I have often wondered how long the dairy boom around the world could be sustained. In New Zealand an industry that contributes more than N.Z.$13 billion to the economy, employs tens of thousands of people working across a myriad of industries as diverse as farming, banking, irrigation supplies, processing companies and transportation, experienced a golden period between about 2004-2012. It was driven by a combination of good prices, steadily increasing demand both abroad and overseas and assisted by friendly Government. Three years after the boom ended I am wondering if more serious symptoms than those identified could be to blame.
Before we look at the potentially more serious problems, let us first examine the known ones. Dairy, important as it is to New Zealand, is not everything and I have always thought it wrong that so much of our available resources are being tied up in it. Two major crises in the last couple of years have made this really stand out:
- A drought that has just about brought some farmers in north Canterbury to their knees, and thus shown that climate and the environment really do have bigger impact than some in the farming community have admitted
- The parlous state of the global economy, with substantial slow downs in the economies of some of our biggest trading partners
A dairy farm is as much a potential lifetime investment as it is a potential way of life. When farms convert to dairying, it is more than just removing the other livestock or changing from cropping to livestock – removing boundary fences, vegetation and making sure that streams are fenced off, setting up milk sheds and developing irrigation all need to be done. On top of that, getting ground water/surface water dam/diversion consent to use fresh water needs to be applied for. Because of the high pressure on fresh water resources, there is no guarantee that the consent will be granted or that if it is, it will be what one wants.
Farmers say that the continuing slump in dairy prices has taken them by surprise. Perhaps that is because years of overlooked unsustainable development in the industry world wide is playing hard ball catch up. Perhaps the slow down in various major economies around the world has also reduced demand. For it is not just in New Zealand that dairy is becoming unsustainable. In the United States the metric tonnage of milk product going to waste simply because there is not enough demand for it is increasing substantially.
But perhaps in the long term more sinister environmental issues could be at work. It is well known that irrigation is reliant on a reliable water source – usually ground water or surface water taken from a river. If climate change is really becoming more severe as the International Panel on Climate Change suggests, then droughts in New Zealand could become longer and individual events could be more frequent and possibly more intense. Dairy farmers complain as it is when we have a drought. I wonder how more much pain droughts of the sort that have given north Canterbury farmers so much grief would cause were current predictions of a 2°C rise to come true.
And even before that, how long will it be before the cost of declining fresh water quality starts biting. It will. Many streams, rivers and surface fresh water bodies are considered to be under severe duress right now – something that despite growing pressure and awareness looks set to worsen.