A new report predicts the possibility of major land use change in Canterbury in the early 2040s when water use consents renewals coincide with the need for dairy farmers to replace their milking sheds.
The report by Our Land and Water found that about 40% of all dairy milking sheds in the district were built between 2007 and 2015, according to resource consents.
Using the IRD calculation of a 33.3-year economic life for a dairy shed, those 230 sheds will reach the end of their economic life between 2040 and 2048.
This means nearly half of all dairy sheds are likely to need replacing during that period.
The report’s authors noted that replacing an aging dairy shed is a significant capital investment. Their research found that any farmer making that kind of decision is going to look at climate suitability, regulations and the prevailing economics of dairying compared to other land uses.
They also found that in the 2030-2040 period, 78% of all water use consents in the district will expire. The area of land involved in this process will, however, be even greater, as the water consents of all three irrigation companies in the district also fall due in this period.
Over the past 20 years, irrigation has transformed Ashburton District in the central South Island away from its traditional use as a sheep and grain-growing region.
Irrigated farming now covers 65% or 220,000ha of the Ashburton district plains. Dairy farming now accounts for $1 billion of the local economy and 63% of net farm income for the district.
“The renewal process is significant because the implementation of the National Policy Statement for Fresh Water Management (2020) may introduce new or different consent conditions for water use,” the report said.
“This could change the viability or feasibility of some land uses under those new conditions, especially if the fortunes of dairy farming do not compare as favourably as other land use options.”
The research was led by Ashburton District Council agriculture portfolio advisor Richard Fitzgerald. He is involved in an intensive irrigated mid-Canterbury family farm, and is a past chief executive of New Zealand Young Farmers and the Red Meat Profit Partnership.
It also looks at how the changing climate can be included in farmers’ decisions about their business lifecycle, on-farm infrastructure and consent conditions. It was funded by the Our Land and Water National Science Challenge, via its Rural Professionals Fund.
Part of this research included running farmer focus groups and examining data from the Ashburton District Council and Environment Canterbury to analyse the economic life of key assets such as dairy sheds and irrigation consents.
It found that these thoughts did not faze the farmers in the focus groups, however, with one farmer saying that they would follow the profits and go where the market led, and another talking about planning investments to cope with extreme events.
“For owner-operators and family farms, making any decision to change will involve looking at return on investment, but they’ll also consider their own personal stage of their farming career, succession plans, and asset value considerations of alternative land uses. At the moment there are not many land uses (with the required supporting infrastructure) that compete with dairy on a return-on-investment basis, but that may change in the future,” said Nick Giera, a dairy farmer at Ruapuna, mid-Canterbury.
The research also found that meaningful climate information at a 5km x 5km resolution would give farmers confidence to make changes that would improve their farm’s circumstances.
“My guess is that most farmers will wait until there are reliable trends and patterns of long-term changes to climate before making significant changes to their business. This means farmers are likely to have other factors that drive change first, such as returns and asset replacement decisions,” Giera said.
“Climate data is notoriously inaccurate and models that predict future changes in climate have a long way to go to give farmers any confidence in investing based on future predictions. Soil type and localised climate are big drivers of what is possible and that’s where we need data.”
The researchers observed, “Farmers are a logical bunch who are keen to understand the changing climate at a granular, local level as their whole business model is based on climate. “It makes good business sense to understand what is coming so they can future-proof their business.”
