2008 Tasmanian Dairy Conference Burnie, 8 th October 2008 South Island (NZ) Dairy Industry Development Richard Christie – Executive Director, South Island

2008 Tasmanian Dairy ConferenceBurnie, 8th October 2008

South Island (NZ) Dairy Industry Development

Richard Christie – Executive Director, South Island Dairying Development Centre

S I D D C – Partners networking to advance South Island Dairying

SIDDC PartnersSIDDC PARTNERS

South Island milk from 7% to 35% of NZ total in 17 South Island milk from 7% to 35% of NZ total in 17 yearsyears

South Island Milk as Percentage of National Milk

7.4

%

9.6

%

11

.7%

13

.2%

15

.2%

16

.5%

17

.3%

19

.4%

22

.0%

24

.0%

23

.3%

26

.5%

28

.0%

29

.2%

30

.3%

31

.1%

32

.1%

35

.1%

92

.6%

90

.4%

88

.3%

86

.8%

84

.8%

83

.5%

82

.7%

80

.6%

78

.0%

76

.0%

76

.7%

73

.5%

72

.0%

70

.8%

69

.7%

68

.9%

67

.9%

64

.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

NI %

SI %

New Zealand Milksolids Growth

0

200

400

600

800

1,000

1,200

1,400

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

kg M

S (

mill

ion

s)

North Island South Island

South Island Milk Growth

0

50

100

150

200

250

300

350

400

450

500

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

Milk

solid

s (

mil

lio

n k

gs)

FACTORS FOR SOUTH ISLAND GROWTH

• Processors wanting to grow• Suitable land• Well priced land• Sizeable properties• Expansion opportunities with adjoining land• Wintering land options• Reliability (rain or irrigation)• Low share structure of industry (initially)• Attracting the entrepreneurs and the

corporations


FACTORS FOR SOUTH ISLAND GROWTH

• North Island migration south, plus international• Large farms give a range of equity possibilities:

– For farm operator– For investors

• Loans readily available• Income and capital appreciation driving

continued expansion of the new entrants• Share revaluations• Westland model


THE SHAPE OF SOUTH ISLAND DAIRY FARMS

• Largest herd sizes • Flat milk curve• Employment of staff• Corporate farms• Equity partnerships• Individuals with multiple properties• Culture of expansion and risk taking• Developing into areas not traditionally regarded

as suitable for dairying


South Island Dairy Regions 06-07

CURRENT SOUTH ISLAND POSITION

• 2,400 herds & growing at +100 per year (21% of NZ dairy herds)

• 1.24 million cows & growing at 100,000 per year (31% of NZ dairy cows)

• 430,000 ha dairy platform & growing at 20,000 ha/yr (30% of NZ dairy land)

• Average herd size 525 cows (North Island = 305 cows average)


LIMITS TO GROWTH

• Service industry support• Availability of skilled and unskilled staff• Ability to borrow• Cost structures• Suitable land:

– Water– Winter support land

• Environmental Constraints– Water– Nutrient loss– Resource Management Act processes

• Cost of land in South Island verses other opportunities– Tasmania, - Uruguay, - USA, - Chile


Land Price $NZ/kgMS

Waikato Canterbury Southland

Sept 2006 43 26 25

Sept 2007 47 31 33

July 2008 57 33 40

Change +33% +29% +60%

Agrifax

Lincoln University Dairy Farm [LUDF]

Southland Demonstration Farm

SI Dairying Development Centre

LUDF StructureSIDDC Executive Director

LUDF Management Team

Farm Manager

Business Consultant

DairyNZ Developer

LUDF Business Advisory Group [BAG]

Farm Staff

Herd Manager

Dairy Assistants [3]

LINCOLN UNIVERSITY DAIRY FARM

• LUDF conversion in 2001-02, 680 cows, 161 ha platform, centre pivot irrigators

• SIDDC Partnership to manage farm and leverage capabilities

• Research, extension, education, training for South Island dairying

• Best practice commercial demonstration farm• Targeting top level production with low

environmental impacts


WHAT PRODUCTION IS LUDF ACHIEVING?• 2002-03 1,414 kg milksolids/ha• 2003-04 1,684 kg milksolids/ha• 2004-05 1,719 kg milksolids/ha• 2005-06 1,771 kg milksolids/ha• 2006-07 1,703 kg milksolids/ha• 2007-08 1,744 kg milksolids/ha= sustainable high production• Canterbury Ave = 1,223 kgMS/ha (LUDF +39%)• NZ Average = 934 kgMS/ha (LUDF +82%)


Visit www.siddc.org.nz Website

Southland Demo Farm

SDF farm walk notes

Lincoln University Dairy Farm - Farm Walk notes Tuesday, 30th September 2008

7. The target line is at the average cover for our budgets for today which is 2200 kg DM/ha on the milking platform and our actual is 2166 kg Dm/ha.

8. The wedge now has a target line that reflects the pre-grazing target for a 21 day

rotation, feeding an average of 16 kg DM/cow (includes springers) at a stocking rate of 4.3. (4.3 x 21 x 16) + 1480 = 2929. This is a slight increase in allocation. No silage has been fed this week.

KEY REQUIREMENTS FOR DEMONSTRATION FARM

• Commercial in approach and at a scale matching the district• Key people – skilled, committed, champions• Data collection - ongoing• Transparency of information• Current information – weekly web updates (farm walk notes)• Focus days that farmers want to come back to• Relevant and leading (cutting edge – not bleeding edge)• New technologies being integrated into practical farm management• New projects• Research carefully integrated and non-intrusive• Able to cope with visitors• Correct structure

– Full control of farm management and capital – Management team operating under policies– Committees (and scientists) don’t run farms – Strong input from leading farmers


WHAT IS OUR RESOURCE USE EFFICIENCY?

IRRIGATION• M Appl Sc thesis, 2008• Detailed study of farms regarded as 10 of best in

Canterbury for conversion of water to milk• Centre Pivots most effective• LUDF water conversion efficiency 70% higher than

the average of the 10 farms• Obtained in part by utilisation of technologies such

as Aquaflex



• IRRIGATION


GREENHOUSE GASES– RESULTS from LUDF using eco-n

• So are we good or bad?


LUDF Typical LUDF Typical

Total 7.85 9.92 15.65 10.34% difference -21% 51%

Tonnes of CO2 equivper tonne MS per hectare

EMISSIONS TRADING IMPACTS


Table 3 Emissions Trading Scheme Farm Costs

Emission Source Allocation of 90% of 2005

Emissions Full Price of Emissions

Carbon price > $15 $25 $50 $15 $25 $50

Methane emissions $1,860 $3,105 $6,205 $18,615 $31,030 $62,055

Field nitrous oxide emissions $1,150 $1,915 $3,825 $11,480 $19,130 $38,265

Total Farm Carbon Cost $3,010 $5,015 $10,030 $30,095 $50,160 $100,320

Eco-n Carbon Credit $4,045 $6,740 $13,480 $4,045 $6,740 $13,480

Total Farm Carbon Cost Using eco-n

-$1,035 -$1,725 -$3,450 $26,050 $43,420 $86,840


6-years of monitoring drainage water shows low nitrate leaching losses (< 22 kg N/ha/y)

North Block lysimeters South Block drainage plots



0

10

20

30

40

50

60A

mo

un

t o

f n

itra

te l

each

ed (

kg N

/ha)

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Average

Lincoln University Dairy Farm North Block Lysimeters

50 mm

300 mm

140 mm

140 mm

120 mm

107 mm

INTERIM DATA

114 mm

Yearly variation shows need to use multi-year average values rather than a single year result


Thank you

Documents

2008 Tasmanian Dairy Conference Burnie, 8 th October 2008 South Island (NZ) Dairy Industry Development Richard Christie – Executive Director, South Island