By Keith Woodford*
Readers of my articles will know that I believe we can find solutions to the multiple problems that face our New Zealand dairy industry. However, the current conventional wisdom within New Zealand’s dominating urban constituency is that there is no path ahead for dairy and that we therefore have to find alternatives. My key message here is that finding non-dairy alternatives will not be easy.
There is a clear logic as to why New Zealand has focused so much on dairy. Quite simply, it is the most efficient of the pastoral industries at turning grass into animal protein. Economic factors have led inexorably to industry expansion, and for many it has paid off big-time. This is despite the dairy downturn from 2014 through until recently.
The first myth to dispel is that it is realistic for large scale conversion of dairy farms to horticulture or other plant-based production. It will not and cannot happen.
To start with, most of our dairy farming takes place in high rainfall environments which are poorly suited to horticulture. It is not by chance that New Zealand horticulture, to the extent it has flourished, is mainly on the east coasts of both North and South Islands. Places such as the Waikato, Taranaki and Southland are highly unlikely to ever become big horticulture regions.
The big regions that could meet the climate and soil-type requirements for increased horticulture are Hawke's Bay, Wairarapa and Canterbury. The only reason I exclude Marlborough from that list is that it is already dominated by horticulture and it would be very hard to find any dairy cows there.
Even in those regions where there is horticultural potential, no modern horticultural industry can prosper without the reliability that comes from access to irrigation. Also, in Canterbury in particular, most of the soils are too stony to support horticulture. On the better Canterbury soils, there are some opportunities for shifting from the current annual crops to perennial crops, but in terms of large scale shifting of dairy land to horticulture, it is not going to happen. As for Wairarapa and Hawke's Bay, dairying is currently not a major land-use to shift from. The problems lie elsewhere.
Accordingly, if dairy land is to shift to non-dairy farming, then in the vast majority of cases it will have to be to other pastoral activities. That means sheep and beef, with perhaps deer in some limited situations. Unfortunately, in most farm situations this shift away from dairy does not make any economic sense.
The starting point for any economic analysis of pastoral alternatives is to get a realistic set of physical data, and also to recognise that we are talking about alternative ways of turning grass into animal protein. Of course, dairy also produces valuable fat in the form of butter, whereas carcass fat is of minimal value.
With dairy, a self- contained farm (including all support animals) might produce 1000 kg of milksolids. (This term ‘milksolids’ is confusing to non-dairy people; it is actually just the protein plus fat, which make up about 55% of the total solids within milk. The rest is lactose and minerals.) In some parts of the country, achieving 1000 kg milksolids would be challenging, and in situations as in Canterbury, where support livestock are almost always farmed off the milking platform, then it would be highly conservative. But as a generalised starting point, it is a realistic place to begin. From that 1000 kg of milksolids, there would be about 450 kg of protein.
On the same class of land, a sheep farm would struggle to produce more than 400 kg of carcass, and in fact most farms would produce much less. From that 400 kg of carcass, by the time allowance is made for bone and fat, and then allowing for the lean meat to be about 75% water, then the actual protein delivered to the market is about 60 kg. So, sheep farming is only going to produce about 15% of the protein that comes from milk. If we factor in the meat carcasses from dairy cows, and allow that milkfat is worth much more than sheep fat, then the relative comparison of sheep with dairy drops even lower.
An alternative way of looking at things is to recognise that a kg of sheep carcass is typically worth no more than, and usually less than, a kg of milksolids. Even with them valued at the same price, then the gross income per hectare from sheep is unlikely to be more than one third that of dairy. And these calculations, if biased in any direction, are biased in favour of sheep. I could redo the calculations to make sheep look worse, but I cannot realistically make the sheep option look better.
Once costs are taken into account, then sheep do move up, but not enough to change the big picture. That is why sheep farmers moved out of sheep in the past.
With beef farming, the story is broadly similar. That beef story only changes if the animals come as a by-product of the dairy industry.
There are indeed exciting options for better use of bobby calves from the dairy industry, but it won’t happen until the wrinkles are sorted out in the use of sex-selected semen. The technology works well overseas with non-seasonal dairy systems, but it remains problematic within New Zealand seasonal-based dairying to get the conception rates that are required to make that seasonal-dairy system work.
There would also be key questions as to where we would market additional meat from pastoral farming. For beef, there are always options but at a price. With sheep, the options are more limited. There is also another hard reality that processing live sheep through to consumer products is more expensive per kg than for beef.
All of the calculations I have produced here assume that the sheep and beef will be produced at similar pastoral intensity as dairy. This means they will be producing similar amounts of piss and poo as the dairy cows. So, there is still going to be plenty of nitrates going into the soil and water, and similar amounts of greenhouse gases produced by ruminant metabolism as occurs with dairy. If the sheep and beef are to be produced at lower intensity, then the emissions will indeed drop, but so will the meat production figures I have used.
I often hear wistful calls that we should indeed go back to the past. How come that we used to do okay as a country with sheep as the backbone of prosperity? Yes, but those were the days when wool was worth more than lamb and provided the backbone of prosperity. They were also the days when agricultural exports only had to counter-balance the import requirements of less than three million New Zealanders.
Up to this point, I have made no mention of forestry. Given the pickle we have got ourselves into as a nation with greenhouse gas commitments, I see no alternative to planting of more forests. However, in most cases, this is not going to be on dairy country, and in any case, it only produces carbon credits for the first timber cycle.
In Canterbury, we do have a history of trying to grow pine trees on the plains. The foresters learned the hard ways that periodic super-strong northwest wind storms have a habit of devastating the forests. As for the dairy pastures of Taranaki, Waikato or Southland, I give no credence to any notion that they will become pine monocultures.
So, there we are! There are no easy alternatives to dairy. We therefore need to get our act together and work out how we can make dairy work. That will mean using our New Zealand comparative advantage in pastoral activities, but getting cows off the paddock in late autumn and winter, as others do elsewhere across the world. Elsewhere in the world, it is largely for shelter, but In New Zealand it will be to stop the nitrogen leaching. If New Zealand dairying wants a long-term social licence to operate, there is no option.
*Keith Woodford is an independent consultant who holds honorary positions as Professor of Agri-Food Systems at Lincoln University and Senior Research Fellow at the Contemporary China Research Centre at Victoria University. His articles are archived at http://keithwoodford.wordpress.com