Dairy conversions surge but no return to the heady days

The surge is apparently prompted by the bumper $10/kgMS payout and the window of opportunity afforded by the repeal of the National Environmental Standards for Freshwater animal intensification regulations on January 1.

However, industry players are not expecting a return to the heady days of the dairy boom of the late 2000s - and Environment Canterbury (ECan) points out that while consents are no longer required for a change in land use to dairying, there are still consenting controls in place under the Canterbury Land and Water Regional Plan (LWRP).

Karl Dean, Federated Farmers North Canterbury provincial president and former dairy chair, says the renewed interest in dairy conversions does not necessarily mean a big surge in cow numbers.

The rumoured 14 or 15 conversions had to be put into perspective, he told Rural News.

"We're not talking about the big influx that we had when Southland had a whole lot of conversions, and Canterbury, in the mid to late 2000s.

"If anything, it might stop the cow numbers decreasing for a year, but the payout will do that as well.

"We're not going to go back to the herd numbers that we had. Peak cow was about four or five years ago now, and we're probably not going back to those numbers anytime soon."

Dean says the expectation for any land use change now will be the protection of the environment, and the best way to do that is to use the technology now available to make sure they are being more efficient with all their systems including nutritions.

"It's all about efficiency. The technology's come a long way in the last 10 years.

"That's just something you will expect to see in these conversions because they will be wanting to have their return off them very quickly."

Dean points out that "there's no new water" and the conversions would mostly be on already irrigated land. While some people will do a full conversion, others would be only partial.

A cropping farmer with 400ha might decide that 150ha would be better in dairy, and that would provide a more stable income than the cropping alone.

But for any farm in Canterbury, any conversion will still have to meet the requirements of the Canterbury Land and Regional Water Plan, which has the nutrient allocation based on its existing nitrogen discharge baseline.

Dean said they still won't be able to release more nitrogen into the environment than they did in the 2009-2013 period. "It's going to be done a lot smarter than just 'smack the cowshed on and milk the cows'. It's going to be a lot more maths involved, a lot more precision required.

"I think we're going to see a bit of a jump for a year or so, and that's going to be it. We're not going to see another decade of conversions or anything like that."

ECan's general manager regulatory implementation, Paul Hulse, said that both existing and new dairy farms must hold consents for effluent discharges and may need a water permit for the take and use of water in the dairy shed.

He said that in the year up to May 22, ECan granted four effluent discharge permits for new dairy conversions, Three of them are within the Central Plains Water Ltd (CPW) command area, and the fourth in the Kurow Duntroon Irrigation Company command area.

The total maximum number of cows permitted across the four is 2,730. The land use change is from dairy support (two properties), one sheep and beef and one dairy support/arable.

A fifth consent, for a farm on Banks Peninsula, was originally granted in late 2024 and has also now been issued following the close-off of an appeal period in January.

As of May 27, another two effluent discharge applications for new conversions are in progress, both in the CPW command area.

No New Peak

Federated Farmers South Canterbury dairy section chair Jim Emmett said it would not be like the 2007 to 2009 period when there was some freedom to go and "chuck a dairy shed on any bit of land".

"It's going to have to be a very carefully considered and strategic piece of land that a dairy farm is suited to."

A lot of farms that were already actively grazing cattle were probably suited to a dairying but it depended on what the new RMA defined as what can and can't be done. "Over the last 20 years of the dairy industry we've got a lot of knowledge, and there's a lot more technology out there now so that we probably do things a lot more sustainably and responsibly.

"It's just how we move forward as an industry with new conversions in a more responsible and sustainable way."

Emmett believed the last dairy conversion completed in Canterbury was four years ago, close to where he farms at Rangitata.

"It is going to happen but it just might not be with the force and flurry that there was in that 2007-09 period that they called the dairy boom."

Phil Read, a director and sales manager of Rangiora-based dairy shed manufacturer Read Industrial, says they already have two confirmed conversion customers.

"Pretty much since the end of last year there's been a number of farmers ringing up and looking at converting farms.

"A lot of them at the moment are just going through the process of seeing whether they are able to convert from whatever they are doing to dairying.

"And I think over the next few months, we'll probably see a few of those come through."

Read says conversions slowed down a lot over the last five or six years, and most of their new builds have been replacement sheds for existing dairy farms, the only exception being a second shed going on the same farm.

"We're still a long way off what we were 10 years ago as regards to conversions. But it seems to be that there's a window of opportunity there are the moment and a few people trying to take advantage of it."

The interest is not confined to Canterbury.

Anne Douglas, group director, Farm Source, said Fonterra was aware of a number of farms across the country converting or returning to dairy.

Those farms were in the early stages of the process and were still investigating their options.