Pastoral Genomics scientist Michael Dunbier said we were no longer the world's lowest-cost food producer, our pastoral system was a major contributor of greenhouse gases, and customers demanded proof that slogans such as clean and green had some validity.
The reality was the our farming systems were contributing methane and nitrous oxide into the atmosphere and nitrate pollution of the soil and waterways.
"They are not satisfied with slogans such as free-range or pasture-fed. We need to look carefully at our systems overall," he said.
In addition, resources such as phosphate were being depleted and questions were being asked about the efficiency and sustainability of fertiliser use in general.
Stephen Goldson, AgResearch's chief scientist and the vice-president of the Royal Society of New Zealand, said pastoral agriculture may have reached the technical limits of production.
"The question is, business as usual in agriculture? We may not be able to carry on as we have."
Climate change was likely to mean more frequent and more intense droughts, and there would be increased competition from low-cost producers.
Dr Dunbier said one angle scientists were looking at was to increase energy levels in forage to improve quality, reduce greenhouse gases and improve production.
There was confidence the technology was available to achieve higher energy levels, but at this stage they were unable to manage protein levels in the rumen.
By increasing energy levels in forage, inputs were reduced and animal efficiency increased.
Drought-tolerant forage was another area being looked at, and Dr Dunbier said drought-tolerant forage had economic, animal health and welfare benefits.
If plants could be programmed to grow for an extra four weeks during dry periods, it would extend peak animal production but also reduce irrigation use and mean lower energy use.
Containment trials have centred on switching on a gene in ryegrass to continue growth when a plant came under moisture stress.
In the trials, plants had been subjected to 28degC temperatures for six weeks without any water.
He described the results as "interesting and significant", and the potential economic impact as "very significant.
A step-change in productivity".
The next stage was field evaluation, but Dr Dunbier said the earliest there could be commercial seed available was in the range of eight to 10 years away.
Dr Goldson said New Zealand had to act to address issues of competitiveness, but also to improve nutrition levels in livestock, especially dairy cows, to ensure we retained our position as leaders in pastoral farming.
That could include using genetic modification (GM) technology, which he said was becoming more acceptable.
In 2009 134 million ha of GM plants were grown, mostly in the United States, Argentina and Brazil, and he said there were still no consistent reports of untoward effects associated with the technology.
Such was the potential of the technology and the lack of problems, Dr Goldson said there needed to be an informed discussion about the use of GM.