The key message of this article is that dairy is of fundamental importance to the future of Aotearoa New Zealand. However, the journey to get there is not straight forward and it will be controversial.
First, I set out the reasons why dairy is so important, and hence the need to face-up to the challenges that lie ahead. This then leads towards necessary actions to address the challenges.
It is no accident that New Zealands most important export industry is dairy, comprising some 30 percent of the export value of goods that leave New Zealands shores. Add in sheep, beef, timber, fish, kiwifruit and wine, and New Zealands primary industries contribute a little over 80 percent of the export earnings derived from merchandise goods.
The remaining exports are led by aluminium and some machinery. However, with these and other manufactured goods, the net contribution is typically much less than the export earnings, given the imports that are required to feed into the manufacture of these exports.
There are also non-merchandise invisible exports. These are largely tourism and international education of foreigners who come to New Zealand.
Alas, even in the good times these invisible inflows are more than balanced by the invisible outflows of foreign currency. These invisible outflows include Kiwis spending money on their own overseas tourism, plus interest paid to foreign lenders, plus profits to the overseas-owned businesses operating in New Zealand, with banks and insurance institutions being the standouts.
So, the bottom line when it comes to imports such as pharmaceuticals, computers, vehicles, machinery and fuel, plus surprisingly high quantities of imported food of types we do not grow, is that physical imports need to be balanced by physical exports.
The only alternative to this balance is to keep importing capital from overseas. New Zealand has become very good at this. But there has to be a day of reckoning.
Accordingly, the inevitable conclusion is that New Zealands future depends critically on its export industries.
It is no accident that New Zealand is so dependent on its primary industries for these exports. This follows naturally from being a small country isolated from much of the world. Very simply, New Zealand will never have the scale required to build a comparative advantage for large-scale manufacturing. Also, although some would like to pretend otherwise, New Zealand education levels provide minimal advantages and significant disadvantages when comparisons are made to that bigger world.
As for the specific primary industries, the development path that New Zealand has followed is also no accident. For example, the temperate maritime climate, the topography, and the low inherent fertility of nearly all New Zealands soils, all lead inevitably to pastoralism rather than large-scale cropping.
A quick look at export statistics confirms that exports of staple crops such as wheat, barley, oats and maize are insignificant. Major crops such as rice and soy are not even grown at all in New Zealand. This is not going to change.
As for horticulture, kiwifruit is clearly the stand out but there are other successes such as apples and some sub-tropical fruit. But if anyone thinks that horticulture can save New Zealands export economy, they lack understanding of the issues.
The major non-horticultural crops that New Zealand does export are small seeds, with this mainly linked to out-of-season production on behalf of overseas plant breeders. This trade is also at close to peak, given the need for isolation between cross-fertile cultivars.
The long-term perspective of Treasury economists, echoed by the Climate Change Commission, is that resources allocated to dairy and pastoralism can over time be re-allocated to other industries. However, the key resources that underpin dairying are the sunlight and rain that falls on the New Zealand countryside. How will those resources be allocated given the fundamental unsuitability of most of this land to non-pastoral activities?
I have yet to hear an answer to that question. I suspect this reflects the lack of biological understandings held by quantitative desk economists.
The other argument I hear from people who consider themselves economically literate is that not only dairy but also the overall agriculture sector is unimportant because it comprises such a small part of GDP. As I have pointed out many times, the GDP of agriculture captures only a small proportion of the on-farm value-add and none of the off-farm added value. Also, much of the on-farm contribution, including shearers and all other contractors, is allocated to the service sector. It is a crazy anomaly bound up in distant history when farmers did everything on-farm themselves.
I also read regularly that dairy consumption globally is supposedly in decline. But this is false news. Fresh milk consumption is in global decline, but overall dairy consumption, led by cheese, continues to increase.
I also read that New Zealands dairy will in future supposedly face trade barriers. However, I only hear that from people who are well-versed in political lobbying but are not out there in the Asian markets which New Zealand exports to.
The overall trend in dairy and other food prices, albeit with inevitable volatility, has been upwards for the last two decades, with populations increasing and producers struggling to meet the increasing demand. There is no evidence that this will change. Growing more food is now a huge global challenge, largely disguised until recently by massive historical productivity gains in both plant and animal agriculture combined with huge fossil fuel inputs.
So, given the fundamental importance of dairy, there is a need to face-up to the environmental and other challenges that dairy faces, going forward. If New Zealand walks away from its pastoral industries, it is inevitable the whole economy will decline as imports have to be reined in.
A starting point is to address vociferous calls that dairy somehow threatens planetary survival.
There is no point in denying that methane and nitrous oxide, both fundamental by-products from dairy farming, are greenhouse gasses. These emissions have been with us since ruminant animals first evolved some millions of years ago. The issue is complex because methane is a short lived but powerful greenhouse gas, whereas carbon dioxide has less power but over a much longer atmospheric life.
The focus on methane is driven by short term temperature targets rather than long-term planetary sustainability. Holding informed debates on that issue is challenging.
I am reasonably relaxed about the current legislated 2030 methane target of 10 percent reduction from 2017 levels. This is a combined target for all biogenic methane and some, perhaps most, will come from the current transformation of sheep and beef land being converted to forestry. However, the 2050 target of between 24% and 47% methane reduction across all ruminant species is of a very different order. Quite simply, there are no technologies currently available to achieve this without a huge reduction in all of dairy, sheep and beef.
The second challenge facing dairy is the impact of dairy on water quality. Once again, there is no doubt that dairy can have a big impact on water quality, but sorting out truth from fiction is challenging. A key fact is that most of the nitrogen-leaching comes from urine deposited on paddocks in the second half of autumn and in winter.
I am closely associated with the development of composting-shelter farming systems where cows and in some cases beef animals are off-pasture during the winter, and are also bedded in these shelters at night time in autumn. This greatly reduces the leaching.
One of the current ironies is that development of these farming systems, which can also be super friendly for animals, are being led by innovative farmers who are learning through trial and error. It is time for the formal research and development (R&D) system to catch up.
There are also health challenges with some dairy products. I have for the last 15 years been closely associated with researching and communicating the health issues associated with A1 beta casein and the need to convert to A2. Right now, the A2 issue seems to have gone quiet in New Zealand but elsewhere things are steadily moving ahead. Given the lack of commitment in New Zealand within the mainstream dairy industry, most of my own A2 work is now focused offshore.
Each of these challenges to the dairy industry deserves multiple articles of its own. All of them are big issues, with progress inhibited by a mix of misinformation and defensive lethargy.
There are tough times ahead for most New Zealanders, and it is not just dairy farmers. There is an old saying that one reaps what one sows.
*Keith Woodford was Professor of Farm Management and Agribusiness at Lincoln University for 15 years through to 2015. He is now Principal Consultant at AgriFood Systems Ltd. You can contact him directly here.
Read more:
Dairy is fundamental to New Zealand's future | interest.co.nz - Interest.co.nz
- New Zealand keep series alive after England's dramatic collapse - Yahoo Sports - March 24th, 2024 [March 24th, 2024]
- New Zealand to Ban Disposable Vapes | TIME - TIME - March 24th, 2024 [March 24th, 2024]
- U.S. Men's Olympic Soccer Team to Face France, New Zealand and Asia-Africa Playoff Winner in Group A at 2024 ... - U.S. Soccer - March 24th, 2024 [March 24th, 2024]
- Around the world: New Zealand settling into World Championship - worldcurling.org - March 24th, 2024 [March 24th, 2024]
- New Zealand will ban disposable e-cigarettes in a bid to prevent minors from taking up the habit - The Associated Press - March 24th, 2024 [March 24th, 2024]
- New Zealand beat England by three runs in third womens T20 international as it happened - The Guardian - March 24th, 2024 [March 24th, 2024]
- Thailand revokes visas of New Zealand tourists after roadside brawl with police - South China Morning Post - March 24th, 2024 [March 24th, 2024]
- England beat New Zealand by 15 runs in second womens T20 international as it happened - The Guardian - March 24th, 2024 [March 24th, 2024]
- England Women begin tour of New Zealand with victory in opening T20 - The Guardian - March 24th, 2024 [March 24th, 2024]
- Jack Blacks epic New Zealand Warriors moment goes viral: Up the Wahs! - New Zealand Herald - March 24th, 2024 [March 24th, 2024]
- New Zealand vs England third T20 result: Hosts keep series alive - The Telegraph - March 24th, 2024 [March 24th, 2024]
- More details revealed about New Zealand interest in joining AUKUS security pact - RNZ - March 24th, 2024 [March 24th, 2024]
- For 60 years NZ has searched its 'Bermuda Triangle' for the Dragonfly a plane that got lost in the clouds - ABC News - ABC News - March 24th, 2024 [March 24th, 2024]
- Filipina-Kiwi actress Franki Russell appointed as Miss Universe New Zealand - GMA News Online - March 24th, 2024 [March 24th, 2024]
- England suffer dramatic three-run defeat to New Zealand in third T20 international - Sky Sports - March 24th, 2024 [March 24th, 2024]
- England take T20 series lead with comfortable win over New Zealand in Dunedin as Heather Knight stars - Eurosport COM - March 24th, 2024 [March 24th, 2024]
- New Zealand February trade data shows exports and imports both climbing from January - ForexLive - March 24th, 2024 [March 24th, 2024]
- New Zealand v England: Tourists collapse to hand White Ferns victory in third T20 - BBC - March 24th, 2024 [March 24th, 2024]
- Thailand revokes visas for New Zealand tourists arrested for attacking police officer - The Independent - March 24th, 2024 [March 24th, 2024]
- Does a weak New Zealand economy lead to a weak NZ dollar? - Interest.co.nz - March 24th, 2024 [March 24th, 2024]
- England Women suffer defeat against New Zealand in Nelson - SuperSport - March 24th, 2024 [March 24th, 2024]
- SailGP Black Foils win ITM New Zealand Sail Grand Prix in the chaos and collisions - Sailweb - March 24th, 2024 [March 24th, 2024]
- 'Dragonfly' plane mysteriously lost in New Zealand's 'Bermuda Triangle' is still being searched for 60 years later - Supercar Blondie - March 24th, 2024 [March 24th, 2024]
- New Zealand adds two Paris 2024 Olympic spots at Oceania qualifier - World Archery - March 24th, 2024 [March 24th, 2024]
- China always regards New Zealand as a sincere friend, important partner amid complex international situation ... - Global Times - March 24th, 2024 [March 24th, 2024]
- Chumbawamba asks New Zealand's populist party to stop using hit song Tubthumping - The Independent - March 24th, 2024 [March 24th, 2024]
- Captains knock from Knight helps England to T20 win in New Zealand - The Guardian - March 24th, 2024 [March 24th, 2024]
- Why is New Zealand's deputy PM rowing with Chumbawamba? - The Spectator - March 24th, 2024 [March 24th, 2024]
- Molly Caudery's New Zealand training is just another example of her life of chaos... the pole vaulter is one o - Daily Mail - March 24th, 2024 [March 24th, 2024]
- We Were Dangerous Filmmakers On Their Hilarious Yet Tense New Zealand Period Drama - Screen Rant - March 24th, 2024 [March 24th, 2024]
- Police hunt for two women kicked out of Auckland metal concert - New Zealand Herald - January 14th, 2024 [January 14th, 2024]
- Hospitality New Zealand to launch industry strategy looking to next 10 years - RNZ - January 14th, 2024 [January 14th, 2024]
- Australia, New Zealand move toward clean energy transition - Anadolu Agency | English - June 9th, 2023 [June 9th, 2023]
- Airdate: New Zealand From A Train - TV Tonight - June 9th, 2023 [June 9th, 2023]
- Labours Winter Plan Excludes Half Of New Zealand - Scoop - June 9th, 2023 [June 9th, 2023]
- What's New On Disney+ | Flamin' Hot (Australia/New Zealand) - What's On Disney Plus - June 9th, 2023 [June 9th, 2023]
- Roundup: Telehealth providers needed in rural New Zealand and ... - Healthcare IT News - June 9th, 2023 [June 9th, 2023]
- Why it's taking so long to open New Zealand's first Ikea - Stuff - June 9th, 2023 [June 9th, 2023]
- New Zealand companies showcase apple, kiwi in HCM City - Viet Nam News - June 9th, 2023 [June 9th, 2023]
- Christopher Luxon has a point: New Zealand needs more people - Stuff - June 9th, 2023 [June 9th, 2023]
- Climate scientist says New Zealand insulated from worst, but warns ... - RNZ - June 9th, 2023 [June 9th, 2023]
- Can the New Zealand Super Pacific teams be stopped this weekend? - RNZ - June 9th, 2023 [June 9th, 2023]
- New Zealand Fiji reaffirm close relationship - Beehive.govt.nz - June 9th, 2023 [June 9th, 2023]
- New Zealand has a new Scrabble champ - Times - Times Online - Auckland - June 9th, 2023 [June 9th, 2023]
- Elite sports trainer had sexual relationship with teen athlete who fell ... - New Zealand Herald - June 9th, 2023 [June 9th, 2023]
- New independent advisory board welcomed to the Royal New ... - New Zealand Police - June 9th, 2023 [June 9th, 2023]
- IBM New Zealand's profit took a mauling in FY2022 - Reseller News - June 9th, 2023 [June 9th, 2023]
- Elliott Smith: Why NZ has a Super Rugby coaching problem - New Zealand Herald - June 9th, 2023 [June 9th, 2023]
- Hospitality Innovator To Open Hospitality New Zealand Conference - Scoop - June 9th, 2023 [June 9th, 2023]
- The New Zealand travel card game being adopted by stoned ... - The Spinoff - June 9th, 2023 [June 9th, 2023]
- Boxing New Zealand welcomes IOC's decision to terminate 'corrupt ... - Stuff - June 9th, 2023 [June 9th, 2023]
- How a spooky old water tank inspired New Zealand's latest creature ... - The Spinoff - June 9th, 2023 [June 9th, 2023]
- He drove almost the length of New Zealand: Truck driver disqualified ... - New Zealand Herald - June 9th, 2023 [June 9th, 2023]
- What will 200000 buy in Norway, Sweden, South Africa, New ... - The Irish Times - June 9th, 2023 [June 9th, 2023]
- Where to find New Zealand's best sea experiences on World ... - New Zealand Herald - June 9th, 2023 [June 9th, 2023]
- New Zealand specialists to probe sudden chicken deaths - Cook Islands News - June 9th, 2023 [June 9th, 2023]
- Qantas v Air New Zealand to New York: Is there room for both? - New Zealand Herald - June 9th, 2023 [June 9th, 2023]
- A Journey Through New Zealands Less-Visited Corners Showcases Mori ... - March 31st, 2023 [March 31st, 2023]
- New Zealand: 7.1-magnitude earthquake prompts tsunami warning in ... - March 20th, 2023 [March 20th, 2023]
- New Zealand actress Melanie Lynskey reveals romantic behind the scenes secret from The Last of Us series - New Zealand Herald - March 20th, 2023 [March 20th, 2023]
- Gin Wigmore on what she doesnt miss about New Zealand and gnarly birth experience - New Zealand Herald - March 20th, 2023 [March 20th, 2023]
- China wants to help New Zealand recover from Cyclone Gabrielle, including financing, constructing key infrastructure - Newshub - March 20th, 2023 [March 20th, 2023]
- New Zealand on Alert over Supervolcano with Explosive History - March 13th, 2023 [March 13th, 2023]
- New Zealand police reach more people previously not contactable after ... - February 20th, 2023 [February 20th, 2023]
- Cyclone Gabrielle: fresh storm warnings for New Zealands worst-hit ... - February 20th, 2023 [February 20th, 2023]
- UPDATE: New Zealand government estimates more than $8 billion worth of damage caused by cyclone Gabrielle - Euro Weekly News - February 20th, 2023 [February 20th, 2023]
- Warning as major new scam cons New Zealand investors out of millions in just a few weeks - Newshub - February 20th, 2023 [February 20th, 2023]
- 15 Most Beautiful Small Towns in New Zealand - WorldAtlas - February 5th, 2023 [February 5th, 2023]
- Ed Sheeran dissed New Zealand chocolate in 2015 - now he thinks it's 'actually alright' - Newshub - February 5th, 2023 [February 5th, 2023]
- New Zealand lifts state of emergency declaration as rain ... - February 2nd, 2023 [February 2nd, 2023]
- New Zealand Pop-Punk Band Goodnight Nurse Are Reuniting to Open for My Chemical Romance Next Month - Concrete Playground - February 2nd, 2023 [February 2nd, 2023]
- New Zealand prepares for more flooding after country's ... - January 31st, 2023 [January 31st, 2023]
- Auckland flooding: death toll rises as New Zealand hit with ... - January 31st, 2023 [January 31st, 2023]
- There is still enough pull to play for New Zealand: Ferguson on players giving up contracts - The Indian Express - January 31st, 2023 [January 31st, 2023]
- India Predicted XI vs New Zealand: Will Prithvi Shaw be roped in for IND vs NZ 3rd T20I? - Republic World - January 31st, 2023 [January 31st, 2023]
- New Zealand climate and weather | 100% Pure New Zealand - January 2nd, 2023 [January 2nd, 2023]
- Countdown for New Year begins; New Zealand welcome 2023 as millions celebrate - The Economic Times - January 2nd, 2023 [January 2nd, 2023]
- New Zealand Welcomes The New Year In Grand Style | Fireworks Show From Auckland's Sky Tower - News18 - January 2nd, 2023 [January 2nd, 2023]
- Sir John Key says mainstream thinking will embrace China again, New Zealand will have 'magnificent' relationship with Beijing - Newshub - December 18th, 2022 [December 18th, 2022]
- Glowworms, rubber tubes, and the Nile: A most unusual adventure in New Zealand - Moneycontrol - December 18th, 2022 [December 18th, 2022]