A Lincoln University expert says Environment Minister David Parker is right to signal New Zealand agriculture cannot continue with business as usual.
Senior lecturer in Agribusiness Management Dr Nic Lees says intensive dairying is currently profitable only because it is not bearing the full costs of its production systems.
"It is not paying the cost to the environment of its production. We are all picking up the tab, and especially our children for the impact on our waterways and climate," he says.
"Currently intensive dairy farming is addicted to high production per cow. This means adding in concentrated feed such as palm kernel and high levels of nitrogen fertiliser.
This increases costs, which means these systems are only profitable with high production and high commodity prices."
Nic says this shows New Zealand's future is not in maintaining our position as the lowest cost producer of meat and dairy products.
"The longer that the beef and dairy industries hold on to a commodity model based on increasing output and lowering costs the greater will be the future farmer pain. I think we need to have conversations around "peak cow" and the future of our animal production industries."
He says the Labour Government is clearly signalling New Zealand's future is not in commodities.
"Facing up to "peak cows" will benefit New Zealand and farmers in the long term. It is either some pain now or a lot of pain later. If not, alternative proteins will take out our commodity agricultural products in the same way nylon took out wool as a fibre.
Minister Parker has said there is potential to change towards cropping, horticulture, which are high-value land uses," says Nic. "He is right to say there are too many cows, however the potential for cropping and horticulture to replace dairying is simply not going to happen. There is no way horticulture and cropping can replace any significant portion of dairy farming land."
Nic says cropping and horticulture land takes up about 2.5 per cent of New Zealand's total land (422,400ha). About 1.7 per cent of that is in grain crops and less than 1 per cent for growing fruit and berries. In comparison dairy takes up about 20 per cent (2.6 million ha).
However, he believes there is potential for the horticulture sector to increase the value of exports. The industry already produces $5.6b in exports from just 200,000 ha. The dairy industry produces $13b from 2.4 million ha. Dairying can also learn from the sheep industry.
"NZ reached peak sheep at 60 million in 1984," says Nic. "Now we have only 30 million but produce the same volume of lamb at significant higher value.
"Fewer animals means less greenhouse gasses, and reduces nitrate leaching. There is the potential to see this happen in the dairy industry also."