NZ remains lowest-cost milk producer - report
The cost of producing milk in New Zealand continues to compare favourably with other exporting regions despite a lift in production costs over the past five years.
This is according to Rabobank’s global animal protein strategist Justin Sherrard who was recently in NZ.
“They see changes being talked about, they hear about things that are going to happen onfarm in water quality, the inclusion of agriculture in the Emissions Trading Scheme, for example, and they are uncertain about that,” he says.
But Sherrard told Rural News that farmers need to understand this is not just Government-led; it is also being led by the market.
“While here in NZ you see the Government getting involved in these issues and wanting to improve outcomes; I also see the market moving,” he explains.
“I see leading animal protein companies, processing companies, making commitments to improve the sustainability of products in production systems.
“I see big retailers and food service companies making commitments to increase the sustainability of all products, in particular meat products they are selling.”
However, Sherrard says, most importantly, he sees consumers in some markets — including markets where NZ is exporting products — not just saying they want more sustainable products, but opening their wallets to buy more sustainable products.
He said he sees markets moving in ways more certain than those arising from actions by governments.
“Government movements are sometimes just perceived to be a product of what happens if there is a change of government.
“[In contrast] these market movements are more durable -- a more durable trend I see by the market itself.”
Sherrard says the market direction is set and, as a result, “we will be talking more — not less — about sustainability of animal protein production in future”.
“We are going to be seeing more demand for sustainability through those product chains -- not less.”
He says NZ’s pasture-based production system for beef and lamb is a great advantage.
“Look at the US market, for example: I think there is a strong perception on the part of consumers that grass-fed for them as a consumer is better for their health; it is a healthier product and it is also for the animal and for the planet. It kind-of ticks all the boxes for US consumers.
“We’ve seen double-digit growth in dollar sales in the US market for the last 12 months for products that are marketed as grass fed — a low double-digit rise of 11-12%. But that is against the background of just under 1% in total market growth.
“You have huge growth in grass-fed relative to the total market growth in value sales of meat in the US market, for example.”
The pasture system dominant in NZ is perceived to have an advantage in some of the markets this country exports to, he says.
Technology to the rescue
Technology options are coming onto the market to assist farmers with sustainability, says Sherrard.
“There is often a perception that it’s all well and good talking about sustainability but ‘what are we going to do?’ ” he explains.
“There are things farmers can do. There are technology options coming into the market which can, for example, reduce methane emissions from cattle – whether dairy or beef cattle, it doesn’t matter.”
Sherrard says there are feed additives proven to reduce methane emissions by 25% to, in some cases, 35% over an animal’s life cycle.
“I appreciate there is a certain irony in talking up a pasture-based production system.
“You have a feed additive which implies a barn-based production system, but there are options: in grass-fed there are solutions here in NZ; with methane there are solutions.”
He refers to devices wearable by cattle and sheep that monitor their health and digestion and help to monitor methane emissions; these can also be used in virtual fencing to redirect cattle away from waterways, for example.
“These technologies help to deal with the very expensive problem... where farmers are being asked to exclude stock from waterways.”
These technologies are neither free nor easy, he says, “but they are there and once we start to focus on what we are trying to achieve, if we come together as an industry and look for integrated solutions we will find there are solutions out there”.
