In a recent video (watchers need to scroll down article to get to the video) was an arguably persuasive coverage of the issues facing Canterbury dairy farming and returning to a clean water environment. One of those involved was a ECan councillor who is also a dairy farmer, and he raised the issue of what the government, or society, would do for farmers to basically help them to exit farming or at least greatly reduce cow numbers to create the change argued for to improve water quality.
To date very little has come out of central government to address this area. Europe has been also dealing with similar issues and with a bigger chequebook than the New Zealand government has, so it seemed worthwhile to examine what they are proposing and also what farmers reactions are.
Within the EU stocking rates are spread over a wide range from 0.4 livestock units (LSU) per hectare of grazing density (a LSU equals 1 dairy cow producing 3,000kgs of milk annually) in Latvia and up to 3.8 LSU in the Netherlands with an EU average of about 1 LSU. So, in New Zealand where we use ‘stock units’ and where a su (for simplicity sakes) is 1 ewe equivalent and with a stocking rate ranging from something like 8su’s to 33.6su’s we inhabit a similar range. A dairy cow would be somewhere around 8su equivalents so 8 to 33.6 would be 1 to 4.2 cows per ha by the EU measure. We can assume if the Netherlands has an average of 3.84 cows per ha there will be farms at a higher rate.
The Netherland’s with its high rate is worth looking at closer as it has made the news recently with farmers there pushing back in protest against proposed government moves to restrict their carrying capacity and also because its stocking rate can be compared to that of Canterbury’s which has been reported to be at 3.3 cows per hectare (2017). This is considerably higher than the national average of 2.84 and which without Canterbury included would be nearer 2.7 cows per hectare. Within the EU there has been considerable movement in numbers (note; these include all livestock not just dairy cows)
Source: Eurostat.
Within Canterbury over recent years despite pressure from local and national governments Canterbury overall stocking rates appear to have increased with overall cow numbers going up and per hectare rates also increasing (approximately 3.42 in 2021). The graph below shows that while all dairy regions are following a similar trend Canterbury is considerably ahead. It’s no wonder Dr Mike Joy and others get upset at the Canterbury situation, especially with its porous soils.
So back to Europe and the Netherlands in particular. In 2019 the highest Dutch administrative court found that their government was breaking EU law by not doing enough to reduce excess nitrogen in vulnerable natural areas. This led to the decision in late 2021 of the government to seek to reduce livestock numbers by 30%.
Two scenarios were proposed including forcing some farmers to sell emissions rights and even their land to the state. If the farmers lose their emission rights then they effectively cannot farm livestock.
The Netherlands government has announced that it has a ‘war chest’ of €25 bln (NZ$41 bln) to ‘enable’ farmers to meet their new requirements. Their plan is run over 13 years and proposes to help some farmers to exit while enabling others to move to more extensive (sustainable modes of farming).
While agriculture may not be so critical to the Netherlands economy as it is to New Zealand, it is still at around €100 bln makes up about 20% of their exports and is a considerable component of the Dutch export portfolio. New Zealand by comparison has a total “food and fibre” export value of NZ$49 bln (€30 bln equiv) and currently (with tourism well down) makes up about 77% of our total exports.
For New Zealand to try and adopt a similar policy we might have to adopt a similar payment system as the agricultural area in New Zealand has approximately 30% more land in agriculture and while overall may be at a lower stocking rate, areas like Canterbury may require greater reductions. A scary thought. Needless to add the Dutch farmers are not happy about the (what appears to be more than) proposal and has led to widespread protests.
Belgium, Demark, Germany and the UK are also looking at looming problems.
What politicians appear to have overlooked is that livestock farming for many is a lifestyle choice and replacing it with arable, trees or fallowing is not what they signed up for when they decided to go farming.
The buyout approach to solving the problem is not without precedent in New Zealand with the tax and ratepayers putting somewhere between NZ$80 and NZ$120 million to encourage farmers around the shores of Lake Taupo to reduce nitrogen emissions. Environment Waikato is also reported of taking a similar approach to pay farmers to reduce nitrogen flows into Lake Rotorua.
Regardless of where we are looking it certainly appears that big numbers are involved in going down the pay-out route are very expensive. This comes at a time where in New Zealand discussions have now begun about what costs are involved in mitigating the impacts of climate change. The public’s appetite for absorbing these costs which largely are created through someone making a choice, be it at some time in the past, is likely to be tested.
A buy out may get more approval from farmers but unlikely from non-farming public where-as a regulate out while likely favoured by non-farming public will certainly upset farmers more. The first test however will be are the politicians, be them local or national, up to making the hard decisions whichever way they go.
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35 Comments
I appreciate that this piece is to raise the discussion, but the gall of the farming sector to even suggest compensation is unfathomable. But let's say that this happens, is the farming sector then in turn going to compensate the public for the equivalent environmental loss over decades?
Past governments have understood the basics of economics (terms of trade) and as a result encouraged the rural sector to expand in order to give the whole of NZ a better standard of living. As a result many have invested heavily into the industry over the last 30 years based on state sponsored research - to now cut them off at the knee's would/will be the death wish for NZ's economy. Farmers were incentivised into their present production systems by state sponsored research and thus should be incentivised out of it and into suitable replacement systems that wont upset NZ's Trade Balance.
Our problem is that those at the top are ruling with a big stick and have no understanding of economic's.
Apart from the abrogation of property rights that a cease and desist approach would entail, there is already ample precedent under NZ law that where land is taken for the public good the landowner should receive compensation to the level that leaves him no better or worse off than he would have been had the taking not occurred. A broader question is that given the NZ economy's dependence on agriculture ( at it's present level of intensity ), where would the money come from to pay adequate compensation?
Agree with this. Absolutely.
The problem I have is the media so far have been leaving the farmers out to dry as the only environmental baddies in town. And with that sentiment, everyone else who has cashed in along the way so far will be left to slink off while the farmer is given the remediation bill to face on their own.
Yikes. Er, if we cut our income don't we have to cut our spending too? Or our population?
Maybe we can pay people to emigrate?
Does this policy mean that we end up with 2 large corporate farms, one owned by a Chinese outfit and one owned by a US one?
How do we stop the currency collapsing? So far its only down 10% from a year ago and down 29% from its last peak in 2014?
New Argentinaroa, here we come.
Compulsory abandonment of productive land would not be my preference, not at all. Cows might be gone but noxious weeds will take over. Land that is looked after is land that is owned by people who care about that land.
That said, we do need to retire more dairy pasture from dairying and reduce the herd, particularly in Canterbury. Hemp looks promising as an alternative crop;
https://www.stuff.co.nz/business/farming/121931088/fonterras-canterbury…
"I think it ticks a number of boxes for us in terms of sustainability and if we can also generate greater yield financially from growing hemp, we'd definitely look at it."
So they need guaranteed markets. For example, a government could require/specify all textile products purchased via government tender be hemp based products (carpets; military uniforms - it could extend to all school uniforms, although I don't think they are government tendered etc.). I have no idea how viable this might be (we'd likely need more investment in manufacture plant) but surely there are many win-win possibilities, that keep the farmers on the land in profitable businesses that work with the environment in a less harmful manner.
Kate,
i have no connection to farming, so am cautious about making judgements, but as the Owl farm in the Waikato experiment seems to be demonstrating, is it not possible to both reduce stock numbers while maintaining profitability by changing some traditional practices?
I flew over Canterbury in a Cessna in about 1995. A drought was in progress. All the land was grey. Not a stock unit in sight. That is the real natural Canterbury. The current situation is totally artificial, fake, and extremely time limited. Even fresh water from the mountains has a little salt in it. In spite of what the "experts" say, this is gradually salting up the ground. Not as fast as the ten years it took the North West Victorian dairy farmers to ruin their land with high salt artesian bore water irrigation a few years ago, but it is happening. They do not get enough rain to wash the salts away into the river systems, and then the sea. So we either force them to change their farming methods back to drought prone farming, or Mother Nature does it for them.
There's a few flaws in this article's arguments.
- It's not accurate to attribute the same amount of stock units to dairy cow in the Netherlands and one in NZ. Dutch cows are mostly housed and fed supplements and produce over twice the milk of a NZ cow, so the stock unit value would be double.
- As well as cattle, there's also large numbers of intensively farmed pigs and chickens adding to the problem in the Netherlands, their numbers are going to be cut also.
Because of those two factors, if you look at global maps of nitrous oxide emissions the Netherlands emits at a far higher rate than NZ (also because of more people, industry and transport). That causes problems not only to water but also affects air quality.
i don't know why everyone has to take it all to the extreme .
We are probably looking at intensity reductions in the order of 5 - 10 % . wether this leads to a 10 % reduction in output is open to question. wether the imported inputs required are less is probably a yes . Wether the logter, profit is less is also open to debate .
Some sort of transition payment may be justified , but research and education are probably money better spent.
Yes, some farmers have found that whatever profit they lost in reducing numbers, it was made up for in reducing costs, some of which were associated with the extra numbers, plus other reductions that having smaller numbers allowed.
This is because economies of scale is not a linear line but a U-shaped curve, ie past a certain point of scale, costs start to go back up.
And there is some new Quantum Biology tech, and ideas coming to market that allows farmers to increase production while at the same time being more sustainable and cheaper than previous methodologies.
I remember reading a few years ago that a Rangitata Island dairy farmer had got his debt down, and went to once a day milking. Still a lot more than half the milk, due to much lower stress levels for the cows, a bit more than half the work to be done, and a bit less income. Very doable.
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