Grow and shrink trial for farmers

Finding ways to grow wealth with a smaller environmental impact is the biggest challenge facing dairy farmers.

The inter-generational problem would be based on a shift in values from growing cow numbers and milk solids to remaining a profitable and attractive industry with a lower environmental footprint, South Waikato dairy farmer George Moss said at the Farmer’s Forum at Mystery Creek.

‘‘How do we grow our businesses? How do we get the next generation in? How are we able to exit with the sort of lifestyles that we want, yet at the same time reduce our footprint and reduce our impact on the environment?’’

Earlier that day, Agriculture Minister Damien O’Connor denied claims the Government wanted a cap on cow numbers. Instead, it wanted better nutrient management on farms.

Moss was participating in a panel discussion on the industry’s future at the two-day event attended by more than 500 people.

He said farmers had to find that sweet spot, where they were making a profit while lowering their greenhouse gas emissions and nutrient levels.

‘‘We thought historically in terms of cow numbers. We thought historically about milk solids but the question in front of us is, how can we generate those dollars for ‘New Zealand Inc’ and ‘Dairy Inc’ with a lesser footprint.’’ He believed the next generation of farmers were more eager to be part of that story than his generation.

The next generation were focused more on ‘‘smarts’’ and onfarm behaviour.

He said farmers would have to mentally cope with a both exciting and scary change.

The frightening part was not being able to meet that challenge as a farmer, while the exciting part was the value the industry could deliver to wider society including food and nutrition, he said.

Farmers could choose to be victims and be negative, or embrace change. To achieve that they had to respect people and their opinions and maintain a dialogue.

‘‘Operating in silos is really not an option if we want to optimise New Zealand Inc.’’

Moss said the opportunities for dairy had never been brighter as the world population was growing and getting wealthier.

‘‘The demand for food, certainly in the next 20 years is going to increase massively.’’

There were also higher expectations by people about how food was produced.

‘‘When you look at how New Zealand is placed to do that, with the exception of Ireland and parts of the United States, we are still the best grass growing place and we have the best technologies around for turning grass into milk.’’ A narrow-focused review of the legislation that formed Fonterra would be at ‘‘our peril’’ for the issues now faced by the dairy industry, says Agriculture Minister Damien O’Connor.

A widespread review was needed because of its complexity. The industry had been built on the back of legislation and there had to be caution when changes were made, said O’Connor, speaking at the Farmer’s Forum at Mystery Creek.

‘‘We have opened the door to competition, but there’s still the obligation from Fonterra to pick up milk if you produce it and there are open-exit provisions as well. Now we change those at our peril.’’

The Government has released its terms for a review of the 17-year-old Dairy Industry Restructuring Act 2001 (DIRA), which provided regulations for large co-operative Fonterra and protected the long-term interests of farmers, consumers and the wider economy.

O’Connor said a review of dairy industry legislation would help the dairy sector get in shape for the future.

It would cover the open entry and exit for farmers, the raw milk price setting process, contestability for milk, the risks and costs for the sector, and the incentives or disincentives for dairy to move to sustainable, higher-value production and processing.

Fonterra’s obligation to pick up milk put pressure on the cooperative to build more processing sites, but if that obligation was removed, it may also remove that obligation allowing people to leave the co-operative.

‘‘We want to try through the Commerce Commission and through our normal commerce law, have a fair protection for the farmers, for the company itself and for the wider economy.’’