A new study has found that New Zealand could be less reliant on internationally produced feed by growing more domestically and reducing the dairy industry’s demand for it.
The year-long study by AgFirst, funded by Our Land and Water, examined how NZ farmers could reduce their reliance on imported feed.
Its findings were outlined by AgFirst consultant Raewyn Densley at the company’s annual Financial Survey release at Mystery Creek in August.
It found that modelling shows that while cropping on farm led to a slight decrease in milk production, it led to a slight increase in profitability on North Island farms and significantly decreased biological GHG in all regions.
The survey also found a significant opportunity for Māori farmland, with 1.47 million hectares of land in iwi ownership.
“Why Māori land? It’s currently an under-utilised resource. They are small, fragmented blocks that aren’t really suited for livestock operations and the owners lack the capital to develop them for horticulture,” Densley said.
The study found there are a number of farms that are on the cusp of needing a major infrastructure upgrade and in that circumstance, it may be better to reduce cow numbers and crop a proportion of the farm, she said.
Using modelling based on DairyNZ data, the study looked at two scenarios: if all feed is imported and if all feed is grown on the farm in different regions in NZ.
The feed chosen for the modelling was maize silage.
In the North Island, there was an increase in profitability if all of the feed was grown on farm despite a slight fall in cow numbers.
While milk production decreased, the reduction in feed costs was larger than the reduction in milk income, she said.
“We saw slight rises in profitability in these farm systems from actually cropping on farm.”
GHG emissions were reduced by 6-13% (averaging 10%) due to less total feed being used and less milk produced.
When the scenarios for the Waikato model were put through a payout and feed price sensitivity analysis, it was found that it became more economic to buy in feed only when the payout hit $8-$9/kg MS and feed was about $400-$450 per tonne, which she acknowledged rarely happens in reality.
NZ is a net importer of grain and concentrates. Last year people consumed 5.8 million tonnes of concentrates and grew 2.1 million tonnes.
The dairy industry is by far the biggest user of grain in New Zealand. Of the 3.7 million tonnes of internationally produced feed (IPF) arriving in NZ last year, 75% was used by the dairy industry. Poultry and other animals used 16%, and 9% was used for human consumption.
The high percentage used by the dairy industry is because of the lift in per-cow feed demand along with the extra 740,000ha of land converted to dairy farming since the 1990s, meaning more cows and more feed, she said.
Domestically, the bulk of grain production is in the South Island, with the largest grain grown by type being wheat followed by maize and barley.
If maize grain and silage are combined, it is the largest feed source, and has been rising recently, she said.
In 2022, NZ farmers produced 900,000t of grain from 107,000ha. While our favourable growing conditions mean average crop yields are some of the highest in the world, the cost of production is high too, due to the small scale of the agriculture and high input costs.
It is particularly costly to get grain from the South Island to the North Island, where the largest dairy demand is, she said. “It’s a very expensive piece of water to cross.”
Compared to Australia, the costs of production are especially high. The average cost of production per hectare (using contractor rates, excluding post-harvest costs) is $3684, compared to $457/ha in Australia on land with 400mm or more rainfall, and $1140/ha on irrigated Australian land.
On a grain-yield basis, NZ averages 12.7t/ha compared to 1.8t/ha and 4.8t/ha on non-irrigated and irrigated Australian land.
“There’s much higher yields, but overall, grain is still $40-$50 a tonne more expensive to produce in New Zealand than it is in Australia.”
Post-production costs are also higher in NZ compared to Australia.
“It’s almost always cheaper to get grain from Australia into the North Island than it is to bring it up from the South Island up.
“That is a major limitation for New Zealand to be less reliant on IPF.”
Australia exported 40.6 million tonnes of grain in 2021, more than 10 times the annual NZ demand for IPF and more than 40 times the amount of imported grain.
As a result, a grain supply issue is possibly less risky than PKE, which is traded by two neighbouring countries.
“The study really showed that the biggest risk was from PKE in terms of availability.”
If there was a shortage, consumers would pay a higher price for chicken and eggs and there would be more imported pork as local pig farmers struggle to afford feed costs for their herds.
Dairy farm profitability would be affected, too, because there would not be enough feed for the national herd, she said.
This article first appeared in the October edition of our sister publication, Dairy Farmer.