A record year for dairy reinforces confidence in the sector

The dairy sector saw record milk production volumes last season, despite a fall in the number of cows. With a new aim to produce with less, the dairy sector is moving towards a more sustainable future and adapting to a labour shortage which has forced farmers to become more efficient in their work. Success in the dairy sector instils further confidence in investment in rural land around the country.

The dairy sector is known for its immense contribution to the economy, including investment in dairy processing plants and finance through dairy farming loans from larger industries and construction. The sector also contributes greatly to the regional economy through links with supporting sectors such as freight transport, storage, packing and agricultural services.

DairyNZ Chief Executive Tim Mackle, says that dairy plays a significant role in New Zealand — the sector employs around 50,000 kiwis and was estimated to contribute over $37 billion to the economy in 2020-21.

With the world in a state of adjustment amidst a pandemic and climate change, the dairy sector — like so many sectors in New Zealand — has needed to adapt its processes.

More milk — less cows

A new focus on breeding higher-performing cows — playing true to the adage ‘quality over quantity’ — saw kiwi farmers hit a new high for milk production last season, with fewer cows. million cows, or 76.2% of the national herd). Herd testing enables farmers to monitor and improve the quality and productivity of their herds.

LIC Acting Chief Executive David Hazlehurst says the greater uptake of herd improvement services demonstrates farmers’ intent and focus on producing the most sustainable and efficient animals.

“Mating season has always been an important time to get cows in-calf, but with a focus now on cow quality over quantity, more farmers are investing in premium genetics to help ensure their next generation of replacements is more efficient than the last.

“It’s really pleasing to see these stats provide farmers with reassurance that the tools they’re investing in to increase their herd’s production efficiency and reduce their farm’s environmental footprint are working. Increasing milk solids with a reduced cow population is an achievement the whole sector should be proud of,” concludes Hazlehurst.

Dairy sector and rural real estate

So, what could the ‘more milk fewer cows’ trend mean for the demand for rural real estate?

According to REINZ’s January 2022 data, dairy farms have seen steady growth compared to January 2021. In fact, 1,710 farms were sold in the year to January 2022 — 169 more than were sold in the year to January 2021, with 79.1% more dairy farms, 28.8% less dairy support, 2.9% more grazing farms, 6.2% more finishing farms and 10.8% less arable farms sold over the same period.

Further, the median price per hectare for dairy farms has increased 31.8% over the past 12 months.

The increase in farm sales for the 2021-22 calendar year shows continued strong demand in the investment of rural land — reflecting the current level of confidence in the agriculture and dairy sector.

However, increasing costs, labour shortages and supply chain difficulties are constraints that continue to challenge the rural and dairy industry. Tim Mackle, Chief Executive at DairyNZ, has seen this first-hand.

“The latest Dairy Statistics report shows that despite a range of challenges such as the COVID-19 pandemic and staff shortages, farmers are working hard to keep milk production flowing, and this benefits every kiwi,” concludes Mackle.

IT’S REALLY PLEASING TO SEE THESE STATS PROVIDE FARMERS WITH REASSURANCE THAT THE TOOLS THEY’RE INVESTING IN TO INCREASE THEIR HERD’S PRODUCTION EFFICIENCY AND REDUCE THEIR FARM’S ENVIRONMENTAL FOOTPRINT ARE WORKING.