Farmers attending DairyNZ’s Farmers Forum in Ashburton learned about the latest trends and innovations as experts grappled with the future direction of the sector.
A range of speakers split between the venues of Waikato, Canterbury and Southland provided farmers with updates in future developments, the changing global and national landscape and emerging economic trends.
Among the speakers were Infometrics principal economist Brad Olsen, Dennis and Partners strategist Roger Dennis and DairyNZ economics head Mark Storey.
MPI trade and international relations associate director Diana Reaich spoke about navigating trade winds and new markets.
A regional farmer panel of Pamu Farms chief operating officer Will Burrett, John Falconer and Mt Somers Station farmer David Acland revealed innovations they have introduced to farms.
Mr Acland has adopted technology such as Halter cow collars and solar panels on the milking shed, and has just installed automatic calf feeders, while Mr Falconer has led major infrastructure upgrades on his farm and applies data driven strategies to farm planning.
Mr Falconer said he had made a few mistakes introducing innovations including flexible milking, variable rate irrigation, injecting effluent in the irrigation system and buying a mixer wagon, not always impressing his accountant.
The message he had got from listening to futurists, economists and experts was the main consistency was "inconsistency", he said.
"There is so much happening in the world out there that getting a lead on what to do is really, really hard."
He said farmers often excelled in this environment of no fixed direction, as they intuitively absorbed information and made a call for their own system.
He said his farmer grandfather came with nothing when he arrived in Lyttelton in 1867 and had to innovate as being new to the country.
"For me, I innovate in how I operate the farming of the cows. They and the staff are the priority. The other part I innovate in is — [even though] I am an introverted person and hate doing this — but I have learned over the years that unless we as dairy farmers get out there and talk and promote and do stuff, the public perception will just stay the same. So innovation is everything."
Mr Acland said their new calf feeders fitted into their station’s dairy and beef system.
He said they took a values and multi-generational approach, with a 100-year vision towards big and small innovation, and that extended to an office built for the future.
Any innovation in a farm business should be justified, he said.
Mr Burrett said Pamu was reshaping its business by focusing on the principles of pasture, animals, wastage and internal optimisation though data, software and benchmarking.
Pamu invested in technology as long as it delivered, he said.
He said farmers should be looking at innovations adding value to the top end of their cost structure, and review them to confirm the investment weighed up, particularly if they were based on a subscription model.
Mr Falconer said the innovation he was working towards for tomorrow was putting in a composting barn with a steel roof model, which had the potential for capturing methane, and this might be supported by plantain planting in heavy soils.
He had just got finance approved and was halfway through the consent process for a development which could open up a "whole new world".
Farmers had to do their own research and not be a sucker for a glossy brochure, he said. The government’s investment boost incentive for new purchases would help, but finding finance was often the main challenge for adopting innovation, he said.
Mr Storey told farmers they were dependent on overseas for dairy prices, but there were good reasons for the sector to be optimistic, as it had a competitive advantages to other nations mainly because of its low feed costs.
"We have no option but to be competitive and amongst the world’s best, if not the most competitive."
The main drivers for being internationally competitive were the costs of milk production, productivity, dairying’s environmental footprint and return on capital, he said.
Over the last 20 years New Zealand had maintained a cost gap against the major milk producers because of its pasture system and low feed costs, even though they had all felt inflationary pressures. While Ireland had got its costs below New Zealand in 2013-2015, this had since reversed.
Cost differences between New Zealand and the United States had not closed, he said.
Mr Storey said the milk payout for the season just completed and the coming season was at a healthy level, with generally good profitable levels.
"It’s a good time to be farming as a dairy sector at the moment from a profitability point of view. However, of concern is that our productivity appears to have plateaued, which suggests we have efficiency losses we are leaving out there."
Mr Olsen told DairyNZ that New Zealand’s compelling case was that it could produce a variety of trusted products through the value chain.
Overall, there were good and bad sides on the trade front, he said.
"We know there are trade ructions going on across the world, but people are still looking for good quality products and clients they can work with and trusted partners to New Zealand, so we are in pretty good shape on that front."
Bagrie Economics economist Cameron Bagrie had already told farmers at other forums to prepare for change.
"What we know at the moment is there is a bit of a bun fight between the Alibaba world and the Amazon world, and that’s China and the US.
"We’ve been used to an environment for 30 years where the commercial economics of trade has dominated and trade barriers have been coming down."
He said this had changed as "protectionism was rife", with geo-strategic and geo-political considerations starting to dominate commercial priorities.
"So New Zealand’s going to need to pivot and we are going to need to change while we are watching with a little bit of patience in regard to what’s going around the world, because protectionism is here and we like less protectionism."
Mr Olsen said the chance of a US recession was rising and its economy was likely to slow over the next year, particularly if increased tariffs remained, and this had flow-on effects for other nations such as New Zealand.
Nations were unlikely to trust the US with signing trade agreements as they did before the tariffs because of President Donald Trump’s quick removal of agreements with Mexico and Canada.
"All of these tariffs are paid by the US consumers at the end of the day, and that means long story short the US is going to have higher inflation. Now that has implications for interest rates, the exchange rate and huge implications for how much the US consumer is going to be willing and able to buy. If more of their money is going to pay a tariff, that’s less money they have got available to buy all the stuff we are sending them."
He said it was fortunate that North and South American milk production was less than normal.
New Zealand farmers were likely to go back to basics focusing on debt and costs, he said.
