Peter McBride, the chair of Fonterra, says that dairy farmers are moving away from cows and milk at a rate of about 1% per year. And the company is going to have to deal with that.
McBride said at the Fonterra Shareholders’ Fund annual general meeting that land use change could happen even faster as more pressure is put on farmers by things like an ageing population, the way farmers choose to live, and stricter rules about greenhouse gas emissions and water quality.
Even though farm gate dairy prices are at an all-time high—from $6.35 per kilo of milk solids in the 2018/19 season to $7.14 in the 2019/20 season, $7.54 in the 2020/21 season, and $9.30 last season—this trend is still happening.
McBride said that dairy land in different parts of the country has been used for things like solar panels, horticulture (growing avocados, hops, and kiwifruit), and heifer or winter grazing.
But not so much for forestry.
“That affects sheep and beef more than dairy,” McBride said, “but it does affect dairy because it makes heifer grazing less certain.”
As the government tries to get farms to reduce their greenhouse gas emissions, there has been a lot of talk from farming groups and politicians in the opposition about how trees are bad for farms and rural communities.
A report commissioned by the farming group Beef + Lamb found that up to 50,000 hectares of farm land bought last year could be planted with pine trees in the future.
Beef + Lamb said that was “alarming” and “far more than is needed.”
Milk production is going down for more than just one reason. High prices for feed, a lack of workers, and the weather are also factors. Farmers were hit by storms, flooded rivers, changing temperatures (including droughts), and low levels of light over the winter, which may have been caused by climate change.
But the weather isn’t everything.
Less milk is being made.
Fonterra1 figures for the month of September show that 1 percent of dairy land is lost every year. From DCANZ.
The Dairy Companies Association of New Zealand makes milk production statistics every month.
Based on milk solids, the most recent report shows that milk production was down 3.8% from September 2021. This number was down 4 percent from June to September, and it was down 4.2 percent from June to September.
A spokesperson for an association told Newsroom that New Zealand’s current production numbers (1.85 billion kg milksolids for the 12 months to September 2022) are very close to what they were in 2014.
“There is a constant race for land use, and other pressures will limit supply in the future.”
