16 Apr 2015

Has NZ lost its dairy production edge?

8:04 am on 16 April 2015

An agribusiness consultant says New Zealand dairy farm production and land costs are becoming unsustainable and making dairy farming here uncompetitive.

Cows being moved on the road south of Tolaga Bay, Gisborne.

Photo: RNZ / Alexander Robertson

Alison Dewes, who is part of an agribusiness consultancy that has about 50 consultants here and in Australia, has been a dairy farmer in New Zealand as well as in Victoria.

Ms Dewes said New Zealand has well and truly lost its advantage as a low cost producer, and that a comparison of dairy farm prices and pasture production costs here and in Australia reinforces that point.

"If I can use an example, such as an irrigated farm in South Canterbury being around $60,000 a hectare, to harvest around 14 tonnes of dry matter, per hectare, that's pasture eaten - one could argue that's getting quite expensive, because it actually works out at about $4400 per tonne of dry matter eaten.

In Victoria, she said, you could harvest about eight tonnes of dry matter per hectare.

"That works out at about $2,500 per tonne of dry matter eaten.

"Comparatively, the price of getting pasture in that climate and on that land type is around half of what we pay in some of our more recently developed areas in New Zealand.

"So why is this a concern?

"It's because our land base, our fundamental resource, is becoming so overpriced, that not only is it causing us to have a lot more debt and be a lot more vulnerable but it's also making us a more fragile in a lot of ways."