Cost to dairy expansion

A doubling of Southland's dairy herd to more than 300,000 cows to boost economic prosperity would require a "trade-off" between economic growth and environmental sustainability, according to South Port chairman John Harrington.

"Dairying has the ability to give New Zealand access to the newly wealthy markets of the developing world and the potential to double in Southland from the existing number of 155,000 cows," Mr Harrington told shareholders at Bluff yesterday.

In what is sure to spark a heated environmental debate, Mr Harrington put dairying potential at the forefront of several agricultural products and aluminium exports which underpinned export growth from Bluff during the past financial year, a period he described as "tumultuous".

"Agriculture is a realistic way forward and South Port is well positioned to take advantage of any development of dairying," he said.

Mr Harrington highlighted the economic potential of dairying to shareholders, saying dairying continued to be a "prime factor" in the economy of Southland and the rest of the country.

"Many are of the opinion that dairying saved the country during the worst global recession for 80 years," he said in a statement.

"For dairying growth to have an acceptable outcome will mean a trade-off between economic growth and environmental sustainability," he said.

The scenario presented a "huge challenge" to all involved but had to be worked through if the New Zealand economy was to improve, more so now the Government had decided not to extract minerals from conservation areas, he said in reference to the contentious Schedule 4 proposal which would have allowed mineral exploration in some national parks.

"[That] effectively ruled out a source of wealth for the nation," Mr Harrington said.

He said Fonterra, which is one of Port Otago's largest customers, provided South Port with its overflow production, as well as storing cheese year-round, while Open Country Dairy's Awarua plant used South Port for warehousing and exporting.