Story: Dairying and dairy products
Page 10 – Dairying in the 2000s
Farm and herd size
In the early years of the 21st century dairying expanded onto irrigated farms on the Canterbury Plains and to Southland, where land prices were lower than in the traditional dairy regions of the North Island. By 2006 Waikato and Bay of Plenty had 32% of New Zealand’s dairy cows, Taranaki 12%, Northland 9%, and the South Island 28%.
New Zealand scientists have bred a herd of cows that produce milk naturally low in saturated fats and high in omega-3 oils, which help to improve brain power. Butter made from the milk is spreadable when chilled, just like margarine.
From the 1970s many South Island farms were joined into bigger farms, which led to a reduction in the number of herds. By 2007, farms were twice as large as they were in the early 1990s, at an average of 118 hectares, with a stocking rate of 2.7 cows per hectare.
In 2007 New Zealand had 2 million cows in milk or in calf, with an average herd size of 322 cows. This was twice that of the average herd in the early 1990s and almost twice the number of cows milked in 1980.
The average price of a dairy farm in 2005/6 was $1.8 million, or $21,000 per hectare. The inflation-adjusted price of dairy farmland doubled between 1992 and 2006. Dairy farm values are often expressed as the price paid per kilogram of milk solids produced from that property in one year. The national average farm value in 2005/6 was equivalent to $32 per kilogram of milk solids, with some farms over $40 – around 10 times the annual milk price, which was $4–5 per kilogram of milk solids. By the 2007/8 season, the payment for milk solids had increased to around $7 per kilogram.
With the average price of a farm at almost $2 million, plus the cost of cows and dairy-company shares, it is difficult for young people to acquire properties. However, many young New Zealanders have followed the sharemilking route into farm ownership. It begins with practical training as a farm worker, followed by responsibility as a herd manager, and then cow ownership and sharemilking. The farm owner, usually an older and experienced dairy industry operator, offers a contract of one to five years to a sharemilker who owns all or part of the herd, operates the farm, and shares the income. They have equal share of the revenue in the common ‘50% sharemilker agreement’.
Sharemilking allows someone with little money to invest in cows, accumulate expertise and finance, and eventually buy a farm. Some have gone on to buy sheep or beef farms.
New Zealand dairy farms usually have two full-time workers, mostly family members. Sometimes the sharemilker is a son or daughter of the owner, intent on increasing equity so they can pay out siblings and take over the family farm. More than 90% of all New Zealand dairy farms are owned by a family rather than a company or city-based investor. Sharemilkers operate 35% of all farms, allowing owners to step back from hard daily work and concentrate on farm maintenance or other interests.