The numbers have been crunched
and dairying does not add up.
A former agribusiness manager for SBS bank, based in the
Cromwell Basin, compared cherry growing with dairying and
grape growing in the region, and found returns per hectare on
cherry orchards outstripped those of the two other forms of
Felton Park Ltd orchard manager and former SBS agribusiness
manager Malcolm Little said even in a bad year for cherries,
returns would still be between 10%-15% of capital investment,
compared with an 8%-9% return on capital for dairying in a
year with good milk solids payouts and about a 6%-7% return
for grape growing (not including wine sales).
The numbers, based upon calculations made by Mr Little, were
based on averages and standard conditions for each industry,
and specific to Central Otago conditions.
Mr Little said the estimates were only for the region, and in
most other places dairying was much more viable.
However, the crux of his argument was, in terms of returns
per hectare, environmental degradation and local economic
benefit, cherry growing was far more suited to the region
than dairying or grape growing.
''With cherries it is all about returns on capital and what
is good for the community,'' Mr Little said.
''Other benefits include more export earnings per hectare,
which is good for the economy, more people [employed per
hectare, and] the economic spin-off from more people [being]
Further positives included less pollution, soil damage and
waterway pollution, reduced greenhouse-gas emissions and
overall lower water usage than other intensive land uses.
''The argument is that we should not be pushing dairying on
to horticultural-capable land in Central Otago,'' Mr Little
''If you have the money, you should be putting it into
45 South orchard manager Jim Blanche said the figures quoted
by Mr Little sounded ''about right''.
He believed cherry growing was better for Central Otago
communities than dairying, and was ''certainly'' better for
Rain was a factor that scared people off cherries, but even
with damage, crops in Central Otago were not wiped out, he
Pollution was a big issue, particularly concerning waterways,
Mr Blanche said.
With cherry growing, pollution was not as large a problem,
particularly as pollution was being reduced.
''Cherries don't have as big a run-off. Spray programmes are
becoming softer and softer. All the nasties are gone and
there is less and less spraying.''
Federated Farmers Otago president Stephen Korteweg said
trying to compare cherry growing and dairying would be hard
as the two were very different, but it would be an
Land-use intensity varied between the two, and people often
engaged in dairying because there was ''more than met the
In the Central Otago area, it would be good to see diversity
in land use rather than all dairying, he said.
''I don't want to see all of Central Otago in dairy - that
would not be good for anyone. There are other ways of doing
things and land uses that are profitable which should be
Mr Little said the reason dairying was being invested in over
cherries was because it was a familiar industry with known
returns, whereas cherry growing was seen as riskier, so
investors stuck with the perceived safer option.
DairyNZ regional leader Southland and South Otago Richard
Kyte said when calculating costs involved with dairy farming
there were many variables, such as milk solids payout prices,
irrigation costs and land values to take into account, and it
was down to individual farmers what they wanted to do with
their own land.
In order to reduce risk and encourage investment, those
involved in the cherry industry had to develop functional and
affordable rain protection to reduce variability in cropping
volumes and ensure maximum returns.
''Change is not going to be easy - not much venture capital
out there. After the global financial crisis people are risk
averse and stick to tried-and-true rather than taking
- Leith Huffadine.