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David Skegg wants us to stop pretending that we can have our dairying cake and eat it - we urgently need to make the hard choices for the environment with intensive farming

David Skegg wants us to stop pretending that we can have our dairying cake and eat it - we urgently need to make the hard choices for the environment with intensive farming

By David Skegg*

Every New Zealander knows that one of the worst threats to our natural environment is the degradation of rivers and lakes.

Some fresh waterways that were previously clean and inviting have become choked with weeds, slime and algal blooms – with adverse effects on insects, fish, and birds as well.

Two other facts are widely known.

First, a major reason for the pollution of waterways is the expansion of the dairy industry.

Secondly, dairy products are New Zealand’s biggest source of export dollars.  Every one of us benefits from the success of the dairy industry.

Without its recent expansion, our economic situation might be gloomy today.

Driving through the South Island, I have seen small towns that were dying rejuvenated by local dairy conversions. And I am conscious that the sectors in which I work – health, education and research – are crucially dependent on a vibrant economy.

In November the Parliamentary Commissioner for the Environment issued a Report in which she concludes that New Zealand faces “a classic economy versus environment dilemma”. 

Dr Jan Wright’s advice is worded diplomatically, but her message is blunt. Unless New Zealand takes urgent steps to slow the expansion of dairying, many more rivers and lakes will be degraded.

None of the steps being taken to lessen environmental impacts can reverse this trend in the near future.

This sobering conclusion emerges ineluctably from analyses linking two models – one predicting changes in land use between now and 2020, and the other predicting the amounts of unwanted nutrients (especially nitrogen) running off farms into streams and rivers.

Dairy farming has become more intensive, leading to a remarkable 60% increase in productivity (per hectare) over the last 20 years.  This has been achieved by applying more water, more supplementary feed, and more nitrogen fertiliser to the land.  While good news in terms of revenue, such intensification leads to increased run-off of pollutants into rivers.  But the modelling in Dr Wright’s report shows that, although intensification is an important factor in the degradation of rivers, the conversion of more and more land to dairy farms is having the greater impact nationwide.

Despite rhetoric from critics about “dirty dairying”, many farmers have made sterling efforts to reduce the run-off of nutrients from their land.  Measures taken include fencing streams and planting “riparian strips” along river banks.  Unfortunately such precautions have a limited effect on the seepage of nitrogen (mainly from animal urine patches) into waterways.  Other measures – such as employing nitrogen fertiliser more efficiently or breeding animals that excrete less nitrogen – may eventually yield benefits.

Yet a group of experts convened by the Commissioner concluded that, even taking an optimistic view, plausible improvements by 2020 could at best balance the effects of likely further intensification.  They could not counteract the much greater threat from expanding the number of hectares used for dairying.

Forecasts based on modelling can never be exact, and sometimes they can be wrong. In the four months since Dr Wright’s report was released, however, I have seen no expert rebuttal of her main conclusion.

I have tried to read all the statements issued by agencies involved.

That has been a depressing task, because so many have ducked the key point.

Consider a couple of examples. DairyNZ assured citizens that they are “working with farmers, regional councils and other stakeholders to contribute to desired water outcomes”.  IrrigationNZ rubbished the report and thought “a far more useful question to be tackled is how we grow farming whilst at the same time improve water quality”. 

Two of the most cautious and realistic responses were from Fonterra and Federated Farmers.

The Minister for the Environment was less troubled. While acknowledging the need for more work, she was “confident that with the combined will of our council, communities, iwi, and water users – and with the support of our science community – we will see significant water quality gains within a generation”.

Scientific research certainly has a role to play, but unfortunately investment in this area has been ramped up only recently and is still modest in comparison with the size of the industry.

There is an urgent need to build scientific capability, and I hope the proposed National Science Challenge (“Our Land and Water”) will help to achieve this.

We need to be realistic about what can be delivered in a short period: Dr Wright’s experts did not envisage any breakthroughs that could improve things materially by 2020.

Currently the Government has targets that appear mutually contradictory. One target is to double the value of agricultural exports by 2025. As part of this effort, irrigation schemes are being funded to expand the areas suitable for dairying.

On the other hand, the National Policy Statement for Freshwater Management requires that the overall quality of fresh water within each region must be maintained or improved.

In the light of Dr Wright’s report, can anyone explain how these aims could be reconciled?

We face urgent and difficult choices.

If we want to restrict the expansion of dairying in vulnerable river catchments, are we prepared to contemplate a less buoyant economy – at least in the short term? 

If we do not limit the expansion, what will be the impact on our second major export earner (tourism) as well as on our quality of life?

How could restrictions be implemented in a way that is equitable for farmers and regions?

But, before it’s too late, let’s stop pretending that we can have our cake and eat it too. 

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Sir David Skegg is the President of the Royal Society of New Zealand

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29 Comments

Agreed - or is that Greed? - Lets not stuff NZ for our kids and their kids and .....

One Duncan Southwell of BNZ beats around no bones...
Compared to many countries, New Zealand has a plentiful supply of fresh water. Despite this,the country faces a number of challenges in relation to fresh water management, including:

  • Deteriorating water quality (e.g. rising phosphorous and nitrogen levels)
  • Over-allocation of water rights
  • Inefficient water allocation (e.g. first in first served, rather than best economic and/or
  • environmental use)
  • Litigious and uncertain decision processes
  • A lack of robust water management information
  • Inadequate attention to cultural issues and values

however, getting down to business, then uses Ruataniwha Water Storage Project – before and after pictures and an example of fine work. and concludes:
The scheme’s financial structure marries the discipline of private sector investment along with
government enablement, importantly involving the Crown as an investor rather than a grant provider.

This style of model has the ability to accelerate growth for the sector and make agricultural fresh water an investable asset class in New Zealand.
It seems a shame many Project Finance techniques identified by NAB authors in earlier articles many seem missing in the example
For further analysis download the full report.

(in case the report is in at the URL below)
http://business.nab.com.au/corporate-finance-insights-february-2014-5723/
Stop Press:
Listed electricity generator and retailer Trustpower announced to the Stock Exchange yesterday it was withdrawing as a potential scheme investor because it believed the project did not fit within the company's "risk and return framework".
http://www.nzherald.co.nz/hawkes-bay-today/news/article.cfm?c_id=1503462&objectid=11228053
 

"One Duncan Southwell of BNZ beats around no bones..."
 
I strongly disagree with you Henry.  BNZ Advisory has been a primary beneficiary of Ruataniwha - to a tune in the $millions. Their job includes major efforts to put positive spin on our perceptions of financial transfers from the public sector to private investors.
 
RWSS doesn't work increasing returns for farmers. It doesn't work as an investment for HBRC. It doesn't work for private sector investors even with high subsidies. RWSS doesn't work for taxpayers or ratepayers - but it is a bureaucrat's dream that works well for our parasitic sectors.
 
I quote Duncan Southwell from your link:
http://business.nab.com.au/corporate-finance-insights-february-2014-5723/
Although farmers are the main direct beneficiaries, the enhancement to their returns from improved water storage is not sufficient to fully fund a scheme of this magnitude. Full privatisation would require public subsidies to be feasible. However, the Hawkes Bay Regional Council (HBRC) favours investing alongside the private sector, rather than acting just as an arms-length subsidiser.
 
Subsidies are O.K. as long as they go to private investors? Where is that taking us? Duncan Southwell tells us:
 
The scheme’s financial structure marries the discipline of private sector investment along with government enablement, importantly involving the Crown as an investor rather than a grant provider. This style of model has the ability to accelerate growth for the sector and make agricultural fresh water an investable asset class in New Zealand.
 
Treasury's advice to the Minister of Infrastructure on such schemes was spot on but is being completely ignored by this government. I doubt that is an accident:
It would also be helpful to make it clear that the government's involvement would be on a fully commercial or equal basis with other investors. Any indication otherwise would simply incentivise scheme promoters to focus their efforts on maximising the level of subsidy being provided through cheap finance. (from OIA request)

you are right we do not understand why it was shown as an example, unless to demonstrate that a bankers greenfield project development approach to Ag schemes fails in the NZ/Aust context. refer the diagram page13.
the odd thing is, the bankers seem to appreciate that production costs are everything, yet happily fully promote a scheme such as RWSS.
 
As for examples to use, we would have thought a case study of 10 yrs of Synlait would have been a real page turner..
 

I see many conflicts of interest at work. The chair of Hawkes Bay Regional Investment Company is a director of the BNZ.
 
BNZ Advisory has been proving consultancy to HBRIC from the prefeasibility stage.
 
I see much in RWSS that mitigates against competent analysis.
 
I saw someone quoting Aristotle recently and think it appropriate to attempt to requote them (from memory):
Commerce is parasitic on production.
Finance is parasitic on commerce.

There is an enormous amount of work being done by some farmers and those who have adopted alternative fertiliser regimes. You can't use the same inputs and expect a different result...that is my definiton of madness.
 
How many rivers and waterways are measured for heavy metal contaminants like mercury?
 
http://nzriverawards.org.nz/2013-river-awards/
 
 
 

The most positive impact on water quality of  alternative fertiliser regimes is a reduced stocking rate and lower production.

Omnomogy - we got the opposite, increased stocking rates and higher production. Our kilograms of meat per hectare went up significantly and our animal health bill went down significantly.
 I have very good records for our beef fattening unit.. All cattle ID tagged and then weighed on entering the unit. I used a 50 ha irrigable platform for my study.
 
I had previous production records from the 50 ha unit. Which was at the high end for NZ farming.
 
 

Sorry to be so forward, but do you think a system like you run would work well on a block 500m above sea level, in Canterbury HC so very remote. Where is a good place to start?Thanks for any advice

Hi Uninformed Hillbilly - email interest.co.nz and ask them to give you my email details and drop me a quick note. Happy to explain what we have done and how to implement our system etc.

There is one thing and one thing only that I want to say about this, that it is obvious, does not seem to make much difference, but, you can survive without riches..........

Raegun - I'm just bloody pleased I wake up every morning.......I think I've still got my faculties although PDK and Steven sometimes suggest otherwise (osmething to do with my cranial activity)......Crikey it's really good to live in NZ and speak English as my first language, my kids are happy and healthy, got a roof over my head, a fantstic extended family and friends etc, I'm not surviving I'm thriving........

Does that mean you don't give a you know what about water quality then?

Does it sound like that ?
Why the heck would I bother posting things about farmers and what is being achieved on that front if I didn't care?
 
Farmers need clean water too?
 
 
 
 
 
 
 

And to the fact that it is getting dirtier?
 

Is it... yet dariying has reduced inputs and incidents all over the place,  what was careful people have gone to a level of paranoia, so many fenced off areas....so if it's getting dirtier, why?
 

Easy - more bovines

Considering that most places had proper max stock levels, how do you think they feed these mythical extra cows?

I'm aware some places have increased but that's not the norm.  And all the recent conversions required to have every modern pollution control.

Are you perhaps insinuating that the pollution control measures that were sworn to be the solution by councils and scientists....might <gasp> not be as effective as they claimed....

Raegun - please describe "dirtier"...........and please provide your evidence.......your generalising.
Farmers across the country are spending huge resources on mitigation. Are you stating  these resources are ineffectual?
There is plenty of evidence where large numbers of humans habitate in places called cities that suggests they are "dirty" too. Or are you finger-pointing as a diversionary technique?
 
 

Nope I accept cities are bad too, which would be one of my reasons for being absolutely anti population growth, it is just that I include the population of farm animals in  my view as well.
Even though individual farmers may be doing stuff to mitigate they cannot prevent entirely and more farms and animals simply mean more crap in the rivers.
Evidence - I still have two working eyes

One has to be careful when using the evidence of two working eyes alone.
Recently some city folk made a comment that the rivers were dirty from farming when in fact the rivers were dirty from high rainfall.
Just prior to all the recent rain some city folk made comments that the farmers were taking all the water out of the rivers and that the water levels were low because of this. I guess some people with two seeing eyes don't take all the other facts into consideration.
The below links are to some of the cycles that take place and I have posted numerous links to cycles on here in the past.
http://en.wikipedia.org/wiki/Marine_snow
http://en.wikipedia.org/wiki/Detritus
 
Countries where they are allowed to use large quantities of antibiotics in there feeding systems would have a very different impact to NZ where there is very low antibiotic use. There is evidence that the high antibiotic content of animal faeces in Countries when washed into waterways destroys the good bacteria and allows the bad bacteria to flourish.
There is also large amounts of literature that show the agricultural chemicals also destroy the good bacteria and allow the bad ones to over-populate.
 
My two eyes cannot see these very important bacterias, but if I used your way of accumulating evidence then these bacteria don't exist.
 
Science can only measure what it can measure and there are many unknowns. And there are many people that aren't measuring what they should be measuring. And heaps of people claiming to be experts in a particular field yet ignore other experts in related fields that are part of the cycle.
 
Studies like the one below on the effects of increased calcium and E coli are going to be highly important. It is a shame that the David Skeggs article wasn't about some of the science that is taking place around the world.
http://www.ncbi.nlm.nih.gov/pubmed/12891550

What will be the significance of debt and continual relative poor performance of sheep and beef? This despite the "free market" (anti crony capitalistic) reforms of Rogernomics and Ruthenasia. 
The market will sort it out.
On a different note.
 
An example of effort to reduce the impact of cow urine,

Indoor 

trials (Woodward et al. 2012) showed lactating dairy 

cows fed Mixed pasture partitioned more of their feed 

nitrogen intake into milk (Standard = 15% vs Mixed 

= 23%) and less was wasted in the urine (Standard 

= 43% vs Mixed = 29%), which meant the urinary 

nitrogen output was halved in the cows fed Mixed 

pasture (Standard = 200 vs Mixed = 100 g N/cow/day). 

 

http://grassland.org.nz/publications/nzgrassland_publication_2532.pdf

 

 

I prefer just to monitor the protein levels on the milk docket.  Urea is a connection to protein.

A couple of things I have noticed with mixed pasture species being utilised is, the smell of the cattle changes and the dung formation changes.
 
Our beef fattening platform used to smell like a dairy farm and working with the cattle they had the familiar dairy cow smell.
Our hill country cattle that grazed on mixed pasture species were very different by comparison. When we added different species to our existing pastures on the beef unit both the smell of the cattle and their dung changed. Cattle also grazed significantly less and were often down chewing their cud.
We also measured sward height etc and change the grazing pattern. Instead of grazing at the 2000kg per ha we started grazing at around the 3000 kg per ha or higher down to 1200 level.  Use of a refractometer and testing pasture sugar-levels prior to grazing also important.
 
Most seasons we woud end up fattening 1500 to 2000 odd lambs per 50 ha irrigable platform in conjunction with beef.

I notice similar effects going to a biological (soil health) approach for dairying compared with previous "scientifically recommended" methods.

Also my mastitis was 3 chronic cases this year (older cows, culled them).  Instead of 3 boxes of treatment (30+ cases) for chronic and acute cases.  Plus minor flecks tended to clean themselves up rather than flare up.

Beats me no-one has put two and two together and come to the realisation that although more is being done to reduce the amount of leechate for each animal, the fact that more and more farms are putting more and more cows onto land further and further up river and stream.

well something has to pay for all the extra fences and work being done.

you can't do more work, work less land, use more technology, on narrower margins...and keep same stock rate.  that's just a silly ask. do the maths.
 

If the animals is not urinating the nitrogen...where is it going?

While I understand more marginal lands are being reclaimed....and many conversions are happening from beef and sheep (which don't urinate apparently)...just how much expansion are we talking?   Intensification?  Pasture?  Irrigiation...like the governments widely pushed irrigation dams?

In the last 20 years only small areas have actually intensified per hectare.

Unlike the cheap fossil fuels and vehicles in the US "cut'n'carry" isn't feasible in NZ.
We don't have the subsidies sucking money for farm development like all of our competitors.
How are all of Sir Skeegs plans going to get funded?  let alone have sustainable return when labour costs are rising

If dairying isn't viable without polluting our wateways then it isn't viable.  If farmers want to take water, a public asset, they should be paying for it.  All indirect subsidies and cross subsidies for farmers such as their cross subsiised electricity lines charges, phone rentals and roading should be removed.  As should the tax dodges most farmers use, and the net flow of tax money from urban to rural areas.    Increasing dairy output will only increase all these subsidies, at the expense of higher wage, better return industries.