Farming within limits, complex

 That’s the view of associate professor Graeme Doole, who specialises in environmental economics at Waikato University. He told delegates at the recent Fertiliser and Lime Centre workshop at Massey University that farming within limits is a new and scary concept to many farmers.  

Farmers tend to be focused on production and use this, rather than profit, as their yardstick of success. Many regard boasting about profit as obscene and some don’t know their profit until their accountant has done their books, he says.

In New Zealand production is seen by the wider community as an indicator of regional vitality. “They say if we withdraw milk production out of a regional economy it will [diminish] the number of jobs in the processing sector. They also say production… is important so we can retain our existing markets overseas.”

But Doole says the issue is more complex than that and there is a link between production and nitrogen leaching which is a major issue on dairy farms. In catchment areas where nitrogen loss is an issue in water quality, farmers are faced with having to downscale production to comply with limits.

“So that’s the dilemma. But there are creative ways to solve that. We’ve found in some applied work that at a milk price below $7.00/kgMS farmers can produce less but make more money. 

“If you over-intensify a farm – especially with expensive infrastructure or by carrying too much stock – you can end up producing more but making less money because of the marginal cost of the feed.” 

Doole says they have evaluated cow house systems, which cost $750-$1000 per cow, and these usually show a reduction in nitrogen leaching of 15-20% if they are well managed. But on less well managed farms the reduction in nitrogen leaching can be as low as 3%.

“We are also getting a tendency towards very expensive cow house systems, especially in the South Island – $4000-$5000 per cow, especially free stall barns. [In that range] people are so highly indebted that they are intensifying to pay the debt and that’s eroding any benefit the system has for decreased leaching.” 

Doole is confident farmers will adapt to the new rules. They previously coped with the removal of subsidies, though some fell out of the industry, and he expects the present changes will have much the same effect.