Farmers need irrigation advice: economist
Sixteen water schemes are planned for New Zealand that could result in farmers changing their land use and farm policies, according to ANZ rural economist Con Williams.
These schemes had the potential to almost double the total irrigatable land to 1.38 million hectares, or 12 per cent of New Zealand's total agricultural land, he told the Wairarapa Water Summit in Masterton.
When the time came to decide whether to irrigate, farmers would need all the advice they could get. "This is not a case of one-size-fits-all and good advice helps to work out the options for properties."
Conversions to dairy were more expensive than five years earlier; his analysis was $26,000 to $30,000 a hectare.
Sheep and beef farmers seeking flexibility could look at options to cope with future dry conditions. Some might consider irrigation for part of the farm.
"I guess the other thing is that there is obviously a lot more flexibility in a sheep and beef operation around what you can do from year to year than perhaps than in the dairy sector."
Profits would increase as farmers became more skilled with irrigation.
"In most of the schemes we looked at [for sheep and beef farmers], productivity was in the top 20 per cent."
The main benefit for arable farmers was that irrigation gave them the ability to move from commodity crops to higher specialised high-margin crops.
"That came through when we looked at class 8 South Island irrigated farms versus non-irrigated class 8 - the difference of $200 or $300 a hectare in returns was due to the difference in the cropping mix. Yes, it was higher costs but it was also higher margins."
He said the benefits of irrigation had been known for a long time but, despite this, New Zealand still irrigated only about 5 per cent of its pastoral land.
"Part of the issue is the diminishing quantity of available water for irrigation. Around 41 per cent of water used for irrigation is extracted relatively easily from groundwater sources stored naturally in aquifers.
"Access to this water is regulated by local government and was historically issued on a first-in, first-served basis.
"Over time, the race to access water has meant that, in some regions, water has been fully allocated, or over- allocated. Furthermore, with water conservation becoming increasingly important, extraction from run of river is no longer a viable means for long-term water security.
"With the realisation that water is a finite resource, there's additional motivation for investment to capture water in order to make use of it at the right time, the right place and in the right amount.
"The development of more water storage and enhancements to existing irrigation schemes are key to primary sectors unlocking offshore opportunities."
The productivity driver that stuck in his mind was: "There's nothing like a bit of debt to get you out of bed in the morning."