Where to Next? Our Agriculture + Future Water Quality in NZ Alison Dewes

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1 Where to Next? Our Agriculture + Future Water Quality in NZ Alison Dewes 1

2 A Painful Transition for NZ Agriculture 2

3 Ag Growth Agenda is Testing Limits Business Growth Agenda Boost exports from 30% to 40% of GDP by 2025 (KPMG, 2013) Double rate of growth to 7% CAGR compared with 3% CAGR past 20 years. (Ridett Institute, 2010) Drive to Realise the Potential of Ha of Maori Owned Land(300,000 Ha class 4-6 land intensified to higher performance each year for next 3 years) (Price Waterhouse Coopers, 2013) Irrigation Infrastructure Fund (Govt + Crown Investment Schemes to Accelerate Water Storage + Irrigation: eg: 4-500,000 ha more irrigation around NZ 3

4 Economic Agendas GDP as the measure of success? Government and Regions use GDP as their metric. They show GDP impacts when a new regional plan is introduced. GDP only measures gross turnover( + jobs)at any point in time. GDP fails to measure public wellbeing, environmental health (cost of clean up), scientific integrity, or regional and national economic vitality. Fallacy of GDP: Christchurch earthquake was good for GDP but not the people. Growth, production and intensification lifts GDP but no relationship to profit and resilience at farm level 4

5 How central + local government + processors see it SWEET ZONE Production + More Output + Development Equal GDP increases Magnitude Environmental effects and costs Inputs 5

6 Is BIGGER + MORE Really Better? Or is it More Problem? 6

7 ON FARM REALITY: More Production BUT LESS Productive + Additional RISK 7 While total dairy output has increased 60% last decade, debt has increased 300% and net productivity has not increased at all

8 The Sweet Zone Business Indicators Farmers pushed to right by processors Environmental Effects and costs SWEET ZONE Production Productivity Magnitude Profit (ROC) Inputs

9 Biological systems have natural limits: Limits = energy, capacity and resource availability. Can we keep growing agriculture in New Zealand? - THEO SPIERINGS 30th of OCTOBER 2014 Says New Zealand dairying can continue its expansion in the next decade with 60% based on conversions and more animals and 40% is productivity. - THEO Disagrees with Environment Commissioner s comments that more dairying means a drop in water quality - New Zealand can easily grow for the next ten years by 2%, 3% a year. Not worried about sales of productive land to foreigners so long as we are working together with foreign owners (Saturday, 25 October 2014,- The Nation; Lisa Owen interviews Fonterra CEO Theo Spierings) NZ will need 22 million tonnes of extra feed(10x current) imported + create extra effluent and nutrient challenges. Revenue will NOT cover extra costs (MR<MC). 9

10 UNDERSTAND the MYTHS that got us here o Farming for the good year to maximise the benefits from the high payouts o More milk production = more money o More cows = more milk and more money o More Nitrogen + Fertiliser and Grass = more money o Growth is limitless and demand is continuous o The environment will always to absorb our legacies (N toxicity in NOF) o Science and technology will give us breakthroughs to overcome limits o New Zealand s Clean Green Image will never falter 10

11 OVERFERTILISATION High Phosphorus levels in soils and still rising: Many dairy farms now importing enough Palm Kernel to meet ongoing P requirements Most do NOT need more P Overuse of Nitrogen: N fertiliser increased 800% last decade. But - Total N test in Soil: discovered 1995 many farms could've used around half the N.. but there hasn t been active extension of this knowledge. (AgResearch + Ballance) 11

12 Rotorua Lakes example: PUBLIC IS PAYING $500 M Clean Up Costs around NZ. Cost of nitrogen removal from receiving water i.e: floating wetlands in Rotorua range between $246,000 T N And up to $400,000/tonne ($400/kg) paid to farmers to reduce it ex the root zone: i.e: Lake Taupo Catchment + $40 Mill in Rotorua 12

13 NOW The Transition Growth Agendas Inside Limits Economic Agenda vs Environment, Public & Farmer Wellbeing vs The Science, the Lag Phases Meanwhile the Public Gets Frustrated, Rivers Get Worse & Law begins to set Bottom Lines. AN IMPASSE? 13

14 The Growth Agenda Inside Limits FARMER FEUDING Growth Agenda is pitting one farmer against another in regions. 14

15 Upper Waikato Pine to Pasture could add 1000 T N extra to Upper River = Public Cost could be $400Mill? 15

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17 Intensification and Growth in Already Overallocated Catchments Selwyn, Waikato, Hinds, Tukituki 17

18 Nationally: COURTS and HEARINGS shape outcomes HAWKES BAY Hawkes Bay Tukituki River + Ruataniwha Dam Proposal - HBRC/Dairy NZ + Fonterra supported toxic N in river + single nutrient mgt EPA ruled limit to be 0.8mg N, ecosystem health. Economics didn t stack up: No longer LOW COST DOWN UNDER due to price of land for pasture -Water costs $1000 per ha per year. COP $ kg Milksolids. + Debt servicing = need $ kg MS long term to be13 viable.

19 How are Regional Councils dealing with allocation of nitrogen loss rights to farmers? 19

20 The Regions: N Transitions Required REGIONAL COUNCIL NET DROP IN N LOSS FOR DAIRY Waikato Don t know plan yet (2016) Bay of Plenty 40% drop N loss. Taupo No more than grand parented allocation Hawkes Bay Must < LUC limits. If >30% LUC non compliant Must maintain or improve all water bodies. 25% drop over 20 Years must prove reductions (LUC allocation) Horizons Selwyn Ashburton Hinds Area 15% reduction by 2017 then a further 30% drop to make headroom for CPW 15% initially then a further 30% drop to make headroom for new irrigation 20

21 FARMERS ARE GETTING MIXED MESSAGES 21

22 RELIABLE MEASURES OF A FARMS RISK TO ENVIRONMENT IS ESSENTIAL (Overseer) 22

23 OVERSEER: a nutrient budget model being used as a regulatory tool Decision support model to give a N output for a farm. We cant not model sediment, pathogens, P loss farm level. IDEALLY it would FOSTERS INNOVATION ON FARM No Input Controls BUT THE MODEL(N Loss for a farm) HAS BEEN FLUCTUATING but up to 300% upwards and 50% downwards, for the same farm and same system between years - TRUST and TRANSPARENCY is now questioned by farmers + Advisors. Around half of NZ regional plans and variations rely on it for assessing farm N Loss Risk. NEEDS MORE FUNDING + TRANSPARENCY + FUNDING ($750K allocated 4/8/2015) 23

24 Stage 3: The Delivery Agriculture in NZ in 2020 Will it be Lucky to be Here? or Healthy + Vibrant? 24

25 Leaders 25

26 TOMORROWS FARMS TODAY SAME SOILS AND RAINFALL UPPER WAIKATO PUMICE, 1000 mm rainfall 25 FARMS at $5.50 and $6.20 milk price MORE MILK -MORE STOCK -MORE N use, -MORE pasture harvested -DID NOT correlate with higher profits in farmers don t know what they don t know Kirsten Watson vet + sharemilker & TFT participant. 26

27 Are we heading towards input controls Best Practice for Profit and Lowest Risk Problems. Over fertilisation, Overstocking Over- use of Marginal Land Classes Solutions Nitrogen Tax or Fertiliser Limits? Only winter cropping on best land use classes? Controls on land use change? Fully fund Overseer and ensure transparency. 27

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29 APPENDIX SLIDES 29

30 What Causes Higher N Loss Higher rainfall, Coarse/Vulnerable Soils Irrigation and Intensity of Farm System Higher N fertiliser esp autumn winter High protein diet (fertilised ryegrass) Higher Cow numbers with no sealed loafing/effluent capture. Winter cropping + high stock densities on crop Effluent irrigation too heavy, too deep. 30

31 SELWYN PLAN 31

32 There will be a couple of ways to go 32

33 Eg: Dairy Farm in Selwyn Cows, irrigated, 165 ha, 250 kg N use, 40% feed imported Must drop 15% N loss by use of Industry GMP by 2017 Must drop 30% additional N loss by 2025 From 50 kg to 32 N loss by

34 SOLUTIONS? Option 1 Stay intensive Business as Usual System Build Loafing + Feeding barn Cost $3 M Increase debt, risk, need for high output BUT is the POLICY CERTAIN? Will current policy fix things? Option 2 Destock by 20% Reduce bought in feeds Whole farm soil test Higher milk from fewer well fed cows. No Elaborate Infrastructure Required 34