Cherries beat dairying, grapes

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 land use.

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] involved.''

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 said.

''If you have the money, you should be putting it into cherries.''

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 the environment.

Rain was a factor that scared people off cherries, but even with damage, crops in Central Otago were not wiped out, he said.

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 interesting exercise.

Land-use intensity varied between the two, and people often engaged in dairying because there was ''more than met the eye''.

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 welcomed.''

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 risks.''

- Leith Huffadine. 


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