A New perspective

Running a dairy farm consultancy in New Zealand is one of a number of roles that Paul has. He is also chair of the Intellect Group, a company that includes consultancy, on-farm technology, feed blending, and maize seed businesses. In addition, the New Zealander runs a farm with his wife. In terms of his consultancy, Paul explained what it involves: “I’ve got 25 farms on my books in Northland, which is north of Auckland. The region is warmer than most of New Zealand, semi-tropical even. It’s still grassland farming, but we have Kikuyu, C4 grasses that thrive there. Our soil temperature gets well up over 20 degrees, so ryegrass struggles.”

End-of-season report

New Zealand had just completed its production season when Paul was interviewed. He gave us a taste of what it offered: “It started off with a low milk price and not a great spring. We had a drought in the summer over most of New Zealand, but with milk price rising dramatically during the second half, the higher payout helped us cope with the cost of buffer feeding. Most people managed to keep their cows milking well and ended the season with good profits. Compared to two decades ago, most producers now buffer feed to keep cows producing during droughts or poor weather or growth conditions. Back in the 80s and 90s, our buffer was the cow’s back. That wouldn’t be tolerated now by farmers or the public. Running the old system with relatively low production, meant extreme profit variability each season. You can’t run a business like that now. Buffer feeding, or small amounts of supplement through most of the year, is the route to consistent profitability.”

Cow type

Paul described the type of cow favoured by New Zealand milk producers: “The average cow in New Zealand is a Kiwi-cross; a blend of Friesian and Jersey, tending slightly more towards Jersey, with an average weight of around 480kg. The average cow will touch 400kg of milk solids per lactation. The South Island figures are higher than the North Island, and that bumps up the overall average. Cows usually deliver four lactations. Most well-run farms are getting that, bringing in about 20 per cent of heifers annually.”

Male calf issue

Paul commented on how the New Zealand dairy industry is developing solutions to the problem of surplus male calves: “The crossbred males have limited economic value, and that’s a problem. Many of my clients have moved towards a greater percentage of Friesian in their breeding programmes, delivering a more viable male calf. Fonterra doesn’t allow euthanasia of calves. They must go into a value chain, with some calves slaughtered young, but with an economic value. Public perception is an issue and how we deal with that is important to the reputation of the sector. There’s not enough land in New Zealand to rear every male calf and every male calf is not going to become a viable mature beef animal.”

Environmental challenges

Paul is conscious of the responsibilities that the sector faces to reduce emissions: “We’ve been moderately proactive. Our previous Government was forcing us to be very proactive. They were going to bring in methane emissions reductions at considerable cost to us from 2026. That’s now being pushed out to 2030. We want to deliver on reductions, but we don’t have all the solutions available yet. It’s all very well saying ‘deal with methane’, but what do we do? There are those who want us to remove all cows but that doesn’t help the economy or farm sustainability. We do have options coming along. Realistically, until there’s a cost on methane, it’s hard to justify putting in a methane inhibitor, for example, unless that’s also giving you a production advantage.
“The developing technologies have potential. There’s not, ultimately, one answer from a methane perspective. It’s about stacking up various solutions. We’re focusing on actively breeding for higher cow efficiency. Productive cows with high feed conversion efficiency are far more methane efficient than the current average. We can manipulate methane production slightly with feeds and that’s also something we need to look at. We will probably end up with some farms reducing stocking rates, slightly pushing per-cow production. And there’ll be methane inhibitors in there. By stacking those solutions, we should be able to get to a position of long-term sustainability.”

Who will milk New Zealand’s cows?

New Zealand has long been a popular choice for young Irish people to work and experience large-scale milk production. At a time when it is increasingly difficult to attract employees to work on New Zealend dairy farms, Paul Martin expanded on the challenge: “There is still an Irish inflow. It’s quite common to meet Irish people working on our farms. Labour availability is now our most serious challenge. I’m starting to sound old, but the new generation don’t appear to want to work, or work particularly hard, or at one thing for an extended period. We are struggling to attract people and I frequently have conversations with my clients around who’s going to own and manage our farms. We can manage the workload and physicality, but the slightly unsocial hours are more difficult,” he said.
Expensive technology is an option, he adds and some farmers are adopting automated milking systems. Paul added: “That doesn’t reduce the labour demand, only the type of labour required. New Zealand is currently in a huge growth phase on cow ID technology, not necessarily reducing labour requirement, but reducing the workload during mating. That delivers more productivity from our more skilled people without increased physical input.”

Price outlook

Paul insisted that higher milk prices are a necessity: “New Zealand producers had a $NZ10 per kilogramme of milk solids (kg MS) payout and that is the expectation for the new season. If you take inflation into account, that’s equivalent to $NZ7.58kg MS long-term average, which would’ve been a good milk price, but not through the roof. Margins have not grown significantly, and you’d be a brave man to say price will stay up. The global dairy industry has always responded to high prices by higher production, saturating the market and reducing price to the producer. I don’t expect price to remain at current levels.”

Routes to farming stymied

The New Zealand consultant explained the reduction in opportunities to farm: “There are fewer share-milking opportunities. Some of that is down to the profitability of a dairy farm, it’s not a gold mine. Unless farm owners have low debt levels, the exit and entry strategies are difficult to manage. Corporate farming has been blamed as well. Most of them haven’t used share milking, although some of them are starting to move towards that because they’ve realised that they too need succession. They need people that want to run and own their business in the future. I don’t think we’ve got the right answer yet. It’s always been hard to buy your first farm.”

Flat-lining grass productivity

Paul conceded that New Zealand grass productivity has diminished in recent years: “The pasture harvest on New Zealand dairy farms has stalled, if not slightly retreated over the last decade. Have we hit the ceiling? Is it climate change or is it our lack of R&D? When I started consulting, we had up to 15 new grass cultivars launched annually. Now, you’d be lucky if it was one or two. Have we hit a grass genetics ceiling without using gene technologies that are currently not available in New Zealand?”