Primary Industries Minister Nathan Guy says there is a limit to further dairy intensification in New Zealand and growing exports in the future will depend more on increasing the value of products rather than the volume.
The number of dairy cattle in New Zealand has surged as farmers were lured by higher prices for dairy products while demand for sheep meat and wool waned.
The latest agricultural statistics for 2016 show New Zealand had 6.5 million dairy cattle, up from just 2.9 million four decades ago. Dairy products are the country's largest commodity export worth $11.3 billion in the year through February, and the government aims to double the value of primary sector exports to $64 billion by 2025 from $32 billion in 2012.
However, a recent string of reports has singled out dairy intensification as one of the key factors, alongside urbanisation, putting pressure on the country's environment, valued for its pristine natural wilderness.
"It will be challenging for the dairy industry to grow," Guy said.
"There's no way that we can double the number of cows in New Zealand. One big opportunity the dairy industry does have is about increasing the value, not the volume."
In the past two months, New Zealand's worsening environmental record has come under the microscope of the OECD, Vivid Economics and the Prime Minister's chief science adviser Peter Gluckman, adding weight to previous reports by the Parliamentary Commissioner for the Environment Jan Wright.
That's prompted a slew of editorials and opinion pieces in the country's major newspapers and a new freshwater policy from the government which aims to improve the 'swimmable' rating of lakes and rivers.
Today, New Zealand published its first Fresh Water report under the Environmental Reporting Act which showed urban areas have the biggest problem with polluted freshwater, but rural areas are showing a faster-declining trend in the quality of fresh water in lakes, rivers and streams. The environmental reports come ahead of a general election this September and Guy acknowledged they had heightened awareness going into the campaign.
He said farmers were working to improve their environmental standards, having voluntarily added about 26,000 kilometres of fencing over the past decade to exclude dairy cattle from waterways, and investing about $1 billion over the last five years to meet environmental obligations such as upgrading effluent systems, fencing, riparian planting and monitoring fertiliser usage. He said new technological advancements, such as more affordable nitrate probes and new cow breeds which produce fewer nitrates would assist farmers in the future.
"We realise that agriculture does have an impact on the environment. What has been lost in the recent debate has been the focus that farmers have on their environmental performance," Guy said. "What farmers and growers want is scientific tools in the toolbox that can help them address these challenges. There are moves afoot to allow farmers to make the changes that they need to make on farm."
There's no way that we can double the number of cows in New Zealand. One big opportunity the dairy industry does have is about increasing the value, not the volume.
He said the government was assisting the industry through putting extra funding into growing international trade, and its primary growth partnership and national science challenge initiatives, however he noted the focus was on "adding value as opposed to volume".
The debate should focus on what was the appropriate land use for the different catchments in the country, rather than what was the appropriate number of cows, and science would help inform those decisions.
"Those are decisions that regional councils will make on behalf of their community when it gets down to understanding their different water bodies and also they can place conditions on consents which they do do."
Guy said there was a "disconnect" between rural and urban communities, which the government and industry were trying to address by getting more urban children to understand farming.
"It's an ongoing challenge that anyone that's involved in the primary sector is very aware of," he said. "In the past, often children had the opportunity to get on their grandparents' farms and that has probably changed over time. If we can get more young pupils to understand where their milk comes from and where their meat comes from then that has got to be a good thing."