Up to 25,818 extra cows could be milked on new Canterbury conversions. Photo / RNZ, Sally Round
By Monique Steele of RNZ
Canterbury grows most of the country’s wheat, barley and oat crops.
But persistently low wheat prices, coupled with a high milk payout, are believed to be driving farmers out of the industry in search of the dairy dollar.
The Canterbury regional council said up to 25,000 more dairy cows could be added to the region’s herd this year, following an end to a temporary ban on intensive dairy farm conversions.
Environment Canterbury (ECan) kept data on new dairy discharge consents as a proxy for conversions, which showed there were 32 new consents approved this year, and 15 more in progress.
It said the maximum number of cows that could be milked through the shed was 25,818 cows, among the approved consents.
Federated Farmers’ arable group chairman, David Birkett, said around half of those 32 consents would likely be arable farmers converting at least part of the farm into dairy.
“A number of arable farmers have gone down that path and are converting arable farms to dairy,” Birkett said.
He said low global wheat prices were hurting profitability locally, and animal feed was under increased pressure from imported feeds like palm kernel expeller (PKE).
“It’s a two-sided sword,” he said.
“I guess one, it tugs people out of the arable industry, which means there are less growers. But it also means that, are we losing the critical mass of the industry?”
He said the arable industry required a lot of infrastructure collectively, including drying machinery.
“Do we get to a point where that infrastructure can’t be supported because we don’t have the critical mass of the number of growers?
“We’re not at that point yet, but I guess we’re as we lose growers, we are getting closer to that point.”
The Leeston farmer integrated sheep into his own cropping farming system to diversify income, and said strong meat prices were a “godsend”.
“Most people we think are around that break-even point, but a lot of that additional income has probably come from the livestock that they’ve had on-farm.”
The lobby group’s latest twice-annual farmer confidence survey in July found that general confidence had soared to its highest level in more than a decade.
Some 81% of dairy farmers surveyed were making a profit, versus just 1% making a loss.
However, for arable, 40% were making a profit while 29% were making a loss.
Last week, Fonterra dropped its farmgate milk payout price forecast for the current season to $9.50 per kilogram of milk solids from $10.
Despite the drop, though, dairy could still be considered a strong industry to be in, with DairyNZ’s breakeven forecast sitting at $8.68.
The number of dairy cows nationwide dropped 0.5% in 2024/25 over the season to 4.68 million, which is about 2% below the five-year average of 4.75 million, according to DairyNZ’s latest census of the dairy herd.
Meanwhile, milk solids production was up 2.9%.
New Zealand’s dairy cow numbers peaked in 2014/15 at 5.02 million.
Just over 20% of the country’s dairy cow population was found in North and South Canterbury alone, at 940,583 cattle collectively.
Compared to the North Island, herd sizes were much larger in the South Island, comprising 30% of the total dairy herds but 43% of the cow population.
Legislation introduced in 2020 sought to temporarily restrict the expansion of intensive dairy farming through the National Environmental Standards for Freshwater under the Resource Management Act (RMA).
It was expected that regional councils would introduce new freshwater plans or change existing plans before the dairy conversion moratorium expired in January, ECan said.
But in July, all plan changes were halted by the Government, RMA Reform Minister Chris Bishop saying this would “stop councils wasting their officers’ time and their ratepayers’ money” ahead of an overhaul of the RMA.
Henceforth, consents were no longer required for land use change to dairy; however, they were required for animal effluent discharge.
Legislation replacing the RMA was expected to be introduced to Parliament in the next couple of weeks.
– RNZ