Massive potential to grow New Zealand agriculture, report shows

The release of the Pasture Renewal Charitable Trust commissioned BERL study, An economic analysis of the value of pasture, highlights not just the value of pasture to the New Zealand economy but the great potential, which exists to further increase productivity.

“This economic analysis of pasture to the New Zealand economy highlights the real potential we have to substantially increase productivity,” says Don Nicolson, President of Federated Farmers.

“While the report doesn’t mention it, water storage infrastructure will substantially reduce farm risk while increasing the volume and productive value of pasture. Water storage with pasture renewal is an economic game breaker.

“Yet the Emissions Trading Scheme is like a gorilla in the room, so research and development must be increased to three percent of GDP to get the Global Alliance on ruminant emissions underway. Farmers need to have the confidence to invest.

“Pastoral agriculture accounts for 41 percent of all exports and 12.1 percent of GDP. The wider agricultural sector contributes 64 percent of everything New Zealand sells to the rest of world and up to a fifth of total GDP.

“The Pasture Renewal Charitable Trust’s report shows there is huge potential for all farmers in pastoral agriculture to increase returns through pasture renewal.

“Based on the latest payout, an increase of just one tonne of dry matter per year over the 1.96 million hectares in dairy, would increase farmgate returns by well over a billion dollars.

“That’s not more cows per hectare but an increase in the feed per hectare that is then converted into milk solids. It’s called efficiency not intensification.

“We see the same picture in sheep and beef, where an increase in pasture production of between 10 and 30 percent is possible over the 8.8 million hectares of pasture in production.

“What we as farmers have to draw from the Trust’s report is the importance of strategic planning for pasture renewal.

“From a farm-gate return perspective, BERL’s modelling shows that increased farm gate values for sheep and beef farms could be as high as 18 percent and 15 percent for dairy farms.

“That increases pastoral agriculture’s direct contribution to GDP by $800 million but the total effect on GDP is more like $2.2 billion, when the full upstream and downstream effects are taken into account.

“That’s equivalent to the revenue 460,000 additional international tourist arrivals would add to the economy but a gain that could come through better strategic pasture management. Pastures don’t last forever and Federated Farmers congratulates the Trust on this report.

“Clearly farmers need to look at our pastures, many of which may be past their use-by date. Yet farmers also need to have the confidence to invest in their pastures and uncertainties over the impact of the ETS do little to add that confidence,” Mr Nicolson concluded.