The New Zealand dairy dilemma

[This post was first published in the Fairfax NZ Sunday Star Times on 2 November 2014]

New Zealand earned more than $17 billion in export income from the dairy industry for the 12 months ended August 2014. This was one third of our total export income. Quite simply, without dairy, our economy would go into free fall. Yet many New Zealanders are inherently negative about our largest industry. The problem is that dairy is perceived as polluting the rivers of New Zealand.

Somewhat grudgingly, the industry now accepts that something has to be done. Actually, there is an implied error embedded in that statement. The industry has already been working hard for many years in first managing shed effluent, and then more recently in fencing waterways and planting riparian strips. I look back to the 1960s, when I first milked cows, and on those farms the effluent went straight into the drains. It was a case of out of sight and out of mind. We have indeed already come a very long way.

The big remaining problem is nitrogen leaching into the soil and thence making its way into streams and rivers. There is also a problem in some catchments with surface runoff of phosphorus fertiliser. Whereas nitrogen leaches downwards, phosphorus travels with runoff on the surface. A muddy looking stream is sure to contain phosphorus attached to the soil particles.

In some fragile catchments, such as the land surrounding Lake Taupo, the realisation that something further had to be done came more than 15 years ago. But with most of our dairy catchments, it is only now that new regulations are really biting hard. The reality is that the future for dairy is going to be very different than the past.

The fundamental problem is that cows discharge urine. This urine lands in a concentrated puddle. Once winter comes, the excess nitrogen gets flushed out through the soil.

Until recently, scientists thought they had at least a partial answer be spraying a chemical called DCD onto the pasture to turn the nitrogen into an insoluble form. Then, in 2012, DCD started turning up in milk and so the chemical was banned.

If dairy were not so important to our economy, then the solution would be obvious. We could simply replace dairy with something else. In the real world that is no solution.

Although sheep produce smaller urine patches than cows, they also only earn only a fraction of the dairy income per hectare. The ratio varies from year to year, but in broad terms a kilogram of pasture will earn about four times as much export income if converted into dairy products rather than meat.

In New Zealand, our traditional competitive advantage with dairying has been the low cost of production. The cows harvest the grass themselves, and they live outside all winter. Also, we have learned how to graze pastures so as to maximise both the quality and the utilisation. Nobody does this better than New Zealand farmers, although in priding ourselves we do sometimes ignore the advantages that nature has kindly bestowed upon us. In most part of the world, these grass-based pasture systems do not work anywhere near as well as in New Zealand.

Now we need to change those systems to manage the environmental problem that lay hidden for so long. The challenge is how should we do this?

There are multiple ways to tackle the problem, all with advantages and disadvantages. Within the industry, the debates can get heated, with limited respect for alternative views.

The simplest way would be to de-intensify. But reducing cow numbers is only a partial solution as the remaining cows will still produce high nitrogen urine. With less intensive farming, we could also expect to see more ‘once-a day milking’, which some farmers are already doing profitably. Other farmers have tried ‘once-a-day’ milking but then returned to ‘twice-a-day’.

De-intensification may work for some at the farm level. But at the national level, farming less intensively will impact heavily on export income, upon which we all depend.

All of the other systems involve some form of off-paddock wintering. These systems can range from stand-off pads designed primarily for heavy rain events, through to fully housed systems. In between, there are the hybrid systems, where cows are housed during the night but let out to graze for a few hours each day.

Our major overseas competitor is now the US. The main system they are using is to fully house the cows. This is capital expensive but it can provide a very high level of effluent control. Importantly, the Americans are showing that they can be internationally cost competitive with these systems.

Fully-housed cows produce a lot more milk than either grazing cows or partially housed cows. They also convert feed to milk with considerably increased efficiency. The key advantage the Americans have is that they are much more cost efficient at cut-and-carry feed systems than we are in New Zealand. In New Zealand, we still have lots to learn.

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About Keith Woodford

Keith Woodford is an independent consultant, based in New Zealand, who works internationally on agri-food systems and rural development projects. He holds honorary positions as Professor of Agri-Food Systems at Lincoln University, New Zealand, and as Senior Research Fellow at the Contemporary China Research Centre at Victoria University, Wellington.
This entry was posted in Agribusiness, Dairy, The Fairfax SST Articles. Bookmark the permalink.

7 Responses to The New Zealand dairy dilemma

  1. JL in US says:

    There is a growing movement in US to feature grass fed dairy. A lot data showing improved fat composition from grass fed cows. Even some data showing better human weight management. Doesn’t NZ have an advantage here ?

    • Keith Woodford says:

      JL in US
      Potentially yes. However, NZ has to date gained no commercial advantage from that potential. My limited understanding is that grass fed dairy has higher Omega 3 fats relative to Omega 6. But these are short chain rather than long chain. For health benefits, I believe they have to be long chain such as come from fish. But I am open to learning more on this.
      I believe that our major company Fonterra will be cautious about pushing the grass-fed issues. Fonterra’s milk is sourced from a range of countries apart from NZ, including Australia, Chile and now its own farms in China. Not all of the cows are grass fed.
      Keith W

      • JL in US says:

        Keith

        There seems to be more and more data to support grass fed whole milk. These products are now showing up in our larger supermarkets. Previously this was an item you could find only in serious health food stores. Generally marketed by larger farmer coops and almost always under an organic label. I am waiting for the day when I see an organic, grass fed, A2 milk.
        Science related blogs in US seem to point more and more back to health benefit of the diet of our parents and grandparents. Some interesting early views that the closer you are to the sun (grass, plankton) the better the food source.

        One would hope that NZ farmers could reap this benefit.

      • Honora says:

        We’ve got an organic milk available in Christchurch that probably is not permitted to state it is sourced from A2 cows but recently it amended its label to say the milk comes from Jersey cows. I emailed them to find out if they’d done the A1/A2 genotyping and they hadn’t but I envisage this milk is predominantly A2. I suspect they’re grassfed as when I was a lass at school, we learned that Southland (where the milk is sourced from) had the highest carrying capacity in New Zealand for sheep so they’ve probably got something going for them with the cows as well even though it’s a lot cooler that far south. Anyway very happy to have the choice of this milk and the cheese is absolutely delicious as well.

  2. Honora says:

    I understand that NZ Dairy farmers like a high component of rye grass in the pasture to increase the protein levels in the milk. Of course this means the cows’ urine has more urea which is good energy going to waste. I’ve been told that for optimum health, cows need a feed of 30% sugar e.g. clover or plantain which would reduce their urea output. In New Zealand, some cows are being fed tapioca to reduce their urea output onto the paddocks.

    • Honora says:

      Also meant to say that the peak sugar content of rye grass is in the winter where it gets to 4%. I was told the cows are fed molasses to increase their sugar intake. I had wondered about the molasses tanker I’d often seen in a rural locale…

  3. trlahh says:

    For soil nutrient buffering I suggest that biochar has had almost no attention from the dairy industry. There is plenty of hard science showing biochar efficacy for nutrient management so why no field trials in NZ? …. http://soilcarbon.org.nz/tag/dairy-farming/

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