Can New Zealand's
farming boom be sustained?
New Zealand's milk industry is booming and bringing in
millions of dollars, but there are concerns over the economic and environmental
costs of sustaining it.
New Zealand
is much more than rolling green hills, snow-capped mountains, the All Blacks
and Lord of the Rings.
All of those made New Zealand famous. But it’s milk that’s made the nation rich.
With dairy farms now dominating the landscape, New Zealand exports 95 per cent of the 19 million tonnes of milk it produces every year.
China is the biggest customer. It buys half of all its dairy products from the Kiwis.
Maury Leyland from Fonterra, the world’s biggest dairy co-operative, says it’s clear why.
“We’ve been lucky to have farmers very well educated. They understand business very well, and have good farming model,” she tells me in a story for SBS's Dateline.
“We have a lot of rainfall and a lot of grass and that’s a very economic way to produce milk.”
But the once booming market is changing.
“What we’ve seen in recent years is that volatility really increasing. It’s because as more markets are more interested in milk, there is more trading dairy so therefore you see ripples across the markets with different political, economic climatic shocks either affecting supply or demand,” she says.
“So we’ve seen an increase in volatility and we really expect that to be the norm going forward.”
Trevor Hamilton expanded his dairy farming empire to ten farms, on the back of record high global prices for milk.
The trouble for New Zealand is that other countries jumped on the dairy bandwagon to cash in too.
“Of course demand in the last two years has been insatiable out of China but it looks like it’s backing off at the moment as the Americans and the Europeans push production into China at a high milk price,” he tells me.
“It is going to put a lot of people under a lot of pressure on that basis if they haven’t built a business sustainable around those levels.”
Trevor believes he has, and what’s more he says, “Sometimes opportunity comes as a result of a downturn.”
But volatile global demand isn’t the only challenge on the horizon for Kiwi farmers.
After New Zealand’s Parliamentary Commissioner for the Environment warned of the effect the dairy boom is having on the environment, environmental activists are increasingly concerned about New Zealand’s ‘100% Pure’ reputation.
Gareth Morgan is among them.
“When you do the surveys of what people value in New Zealand, fresh water is actually number one. By a mile - far more than pest eradication, far more actually than climate change,” he says.
“So it’s a huge issue for New Zealanders. And dairy farmers, especially with the intensification of farmland, have suddenly found themselves in the gun.”
He says if too much animal waste leeches into the waterways, New Zealand will be dealing with an economy verses environment dilemma.
But Trevor Hamilton believes both can be protected.
“We probably spent 250,000 in the last couple of years on this couple of farms around the catchment in terms of lined effluent ponds, and testing effluent,” he says.
“We tend to get the blame for a lot but I don’t think it’s rightly justified.”
He built his empire from the ground up and is confident he can keep making millions by selling milk to the world, without New Zealand’s environment paying the price.
“For me it’s a 140 million dollar business today. I want to double it in the next five years and double it again. That’s been our rate of growth and I want to continue with that so long as I am capable.”
All of those made New Zealand famous. But it’s milk that’s made the nation rich.
With dairy farms now dominating the landscape, New Zealand exports 95 per cent of the 19 million tonnes of milk it produces every year.
China is the biggest customer. It buys half of all its dairy products from the Kiwis.
Maury Leyland from Fonterra, the world’s biggest dairy co-operative, says it’s clear why.
“We’ve been lucky to have farmers very well educated. They understand business very well, and have good farming model,” she tells me in a story for SBS's Dateline.
“We have a lot of rainfall and a lot of grass and that’s a very economic way to produce milk.”
But the once booming market is changing.
“What we’ve seen in recent years is that volatility really increasing. It’s because as more markets are more interested in milk, there is more trading dairy so therefore you see ripples across the markets with different political, economic climatic shocks either affecting supply or demand,” she says.
“So we’ve seen an increase in volatility and we really expect that to be the norm going forward.”
Trevor Hamilton expanded his dairy farming empire to ten farms, on the back of record high global prices for milk.
The trouble for New Zealand is that other countries jumped on the dairy bandwagon to cash in too.
“Of course demand in the last two years has been insatiable out of China but it looks like it’s backing off at the moment as the Americans and the Europeans push production into China at a high milk price,” he tells me.
“It is going to put a lot of people under a lot of pressure on that basis if they haven’t built a business sustainable around those levels.”
Trevor believes he has, and what’s more he says, “Sometimes opportunity comes as a result of a downturn.”
But volatile global demand isn’t the only challenge on the horizon for Kiwi farmers.
After New Zealand’s Parliamentary Commissioner for the Environment warned of the effect the dairy boom is having on the environment, environmental activists are increasingly concerned about New Zealand’s ‘100% Pure’ reputation.
Gareth Morgan is among them.
“When you do the surveys of what people value in New Zealand, fresh water is actually number one. By a mile - far more than pest eradication, far more actually than climate change,” he says.
“So it’s a huge issue for New Zealanders. And dairy farmers, especially with the intensification of farmland, have suddenly found themselves in the gun.”
He says if too much animal waste leeches into the waterways, New Zealand will be dealing with an economy verses environment dilemma.
But Trevor Hamilton believes both can be protected.
“We probably spent 250,000 in the last couple of years on this couple of farms around the catchment in terms of lined effluent ponds, and testing effluent,” he says.
“We tend to get the blame for a lot but I don’t think it’s rightly justified.”
He built his empire from the ground up and is confident he can keep making millions by selling milk to the world, without New Zealand’s environment paying the price.
“For me it’s a 140 million dollar business today. I want to double it in the next five years and double it again. That’s been our rate of growth and I want to continue with that so long as I am capable.”
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