Thursday, 11 April 2019 09:49

Premium must cover rising farming costs

Written by 
Emma Higgins. Emma Higgins.

Obtaining premium prices to pay for higher costs of production is the next challenge for farmers, says Rabobank dairy analyst Emma Higgins.

New Zealand dairying has for years seen environmental regulation tightening and that is forcing higher cost of production onto farmers, says Higgins. 

“The real key issue here is trying to obtain a premium for our products now that will pay for those higher costs of production,” Higgins told the Rabobank Farm2Fork seminar in Sydney on March 28. She took part in a panel discussion on whether farmers are ready for change, particularly over sustainability issues.

NZ dairy farmers are very conscious of animal welfare and environmental sustainability issues and adopt many technologies, she says. But taking sustainability to another level and thinking about true business sustainability is the next challenge facing NZ farmers, Higgins says. 

No amount of money will solve some of NZ’s environmental challenges, particularly in parts of Waikato and Canterbury. 

“We are ‘tapped out’ in terms of resources… NZ is on the precipice of transformational change in agriculture.”

Farmers are considering what alternative land use is available to them — perhaps diversification into some sort of cropping arrangement.

“Or it could be getting [totally] out of dairy and moving into something a bit more innovative, e.g. sheep milking with its lighter environmental footprint and perhaps less onerous social licence to operate. In dairy that pressure is there and we have seen that play out in a number of ways.”

Dairy companies are trying to lead in managing some of the issues on social licence to operate, she says.

Farmers seeking to act on sustainability must ‘walk the talk’ on value adding and brand development.And NZ must adhere to its provenance story.

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