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Agriculture will change but pastoral agriculture will survive and prosper. It is all about international competitive advantage, new technologies and managing the environment. It can be done but it won’t be easy

Agriculture will change but pastoral agriculture will survive and prosper. It is all about international competitive advantage, new technologies and managing the environment. It can be done but it won’t be easy

One of the regular questions I am asked about is the future of pastoral agriculture. It reflects a perspective that, given the issues of water pollution, greenhouse gases and changing consumer attitudes, perhaps New Zealand’s pastoral agriculture belongs to the past rather than the future.

A good starting point for a response is to reflect as to why New Zealand developed as a pastoral-based economy. Nature blessed New Zealand with a temperate maritime climate combined with a hilly and mountainous topography that is well suited to pastoral agriculture, but much less suited to crop activities.

Compared to much of the world, New Zealand’s natural competitive edge still lies in pastoral sheep, beef and dairy.  In contrast, the economics of broad-acre cropping and vegetable production are challenging in an environment where flat land is limited and where rain can occur, or not occur, at any time.  New Zealand can grow wheat, barley, potatoes and lettuce for the local market, but selling them profitably on world markets has never worked particularly well. 

More than 75% of New Zealand’s physical exports come from primary industries. Despite the great successes of kiwifruit, wine, apples, subtropical fruit, timber and fish, some two thirds of these primary exports still come from pastoral agriculture.

Bringing the above numbers together, that makes pastoral agriculture the rock on which half of the export economy is built.

It is helpful to remind ourselves of the biophysical processes that underpin pastoral agriculture. It starts with conversion of carbon dioxide and water into plant carbohydrates, using nature’s own wonderful energy source called ‘the sun’. The process is called photosynthesis.  

However, plants need protein as well as carbohydrates. Nature has organised that as well, by creating a plant family called legumes, with clovers the most important, but others such as lucerne playing an important role. These legumes extract nitrogen from the atmosphere with the help of rhizobia bacteria and convert the nitrogen into protein.  

When animals eat clover and other legumes, there is typically more protein than the animals need. The excess gets excreted, mainly in urine but also in animal faeces. This provides the nitrogen to the soil that is needed by non-legume species including grasses.

Nature truly is wonderful the way it has organised itself. However, a big problem arises when humans start removing large quantities of animal products from the pastoral environment, leading to a deficit of key nutrients. If these are not replaced, then nature’s natural processes cannot work.

Also, nature does not always get things quite right from a human perspective. Nature’s geological processes have bequeathed much of the South Island with a deficiency of selenium. This does not trouble the plants but it does trouble farm animals. Similarly, the volcanic Central North Island lacks cobalt, the absence of which causes ‘bush sickness’.  There are many more deficiencies in specific regions.

I also get asked a lot about organic agriculture and regenerative agriculture.

Organic agriculture is relatively easy to talk about. The rules are clear cut. The systems can be made to work on good quality soils, but in general, significant price premiums need to be achieved if the systems are to produce economic returns.

It’s hard work when farmers cannot use modern cost-cutting technologies. I applaud farmers who are able to make these organic systems work. However, I also know farmers who have had to forego their organic systems because of a lack of resilience to pests and climate when nature turned against them.

Within any farming system, marketable products and the nutrients therein are removed from the land. Within organic systems, it can be challenging to bring enough nutrients back to the farm. For that reason, and unless the human waste is brought back to the farms, including from overseas, then it is very hard to scale up organic systems to a national level.

As for regenerative farming, that does get confusing. This is because regenerative farming is a concept that has no clear rules and hence there is no certification.

Regenerative agriculture philosophy comes from the USA where many of the traditional farming methods of the last 100 years were depletive. Many American soils are naturally highly fertile, and American farmers were able for prolonged periods to apply depletive practices that New Zealand farmers could never apply.

Regenerative agriculture has a focus on soil improvement, and surely no-one should argue about that. The problem occurs when regenerative farming becomes a mantra devoid of science. And that is why scientists sometimes get their backs up. The starting point has to be a focus on nutrient cycling, and fixing up some of the holes in the system through which nutrients escape.

New Zealand pastoral agriculture was built on regenerative principles, with clover-based pastures on almost all classes of land, combined with cropping rotations that included an animal phase on the better soils. Dairy farming has subsequently moved to placing much emphasis on bag nitrogen, with consequent improvement in production, but sheep and beef farming still rely to a great extent on legumes.

I started my career a long time ago as a Ministry of Agriculture farm adviser. I used to collect soil samples, send then to the laboratory for analysis, and then convert the results to fertiliser recommendations. Most of the Canterbury soils were very low in organic matter. Now, when I revisit those farms fifty years later, the changes that have occurred – for the better – are remarkable.  Our farming systems of those days, including cultivation and wind-blown soils, were totally unsustainable.

There remains a widespread notion among urban folk that crops, including lots of vegetables, are what New Zealand needs to focus on. There is a poor understanding that some of New Zealand’s worst nitrogen leaching is associated with vegetable production. In any case, most of the world thinks it is quite capable of producing its own vegetables, and they are expensive to transport.

The other suggestion people give me, sometimes with great confidence, is that much of our pastoral land must go to timber. Sometimes I have to bite my tongue. Carbon credits are all very well, but they are primarily for internal use within the NZ economy. They are not an export substitute. I also gently remind people that much New Zealand timber is used in China for formwork and subsequently burned. There won’t be much need for formwork when today’s newly planted trees are ready for harvest. Before then, China’s big infrastructure development phase will be well over.

Of course, this would all count for nothing if market demand for New Zealand’s pastoral products were likely to decline. I have written about that before and will do so again. There will always be challenges and there will always be volatility, but there is lots to be positive about as long as we get our act together.

As for the biophysical environment, I remain confident that we can solve the big issues facing pastoral farmers. But both our systems and our thinking will have to change. The biggest transformational technology will be the ‘composting mootel+pasture’ system. It will still be pasture-based farming, but uniquely suited to New Zealand. I have written about that before, but industry understanding remains low. However, the technology exists and mootels are being built. I expect to be writing more about it.


*Keith Woodford was Professor of Farm Management and Agribusiness at Lincoln University for 15 years through to 2015. He is now Principal Consultant at AgriFood Systems Ltd. His articles are archived at http://keithwoodford.wordpress.com. You can contact him directly here.

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43 Comments

Great article clearly outlining and clarifying some of the common misunderstandings held buy the less informed.

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With vegetable farming being perhaps the most common

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KW consistently avoids the fact that BigAg, as practiced, is the process of turning fossil energy calories into food ones. At a substantial loss, I might add.

So it is unsustainable in present form. Period.

Despite the fierce spin

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PDK
Can you please provide your evidence to support your statements?

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I have no farming background, so articles like this really help me to understand the challenges and potential of our pastoral farming a lot better.
What I would also like to better understand are the financial challenges. I understand, perhaps quite wrongly, that for most dairy farmers, the return on equity(ROE) is low and that the model relies heavily on future untaxed capital gains to make it work. Is that correct?

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Relies heavily on debt due to the sheer cost of buying a farm. As does anything property related. One season, my folks paid 400k in interest alone

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The model you speak of was a driver of expansion previously but now Banks are more circumspect and are looking for sustainably profitable enterprises to loan against.

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I think most farms, particularly where I am, are priced on an EBITDA of 8%, it's not easy to value them but I think that's roughly where they sit. It's low milk prices and having to upgrade infrastructure that puts farms further into debt. You need a fair bit of capital and a lot of skill to make it work though.

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it takes a lot of discipline

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Farming is hard work and not everyone can do it my mate is a dairy farm owner, he is quite happy with the sharrmilker arrangement which means he's not getting up at 4am

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WhiskeyJack,

With that spelling, obviously not Scotch. Thanks for that information. While nothing about Covid could be described as good, it has served to highlight just how important our farming sector is. I regularly watch Country Calendar the sheer passion of those featured comes through so strongly.
It seems that farmers are primarily price takers and having been in business for over 30 years, I think I would want to explore any way of becoming a price maker for at least part of the business.

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My valuer friends in Canterbury seem to be working on a figure closer to 6%, but either way, this is high by historical standards, reflecting several recent good yearss for payout and very close to a total absence of potential buyers for large farms. The lack of sales for bigger farms makes those values very uncertain. Buyer confidence has been severely shaken by regulatory concerns and the Australian-led banks are very circumspect about lending for dairy.
KeithW

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that's interesting I don't know if pastoral farms ever gave that kind of return. Council regs are definitely putting damper on enthusiasm, it's all the unknowns. I talked to a biggish farmer last week and he was busy dumping all his ewes, going beef, buying steers out of Sth Canterbury. The problem I see, he is now in a trading position with stock shortages looming.

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Excellent article thanks Keith. Your simple explanation of some of the basic biophysical aspects of agriculture is well timed I hope.
You mentioned the change in soil quality you saw over 50 years. I hope you are alluding to soil carbon. The capacity of good farming practice to sequester carbon in the soil and thus offset agricultural emissions (take carbon dioxide out of the atmosphere and lock it into the soil) is sadly unrecognized in general debate, trees seemingly the only consideration (notably absent is discussion of the long term effects of pinus species on acidification of the soil, destruction of soil boita and depletion of the soil carbon reservoir.)
So please keep up these plain English explanations of really rather important aspects of livestock agriculture benefiting not just the economy but also the environment.

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"The problem occurs when regenerative farming becomes a mantra devoid of science. And that is why scientists sometimes get their backs up. The starting point has to be a focus on nutrient cycling"
Oh the irony when applied to climate change science and some of the finding pushed forward. Digging the black stuff up and putting it into the cycle is in no way scientifically comparable to the methane cycle of ruminants, and yet.....
Antidotal I know but the pumice and ash soils up north have suffered a similar fate to canterbury over my life time with topsoils much deeper than they were, although not as the were pre human induced wild fires.

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I agree, counting methane as if it were a fossil fuel is a totally false accounting.
It sounds like building topsoil is an essential feature of dairy farming throughout NZ, it's the only way to farm Pakihi soils on the west coast and top of the south. Some of which predate humans. The soil is hungry for fertiliser, but if you keep at eventually it can produce very well.

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Methane emissions are included as a CO2e (CO2 equivalent gas) due to them rapidly decaying to CO2 and H2O. Fossil fuel emissions are counted as direct CO2 and CO emissions so it is not false accounting but a method of comparing the direct carbon emissions.

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Equivalents are used because methane is way more a GHG than CO2 when compared over the 100 year life of CO2. But of course ruminant methane adds zero CO2 to the atmosphere while every single CO2 molecule from fossil fuels hasn't been part of the cycle for 120 million years. I've never been sure why the 100 year bit, it's bollocks as the CO2 is permanently in the cycle.

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It is false accounting because methane decays into water and CO2, and with stable number of stock units, methane in the atmosphere remains static, unlike CO2 from ff which increases every year. It's treated as cumulative every year, which is 100% wrong.

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Thanks Keith, we are getting very tough nutrient limits and that will knock growing vegetables around here for six. I was told vegetables are the worst for leaching.

I am trying to improve my dry flats, acidic and ,low in nutrients except P, crazy expensive but Im starting to get results building carbon and hopefully starting to hold water. Certainly have higher stock numbers through winter. We are wet today and the forecast is for 60ml more. I planted a regenerative mix as an experiment as we are meant to be in a wet cycle this summer. here is the mix-

Oats Ryecorn Forage Rape Faba beans Daikon Radish Sunflower Annual Ryegrass White Clover Balansa Clover Red Clover Phacelia Hairy Vetch Chicory Plantain Jap Millet Mustard.

The problem in the pastoral industry will be stock shortages as people get out of sheep and bobby calves are not reared. We need a stable system that doesn't screw rearers nd breeders everytime the weather goes against them.

Some locals have killed all their sheep this spring as they don't see a future in sheep, I suspect they may find they don't get as many options as they think. Lots of Ryall Bush trucks down our road this year as the drought in South Canterbury bites, at $2.40 a kg lw for steers there must be some really unhappy sellers.

This is out of Aussie and may interest you
https://www.youtube.com/watch?v=i1Laqc6bltU

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Vegetable farmers are exempt from nutrient limits, can you imagine the outcry if the new limits actually hurt vegetarians more than dairy farmers.

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That's a pretty interesting mix you got there Andrew - who's your seed merchant and how did you come up with such a mix? You might find the chicory will dominate then fall over - I've tried it but it doesn't last long if you graze it hard in winter

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I use GSB seeds ( grain and seed brokers) in Timaru, he's way cheaper than the locals, chicory won't last that long around here, i'm in low rainfall with stoney gravels. I should be able to start doing my own mix soon, I'm learning fast.

I'm growing as many different things as I can and watching, not listening to locals, trying everything for myself. Not a great fan of Plantain that can get dominant around here.

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I like Plantain, it's long lived and is a good source of Zinc (assuming it's there in the first place). It's good in a mixed sward like you've got above

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I have plantain naturally occuring

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the Wiltshire sheep breed would go well for you and your neighbours

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growing as fast as they can breed them, lots of farmers getting into them at this rate they soon dominate the industry.

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We have a few dozen but having foot problems on our damp area

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And Ryal Bush is just north of Winton in central Southland, so that tells us something....Saw another RB stock truck and trailer heading north just this morning on the motorway out of Christchurch - further confirmation that there's a lotta movement in stock.

And congrats yet again to Keith for an article that tells it like it is - soil samples don't lie, but urban myths take a lotta knocking over - it's whackamole country.

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Soil samples don't lie. True. BUT are we asking the right questions? Phosphorus (P) is a vital element to NZ agriculture. In its phosphatic rock form it is becoming more restricted in availability for processing into our mainstay fertiliser, superphosphate.
I argue that NZ farmers need to understand the total P in the soil and learn ways to access and cycle that soil resource.
Research is increasingly clear on how beneficial fungi in the soil are in symbiotic relationship with plants. Fungi make P and other elements plant available in ways plants are unable to do on their own. The fungi draw carbon from the plants.
We need to use P tests, in particular, that can tell us total P in the soil, particularly in soils where pH is on the low side.

But knowing how much P there is in the soil and accepting the benefits soil fungi can bring requires more than optimising pH. There has to be a soil physical as well as chemical environment that allows fungi etc to thrive. Good physical structure in the soil allows roots and microorganisms to breathe. Compacted soils don't breathe well and asphyxiate roots and microorganisms. The beneficial fungi and other microorganisms also need to be present. Intensive, repeditive cropping, severe pugging can destroy the microorganism population, requiring reintroduction (there are relatively simple, inexpensive means to do that).
I think embracing these points are important aspects of 'regenerative' agriculture. For example, a mix of pasture species with deep and shallower rooting depths will, over time, with good management, rehabilitate soils. Some plant species may be only included for their capacity to (a) relocate elements from deeper in the soil profile into the topsoil where they available for shallower feeding species; and (2) enhance permeability for water and air to deeper levels = increased water holding capacity and drought resilience.

It's a different way of approaching things. But it's certainly time to start planning for when it will be either difficult or expensive (or both) to access fertiliser solutions out of a bag (or truck or plane) as NZ has grown dependent on.

The other side to think on, is to reposition agriculture in the value chain so that farmers can continue to afford to produce food to feed NZ and the world. (Might have to rethink the capital value of land too for that matter. Sometimes as farmers we are our own problem.)

Just a perspective on a wet day in Southern Hawkes Bay

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Articles like this cheer me up a little, after reading the constant stream of media tripe dumping on the farming sector. I've always been interested in environmental issues but it's really quite depressing to engage with what passes for "Green" these days. I remember when Green meant farming as close as possible to natural systems, now it has done a 180deg turn and the more industrial the food, the greener it is apparently! Must be getting old. Will anyone be eating pasture raised NZ meat in ten years? I'd be interested in your opinion Keith? https://bigthink.com/technology-innovation/protein-from-air

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Amongst other things, 2 million meals annually for $800m plus revenue by 2023? Seems a bit excessive. Feeding 9billion by 2050?

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Pure snake oil

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The constant barrage of artificial protein stories starts to wear you down after a while, snake oil, or not.

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Hi Keith, great article as always. What role do you think synthetic protein technology will have on the future of pasture-based beef and dairy production in NZ? I’ve heard of dairy proteins able to be produced from yeast in a batch manufacturing operation. If cost effective, it seems a no-brainer for commodity product from an environmental perspective given the byproduct gases could easily be capture and put into boilers or gas turbines. Plus the supply could be located closer to the demand reducing supply chain costs and emissions. No doubt there will always be a market for premium pasture-based product, but could synthetic technologies undermine our natural competitive advantage (climate) for commodities?

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Sure the supply could be closer to the demand, but lab synthesised proteins still need the building blocks to start from and where do they come from and how do they get to the lab?
As Keith points out, the energy source for the building blocks going in one end of the animals is mostly sunlight.

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I'm a bit confused.
In this article Kieth says that the N collected by clover is not directly available in the soil for other plants.
He says that it becomes available to grasses once the clover has been eaten by stock and and then pissed out onto the soil.
Is my interpretation of what Kieth said true?
I understood that microbes on the clover roots put the N directly into the soil.

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this has your answer down the page a bit

https://aces.nmsu.edu/pubs/_a/A129/

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thanks - that explains things well.

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Keith, you mentioned cultivation and wind erosion as factors in Canterbury in years gone by. We experienced some of the same when cultivating in Central Otago.I blamed the cultivation equipment and its usage. With old tough pastures and light equipment the only way to achieve a seed bed was to literally beat the soil almost to death. Higher horsepower tractors combined with bigger, heavier implements enabled better seed bed preparation with fewer passes resulting in much better moisture retention. I recall drilling a paddock in a wind so strong it was blowing open the lid of the drill, yet apart from a bit of dust the paddock was not moving. I know that this does not contribute to the accumulation of soil organic matter, but it does help in preventing its loss.

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"As for the biophysical environment, I remain confident that we can solve the big issues facing pastoral farmers".

Another Upton Sinclair statement.

Try this Keith:
https://www.resilience.org/stories/2020-11-09/a-small-farm-future-revie…

“…if…it turns out that the way you eat is too costly in terms of energy, GHG emissions, soil health, water or someone else’s well-being, there’s a good case for trimming it back to what your locality can sustain. And if it’s impossible to trim it back to a sustainable level, that may suggest a need to re-sort human populations more sustainably across agricultural space.

“It seems likely that the coming years will see a major re-sorting along these lines due to climate change, energy descent, water stress and economic crisis, generally from cities to countrysides, from coasts to interiors and from lower latitudes to higher latitudes. The potential for conflict in this process is high;"

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I wonder how much of the improvement in soil is due to irrigating dairy waste back on to the land , instead of into the nearest ditch , as in the old days.

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solardb
I worked on a dairy farm in the 1960s where all the effluent went down into the drain and from there into a rather well-known Lake. We used to water ski in that lake and so there was an incentive not to fall off. Thing have come a long way, but the journey is not over.
KeithW

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