cows on pasture
April 29, 2017

Environmental Impact will Curb New Zealand Export Growth

 |  By: Mike Opperman

The expansion of the dairy industry in New Zealand will be limited by the environmental impact of the industry on natural resources, driving the industry to focus more on product value rather than volume, says a New Zealand official.

“It will be challenging for the industry to grow,” says Nathan Guy, New Zealand Minister for Primary Industries as reported in Scoop Business. “There’s no way that we can double the number of cows in New Zealand. One big opportunity the dairy industry does have is increasing the value, not the volume.”

According to New Zealand statistics, in 2016 there were 6.5 million dairy cattle, which is a significant increase from the 2.9 million dairy cattle in the country just 40 years ago. Dairy products are the country’s largest export commodity, with exports totaling $11.3 billion through February of this year.

A recently published Fresh Water report shows that while urban areas are the biggest issue when it comes to polluting fresh water, rural areas are showing a faster decline in the quality of fresh water in lakes, rivers and streams. Additional reports have pointed the finger toward dairy intensification as the culprit for unwanted pressure on the pristine landscape of the New Zealand countryside. The reports have caused public outcry, which has led to a new government policy to protect the quality of lakes and rivers.   

“We realise that agriculture does have an impact on the environment. What has been lost in the recent debate has been the focus that farmers have on their environmental performance,” Guy says. He notes that farmers have been working to improve environmental standards, adding fencing to exclude animals from waterways and upgrading environmental management practices. “What farmers and growers want is scientific tools that can help them address these challenges. There are moves afoot to allow farmers to make the changes that they need to make on the farm.”

Guy says the government is putting extra funding into growing international trade, however he noted that the focus was on “adding value as opposed to volume.”

New Zealand has been a primary competitor to the U.S. on global markets. Because New Zealand farms are lower-cost, pasture based systems, New Zealand products can go to market at a lower price point that the U.S. If the trend in New Zealand goes toward adding value to products, this could help U.S. products be more competitive from a pricing standpoint.