridging that gap.

The 'outsiders' are 'experts' who come in to the conversations ad hoc, expecting to have their opinions accepted as the only valid one, but who haven't engaged in building a relationship with anyone outside their own agency. That sort of behaviour doesn't go down well at intersectorial meetings.

At one meeting I attended with some other farmer members the meeting time had come round to 2hours. The other attendees said that as 2hrs were up we should close the meeting (the business at hand wasn't concluded) and reconvene another day. The farmers pointed out that we were they only ones around the table not being paid to attend the meetings and that our time was also valuable and as we were paying directly or indirectly for each and every one of them, we would not be attending a reconvened meeting when another 30mins should see it all sorted. Consequently the meeting carried on and within 20mins business was concluded and another meeting avoided. Farmers are used to looking at the problem, finding a solution and getting on with implementing it. One of the most frustrating things is to be sitting around a table with people who don't have the power to make a decision and it can take months before you get an answer from a particular agency as it has being handed up a chain of command to get an answer. We (farmers) took a case to one of the lead agencies for an Independant Chair. We were successful and after that meetings ran very efficiently. It does need to be said that the farmers around that table had a few more years on the clock than the other members and many years of experience on committees etc. ;-)
An example: In 2011 when the Waituna became news within 12months farmers had done sustainablility plans and spent >$1m dollars on environmental mitigation works with a total of around $3m planned. 4 years later (2015) DoC and iwi still hadn't decided what their values for the lagoon were. I understand Doc will release theirs this year and I'm not sure on iwi.

edit: Your Miranda comments are interesting.

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Acknowledged, CO, with thanks.

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To what extent is the NZ government subsidising farmers the same as EU farmers are subsidised?
Where could I get these figures, if they are available at all?
Turning farmers into environmentalist would be a win/win, and maybe we should be looking at that. There are certainly some wildlife success stories from the UK...

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You obviously need to look at facebook page Circular solutions, and the plethora of Biological farming pages get yourself educated.

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There is something seriously wrong with the NZ economy when a dairy farmer would be much better financially to sell up and put all of his money into existing houses in Auckland.
He would receive 25% tax free capital gain, at least 5% rental return and he would not have to put in any hard work.
Existing houses do nothing for our economy whereas dairy is still one of our exporting backbones.
When we have this scenario, we are indeed heading into a downward spiral.

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Local dairy farmer coaches boys cricket and rugby teams, like a lot of farmers. He was a regular assistant, now sole cricket coach, use to employ a relief milker. This season he's already cancelled a practice, and pushed the time back an hour. There's 200-300 a week he saves but takes outta someone else's pocket. Shame but the reality.

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The fall in all commodity prices everywhere is quite simply attributable to one thing and one thing only , and its called D E F L A T I O N.

Its far more insidious than inflation , because there are no known monetary tools to turn it around .

It is even worse for dairy farmers in NZ now that the EU has scrapped the milk production quota system , Europe is awash with milk which will find its way the China

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most RB around the world think Neg rates is the answer, looks like it just adds to the problem. what needs to happen is some hard news and supply needs to fall below demand, not going to happen while the weak get propped up

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Deflation can always be solved by printing money. In fact the best scenario possible would be the ability to print money and not cause inflation, the government could drop millions on everyone's doorstep, no one would need to work.

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I like your thinking!

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LOL I hope to be first in the queue for the free money printed , I need three houses in Auckland for my offspring , and I want to get in before everyone else gets their free millions

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"Here in New Zealand, our industry has always argued for deregulation of both the European and Canadian dairy industries in the naïve belief we would somehow benefit. Well, in Europe it is occurring and we are now reaping the bitter harvest thereof."

What a fascinating statement as we rush headlong into TPPA.

In NZ we often take for granted that we are the beneficiaries of restricted quota access to EU/US/ Chinese markets. I have often wondered when the free trade mantra is being pushed hard where the net gain to NZ inc is? We seem to be wanting our cake and eating it too....

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Shaggers, friends tell me that SFF Takapau plant is dropping the nigh shift, as the freezers are full. Have you heard anything? Doesn't look great for lamb prices.

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Interesting re prime range CO. They better have a logical explanation or they wont attract stock at any price. Last thing farmers need this year is to end up as unsecured creditors. I wonder if it is some fallout from overseas financial markets washing up here with the Chinese partners...?

In answer to your question Aj im not hearing any positive vibes what so ever. Normally the companies are all talk about in the medium term things look good ra de ra but not even being thrown that bone at present. A mate in the industry at the marketing end recons 2 to 3 years and only if overseas economies recover significantly.... I don't read a lot of optimism on that happening anytime soon!

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The Key/English biumvirate and its RBNZ lapdog have 'dropped' the dairy farmers in favour of o/seas property speculators. The damage has been done, and in the medium term is irreversible.
The OCR should have been reduced by now to 2% as the Aussies already have.; that would have given the farmers a little more money in their bank accounts. The obsessional goal has been a trophy
surplus the achievement of which comes with disproportionately huge bragging rights.

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Well actually I don't believe any of the rhetoric spouted above. Its not the Eruo's its not the Yanks its not the Asians that has caused this it is us.
Its our marketers, its our processors and its our sellers and our attitude to our product I believe that we are useless at promoting and leveraging our unique product. GET OVER YOUR COMMODITY DISEASE.
I have talked to people marketing in Asia in different products they say that Asia would take all that we have if they knew it was clean and grass fed and high quality.

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Agree, though not sure on all as we produce a lot of milk.

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Do we???

its only our perception of that we produce a lot of milk

Honestly we don't produce much of anything.
We need to take back our primary products and only sell finished products we would all prosper.
You imagine if we processed all of our own timber
All of our own beef into finished cuts
All of our milk to consumer packs
processed all of our own wool.
Processed all of our fish.

All of these products would be high value and are in high demand we are not delivering what our customers want a clean well made product from new Zealand.
Once it is processed as a product overseas it is no longer Made In NZ.

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A UK farming friend earns thirty thousand pounds a year just for counting and measuring trees on his farm. Takes about 3months (partime) work. If I was paid what they were I would definitely be more profitable than I am now. ;-)

http://farmersweekly.co.nz/article/subsidies-stall-recovery?p=7

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Farms subsidies are not as commonplace outside the EU as we Kiwis believe .

The Americans , Canadians , Aussies , Brazilans, Russians , Indians and South Africans and Argentinians DO NOT subsidize farm produce and only intervene in an absolute crisis such as drought or tempest

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Pretty sure American farmers are supported, in fact ethanol is a case in point to prove they are let alone all the tax breaks etc.

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Aussie govt to raise farmers interest free loan cap to $800,000. Is this not a form of subsidy, Boatman?

http://www.weeklytimesnow.com.au/news/politics/federal-governments-farm…

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Call it what you like

Any farmer who accepts such a loan is putting their head in a noose

The AU government is trying to stem the tide of farmers walking off the land

Last week Perth WA had 4 consecutive days over 44 degrees Celsius
Last year South Australia had 13 consecutive days above 40 degrees
Try farming that

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It is more the Aussie response to farmers hardship that was my point iconoclast. Australia is a hot country - the farmers in those areas know that. The heatwave of January 1896 is the biggest Australia has had. In January 1896 a savage blast “like a furnace” stretched across Australia from east to west and lasted for weeks. The death toll reached 437 people in the eastern states.
http://trove.nla.gov.au/ndp/del/article/64889112

The assistance isn't only for drought. A quick look of designated disasters show flooding and bushfires frequently qualify.
http://www.disasterassist.gov.au/Currentdisasters/Pages/default.aspx#WA

Son works at planting wheat each year for same family in WA. 3-4years ago they almost had to walk off their land. This year when he goes it will be to a complete suite of new machinery and extra lease land taking the planting area to over 7000ha. All done with only one tractor. Quite impressive really.

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A Q for farmers, roughly what per hectare is your return per annum? I have just seen a claim its $1m/hectare and I am going that sounds wrong. --edit-- the numbers I see are more like $10k per hectare?

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Delete the "m" and take a couple of zeros off the $10k. At the end of the day.

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Steven, farm production averages in 2014/15 varied from 722kg/ha to 1457kg/ha depending on where you farmed for dairy. So multiply kg/ha x milk price and that will give you your gross answer. You can add dividend in for Fonterra farmers but not everyone gets that. Herd owning farmers will also have some livestock sales.

http://www.dairynz.co.nz/media/3136117/new-zealand-dairy-statistics-201…

If you are referring to net figures this year they are likely to vary from positive through to negative cashflow.

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So 1457 x $5 = $7200 per hectare GROSS ie before costs are taken out?

That would match what I can find.

interesting....

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That 1457 was Canterbury - so irrigated land.

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Talking to a 30yo UK migrant employee of an ag-contractor last week. He had been working on a large Southland dairying conglomerate, 16 hour days, 11 days on, 2 days off. Didn't have a lot of energy left in the tank for himself. Once tried to get out during his days off, go see some of the countryside, wanted to see the Catlins. got half-way, had to pull over for a nap. Dog-tired. Gave up and went back "home" to bed.

If I recall correctly the name Patterson was mentioned

Didn't sound good. Now he's driving tractors/diggers in Otago. 8 Hour days. 10 am start.

Sounds like a high turnover of staff and exploitation. Any business that relies on the exploitation of it's employees is hardly on a sound foundation, unless it has a never-ending guaranteed supply of exploitable labour

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He should have access to the employment court, could be a good little earner for him, all he has to do is keep a record of his hours.
When I was young summer was busy, busy, and then we went to the beach for a couple of weeks, recharge and back into it.
We can no longer spend money like that, we used to buy 1000 posts a year,wire by the ton, this year I purchased 20 posts, no fencers on the farm, no drainage,no new woolsheds, no tractor work, no diggers, no new pasture, it's been happening slowly for 30 years.
The UK is not pretty for low income earners either, with all the migrants, I have friends who have built their business on the back of Polish workers and openly admit it wouldn't have happened without them. It has kept wages in the UK country side very low compared to house prices, which are mostly owned by city folk.

His boss could have a tiger by the tail.

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Get up at 3, finish in the shed at 8.30, hour for breaky, do weeds for a couple hours, hour and half for lunch, off to get cows, milk to 5. Put cows away and hopefully go home. Bed 7.30. Do that for 10 days or more. Get couple days off. Sleep the whole time. That is the nightmare of a lot of these dairy farm workers. Been waiting for years to see the corporate owners so desperate they have to do the up at 3 thing.

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Are we surprised by all this. NZ has known for years that a percentage of our dairy farmers are some of the worst employers in our country. Staff turnover is pretty high as a result and they have had to resort to using and abusing foreign labour as a consequence.

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I hope you can defend that statement in Court ex agent.

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Regularly working 16hour days would mean starting at 4am and not finishing till 8pm. I find that hard to believe. Are breakfast, lunch and dinner breaks in addition to that?

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Cas Ob are you trying to say that if you get breaky and lunch then working from 4 in the morning til 8 at night every day of the week is ok? I recall the labour dept or whatever bureaucratic name they have did a check of a large corporate. Found most of the farms were underpaying staff. Due to extraordinary hours worked.
Its not uncommon for staff to be up well before 4 to get cows in. Most of the bigger farms have only 50 to 60 bail rotary's which means a milking time of around 4 hours. Its absurd really. I remember back in the day if you were in the shed for longer than 2 hours per milking you had a shit shed. So now these guys do around 4.5 hours in the morning farmwork the middle of the day and 3.5 in the arvo and noone bats an eye. I go on to these farms to do ab and the poor buggers are zombies. And they have to spend another hour with me....what is unbelievable is the managers moaning cos the group overseer is telling them they arent getting enough thistles done, or calves weighed, or drenched....so it will be 1000 or more cows and it will have 4 staff....and probably another half dozen in offices somewhere sucking off the tit doing gentlemens hours. Its all up the boohai.

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Definitely not Belle. Just querying if their 16hr day includes meal breaks.

It's not so much the hours per day (manufacturing sites often work 12hours a day plus travelling) it is the 11/2 roster.

With technology now, some are getting staff to not only fill in electronic timesheets but also code what the work was that they are doing. This has allowed these employers to see where their staff need further training e.g. if they take an excessive amount of time to do a particular job, it warns the employer that maybe they need training around this. It has also worked to improve efficiency.

Corporates have the worst reputation as employers, though not all of them are. Unfortunately even if these types of employers are in a minority, Joe Public tars all dairy with the same brush. After all there are good and bad employers in every sector. Yet they still manage to get people to work for them??

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Yes they get people to work for them. Indians, philipino, indonesian, nepalese etc etc same as in the states migrant slave labour

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"migrant slave labour"... a farm worker in Java or Kerala would be on about $3-4/day. Who are the slave masters? There is a judicial system in NZ.

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No that many farmers get rich off of farming.....who are the ones really to blame, here?
Joe public who wants cheap milk and cheap cheese, and is not prepared to admit that the true cost of ethically produced dairy is high?
The supermarket cartels who squeeze the suppliers to add more to their balance sheet?

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d p

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Of course it included breaks

I once worked in a Tip-Top bread bakery as an oven labourer 130F degree heat - 54 Celsius - 12 hour days - 1 hour on - half an hour off - 1 hour for lunch - drink litre of water plus salt tablets during half hour break

Couldn't exactly duck out to a movie during your breaks

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Yeah, Take the meal breaks out and this pathetic worker is only doing 13 hours per day!

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And no weekends. Kool!

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If its under glass you could probably command 1m/ha
but conventional farming you are looking a 5k /ha this includes the 5 year averaged payout of dairy
Rule of thumb for dairy in Waikato 800 to 1000kgms/ ha is good going.
Northland is about 580kg/ha
southland is 800 to 1250kg/ha irrigated
just x the ms/ha by the $/ms
Dairy this year looking at -1200/ha

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Far too many dairy configurations to generalise. And wetland degradation in Southland, well, that started a century ago with the Drainage Boards. I lived in Invergiggle for 20 years, and Otautau for 10. The drains had run full for a century, and had just started to run low. So the invective directed at the most recent land use of dairying, lacks any local knowledge or sense of history. Noone's hands are clean here.

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Yeah too right - the Invercargill Estuary has raw sewage and industrial waste pumped into it for a century and Canterbury lost 90% of its forests burnt before Cook arrived. Let's get evil those dairy farmers!

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What others, or earlier generations, have done is completely irrelevant except as an inheritance and a lesson to us. Others didn't know better. We do. Others could have done things better. We must do. Simple.

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Uh no, earlier generations knew about Peak oil, and climate change but ignored it, can kicking it down the road and instead concentrated on raping the planet and breeding like flies.

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Pointing the finger really serves no purpose, does it?

Matter of fact is that continue with the rape and pillage of the earth out of spite is pretty damn stupid. The mature thing to do would be to talk, and come to a consensus on how we can all share without doing damage.

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We are doing - your touted Southland wetland example above aptly demonstrates that, though perhaps not in the way you'd envisaged. The largest % protected area in the OECD also aptly demonstrates doing it.

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Sensible suggestions of lower stocking rates, probably the best efficiency is at 350kg MS per cow grass based system. Limited or no palm kernal even at 20c, no maize silage but on-farm grown crops that can be harvested by the cow at 10-15c.

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As we are talking Waituna i should say i spent the morning there photographing Damsel flies, as i have for many years. It is alive with dragon flies and bees, ducks plentiful on the lagoon
It looked fine to me and i could see some new ponding that may be part of the remedial work.
But i can say i think the invercargill estuary is grimly dead
We do need to face the damage but it is recoverable

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Thanks for the positive comments on the Lagoon. It is great to see someone acknowledge there is more to the lagoon than just ruppia. ;-)

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Havent seen any of those ruppia,
We just try to convince the damsels to cooperate...
Sigh..

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Meanwhile, back out of sight, a towns raw sewage is being released in to a 'pristine' river - with the blessing of the council. You may need a facebook account to see this video. This is what many urban folk don't see and don't want to know about.

https://www.facebook.com/tipene.puhipuhi/videos/929592843804439/

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RATHER strange that in all the talk bout Farmers having tough times that noone comments on the downstream effect on those reliant on the.industry for their livelihood. .....which surely eventually will hit NZ Inc.

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RATHER strange that in all the talk bout Farmers having tough times that noone comments on the downstream effect on those reliant on the.industry for their livelihood. .....which surely eventually will hit NZ Inc.

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Such has been mentioned from time to time. the outlook is then that when the farmers were unduly profiting and spending then those benefiting also probably over-expanded/commited only to find now the demand has collapsed.

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I can see why you choose not to own your own business steven There are those that consult and those that do. ;-)

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