Adopting the open-minded Antipodean approach
In 2010, New Zealand invested in a Domestic Centre for Agricultural Greenhouse Gas Research and in the Global Research Alliance, while will further boost research expenditure on agricultural greenhouse gas emissions.
But it’s not only in technology that New Zealand is innovative. Its organisation of dairy-processing is streets ahead of other countries, including Ireland.
Fonterra is one of the largest processors of milk in the world and dairy farmers everyone track its milk price on a constant basis. It was a tremendous leap of faith by New Zealand dairy farmers to appreciate the potential benefit to them of amalgamating their co-ops under a single processor.
The gains in terms of the exploitation of scale economies alone have been huge. New Zealand now has some of the largest-scale milk dryers in the world, which provide the sector with a significant advantage in a range of milk commodity exports.
The scale of Fonterra also confers significant benefits in terms of R&D and marketing investments.
Everyone remarks on the differences in farm size between Irish and New Zealand farms. However, the difference that I noticed most related to mindset. Dairy farming is seen first and foremost as a business. New Zealand farmers will frequently talk about their return on equity. This metric is rarely, if ever, mentioned in Ireland.
New Zealand farmers see themselves working so as to retire completely from farming on a good pension. Farmers in their 50s will frequently sell a fraction of their equity to family members or others and take a more relaxed role on the farm.
This means that generally productive land is held by people that want to maximise the returns from its use. This open-minded approach to land ownership means that people without any land can find ways to become large-scale dairy farmers. “Share” milking, whereby people without land can work on a dairy farm and earn a share of the profits, is an innovative way of enabling landless educated young people with drive and motivation to enter the industry.
In many cases, landless people can also obtain an equity stake in dairy farms. These mechanisms ensure that land is managed by those who are motivated to use it optimally.
I don’t think we’ll ever see farm size increasing to New Zealand levels but I do believe that we will see a change in land tenure arrangements and that new business models will also emerge, perhaps along New Zealand lines.
I also think in time we will see further rationalisation of milk processing as we inevitably engage in competitive with New Zealand and other countries for new customers on global dairy-product markets.
Prof Gerry Boyle is director of Teagasc, the Agriculture and Food Development Authority