[For the last three years I have been writing fortnightly columns for NZFarmer, which is delivered free to all New Zealand farmers. However the agricultural press in New Zealand is undergoing major change. One part of that change is that Stuff (formerly Fairfax) is now moving towards a digital focus and will cease to publish the weekly NZFarmer. This was my farewell column to NZFarmer.]
With the impending demise of NZ Farmer, this will be my last article published here. So, I had to give a lot of thought as to what I wanted to say.
Right now, we are surrounded by forces for change. There are so many topics that could be covered. So, I have decided to provide a smorgasbord of key issues.
It would be impossible to walk away without saying something about Mycoplasma bovis. This disease, and the way we have chosen to respond to it, will change many aspects of dairying going forward. My personal perspective is that we might struggle to eradicate the disease, but if we do fail, we will still succeed in managing the disease. There are many worse diseases.
I will continue to write online about Mycoplasma bovis at https://keithwoodford.wordpress,com and also at www.interest.co.nz in their rural section. This week I have written there in considerable detail about European-sourced semen as a likely source. There is a need for all semen companies, whatever their sources of semen, to be transparent as to their risk-minimisation procedures for this coming season.
I also expect to have more to say as to why I think MPI is likely to be wrong in claiming that the disease was not here in 2014 and 2015. The nub of that issue is that they have not been looking, and they do not know. In contrast, some of us who have been trying to piece together the evidence think it is likely that it was here back then. In the battle between Mycoplasma bovis and MPI, Mycoplasma bovis got a head start.
The potential for infected service bulls, the history of purchased calves and their agistment herd-mates, together with the use of non-pasteurised red (hospital cow) milk, are now the big risks for individual farmers to address, together with double fencing.
The dairy beef industry will rear less calves this year because of the risk of Mycoplasma bovis. Anyone buying weaned calves needs to be sure not only that they have been reared on safe milk, but that all herd-mates have also been raised on safe milk.
In the long term, dairy beef, particularly from Friesian-type animals, will be even more important than now. But in the short term the risks are going to put some people off.
The importance of China
I have written many times about the importance of China. It is a country that has fascinated me ever since my first China visit way back in 1973. It is a topic that will not go away.
China is currently and will continue to be New Zealand’s most important trading partner. China is crucial in regard to agricultural and horticultural products.
Europe and the Americas do not need us. Africa cannot afford to buy our products. Japan has a declining population and only slow economic growth.
There are many Asian countries where there are opportunities, but China’s 1.4 billion population plus ongoing economic growth stand out head and shoulders as to where our trading opportunities lie.
The average New Zealander still has a big journey to travel before understanding both China’s own journey and also the culture of that country. We get so many things wrong when it comes to China. We lack an understanding of what drives Chinese society and consumer purchase decisions.
Just look at all the mistakes Fonterra has made in China. Yet the opportunities are so great that we still succeed there, at least with commodities. Both meat and dairy products from New Zealand are still essentially sold as commodities. Kiwifruit is the best example of New Zealand earning entrepreneurial profits.
Currently we are in a sweet spot. There are at least three contributing reasons. The first is the buoyant China market. The second is a particularly cold European spring. The third is that higher oil prices have given some oil producing countries more money to spend.
The key message going forward is that, as always, dairy prices are essentially unpredictable. Some of the worst years have started with optimism and some of the best years have started in gloom. Most years the opening price is wrong by about $1.50 per kg milksolids, and there is no reason to expect that to change.
Despite the prospect for volatility as long as we are tied to commodities, the long-term demand for dairy, centred on China, remains strong.
The sheep industry too is in a sweet spot and hopefully that will continue. New Zealand is fortunate in that we have the opportunity to control our own destiny with few competitors. But once again it will be China, and particularly Northern China, where the entrepreneurial opportunities lie.
I don’t think we are doing enough to capture those China opportunities and we are not close enough to our consumers. The current sweet spot is making us lazy. To understand those opportunities requires using more boot leather in China itself.
There are lots of exciting prospects for the future, without worrying about artificial products where, as a low biotech country (sorry, but that is true), we have no competitive advantage. Some horticultural opportunities are indeed interesting, but it is easy to under-estimate the challenges and constraints. Kiwifruit, wine, and off-shore mussel farming should all be capable of some growth. As for bottled water and other beverage products, we have really messed that up.
Once again, with future foods it all depends on understanding markets and how to engage with consumers. We won’t get there without expending boot leather and understanding Asia from an in-country perspective. Currently, we think we are market-led but we are not.
Nutrient management and greenhouse gases
These are both vexing questions. They will not go away. And with Government contributing so heavily to Mycoplasma bovis eradication then the dairy and beef industries cannot tell the Government to get lost. There is always a quid pro quo.
In regard to nutrient management, I regard composting loafing barns as a key solution that addresses animal welfare plus nutrient management and that can also be economically positive. However, the composting barn concept is not yet widely understood in New Zealand. And if farmers are going to build them, then it has to be done right.
These composting barns, proven overseas on hundreds of farms, are totally different than any other off-paddock system. They have huge potential for farms which will stay as predominantly grazing farms. This will continue to be one of my projects going forward.
As for greenhouse gases, with methane we have to look at the net flows from pastoral agriculture and not the gross emissions as currently. But I am also of the opinion, as one rural leader recently said, that the choice is between stepping up to the table or else being on the menu. It is yet another challenge.
A1 versus A2 beta-casein
I have said for many years that the A1 versus A2 milk issue is the greatest risk to our dairy industry, and I have faced my share of negativity, derision and contempt for saying so. Well, I did not go there to be popular, but because I was following the evidence. Also, I knew how long the herd conversion journey would be.
The big companies are moving. Fonterra has committed to a joint venture with the a2 Milk Company after close on 20 years of dismissing the issue. Nestlé and Mengniu, which is China’s second biggest dairy company, are now both on board. The a2 Milk Company itself is now the largest New Zealand company (all categories) by value on the NZX. I could list many other dairy companies that are also quietly on the journey.
These companies have looked into the future and seen something that the average dairy farmer still has not seen. My simple message is that farmers who do not plan to use A2A2 semen need to reassess their position quickly.
The pendulum is now swinging such that eventually the key question will not be the premium to be achieved for A2 milk, although that could be considerable in the short to medium term. Rather, in the long term, it will be the discount for A1 Milk. All the semen companies are organised and now it is up to farmers to position themselves for that future.
Exactly where I will be writing about the above topics in future is not determined, but I expect my current online platforms will continue. I may also pop up elsewhere. The future is both daunting and exciting.