Dairy industry critics need to tell both sides


photo by David Unwin/Fairfax NZ

Federated Farmers dairy chairman Andrew Hoggard.

Several weeks ago, we had academic paper that was published in a minor American journal that basically stated the cost of the dairy industry to New Zealand equalled what it was worth. So that it was a zero sum game.

While a number of real economists, DairyNZ, and Federated Farmers were fairly damning of this paper, supporters ran the standard line that we played the man and not the ball. I found this quite amusing since we all raised a huge number of points as to why the paper was flawed.

The most obvious point for me was the title “Dairy farming milking NZ for all its worth”.


That’s hardly an objective academic title, I thought the whole academic rigour thing was to posit a hypothesis, then look at all the evidence with an open mind and be willing to admit that your hypothesis is either proven or it isn’t. To me, this title speaks of foregone conclusions, and of only looking at evidence that suits your needs.

The supposed costs of the dairy industry were all based on the negative externalities of the industry and were primarily based on its impact on the environment. However, if you are going to do a report on the real value of the dairy industry by measuring externalities then you need to focus on both the negative and the positive. In other words you have to balance the impacts on the environment against the positive benefits to the national economy and more importantly the positive benefits to the regional economies, which everyone seems concerned about. If you were doing balanced research you would also include the positive benefits on the social fabrics of those communities.

The convenient conclusion engineered by its ecologist authors is that the industry adds nothing. I don’t think anyone would seriously believe that by removing the dairy industry from the face of New Zealand that our lives will not change at all. Are we suggesting that the unemployed dairy farm worker, factory worker and their community will be no worse off?

You don’t need an economics degree to work out that that isn’t the case. So I reinforce my point, if you’re going to attach a value to the negative externalities you also need to attach a value to the positive externalities to give you a true picture.

Looking at what they claimed, primarily this was under the assumption that we had to remove all nitrogen from waterways, that’s a big fat zero. Now is this really true, must we remove all nitrogen?
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If I look at my catchment, the Oroua River, it doesn’t have a water quality issue from excessive nitrogen from agricultural activity. So it’s fair to suggest that my farm and all the other farms in the Oroua river catchment do in fact not add any negative externalities to the local catchment. However that’s what the paper assumes.

The paper argues that because we aren’t paying for these supposed negative externalities we are in fact being subsidised by the rest of the country. In fact it mentions the Manawatu River as an example of the need for government funding to improve water quality now the Oroua River is a tributary of it. If we look at the government funding of $5.2 million that has gone into improving the Manawatu River, the only portion of that was spent on dairy farms was roughly $250,000 which went into farm plans for one catchment, and the rest is been spent on improving urban sewage treatment plants.

So are farmers really being subsidised? If you look at those farm plans, the funding pays for all the technical expertise to create those plans, the cost to actually implement those falls on the farmer. The remaining millions is for the like of urban sewage treatment plants.

What baffled me is that all the relevant facts the authors needed were in the National Policy Statement on Freshwater, and the National Objectives Framework. The nitrogen limits that are going to be set for each waterway are all there and the acceptable levels are all explained. Zero nitrogen is not necessary.

Important to note the cost is going to be born by dairy farmers to meet those limits set in catchments, especially those that have excessive nitrogen levels. This is happening around the country, and farmers are already facing up to the challenges it creates.

We aren’t arguing that we don’t have an impact in a number of catchments. We are working on how we work within those over allocated and fully allocated catchments across different farmland. This is a challenging a complex issue that creates tension across all the sectors and faux academic papers like this do nothing for the people actually trying to solve these complexities.

For those that want to just argue that dairy is bad and dairy harms the environment, the debate has moved on please move on with it.

Everything has an impact on the environment and dairying, due to its more intensive footprint, has more impact than other farming types. We accept this, and realise some dairying catchments will need to pull back on the Nitrogen levels, while in other catchments we will need to put mechanisms in place to ensure we don’t end up in that space.

Finding solutions on what a fair allocation to different farming types and the wider community looks like is challenging. So really, unless you have sensible solutions and ideas around that you’re not helping and you’re slowing us down in getting positive outcomes.

Why don’t you join your colleagues who are helping the government, communities and businesses to get it right.

* Andrew Hoggard is Federated Farmers dairy chairman.

– Stuff

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