Green gold

Organic dairy farming can make city folk feel good and might even be kinder on the environment, but making money out of it is another thing. One Tokoroa farmer is well on his way to finding out whether he can. Tracey Cooper reports.

George Moss has managed to worry his fellow dairy farmers in a way that usually only interventionist American presidents and sandal-wearing hippies can.

The thing about Moss, and the cause of much angst among the dairy farming community, he says, is that he's taking part in a long-running experiment to prove, one way or another, whether organic dairy farming actually stacks up.

"We've got both the organic and conventional people scared," the affable - and bearded - South Waikato farmer says with a laugh over coffee, with non-organic milk, in his cosy home just outside Tokoroa.

They're worried, he says, that one form will return a markedly better outcome than the other.

If the organic dairy farm comes out on top, it could lead to even more pressure on dairy farmers to go green. If conventional farming wins, environmentalists worry it will shatter the dreams of the pioneering organic farmers who believe they are doing their bit to save the world. It would lead to even more intensive farming on prime land already showing signs of stress after years of abuse.

There has been an increasing focus on the sustainability of dairy farming in recent times. And the world in general is becoming more concerned about the impact intensive food production has on the environment.

The temperature was ratcheted up several notches late last year, when regional council Environment Waikato (EW) released a damning report about the condition of the region's water and soil, sheeting home much of the blame to dairy farms.

The figures contained in the report were staggering and sobering. Each of the 4500 farms in the Waikato leached an average of 3.6 tonnes of nitrogen a year, it says. Scientific estimates showed 97 truckloads of urea fertiliser entered the sea at Port Waikato every week, while another 32 truckloads wound up in the Firth of Thames. About 70 per cent of waterways were deemed unsafe for swimming.

"There are clear links between declining water and soil quality and the intensification of land use in the region," the reports says. "Increasingly, there are signs that for farming itself to survive into future decades, there will need to be some changes."

The report showed that from 1997 to 2007, the number of dairy cows in the region increased by more than 10,000 a year. The amount of nitrogen fertiliser used on Waikato farms has increased seven-fold since 1990 as farmers strived for higher production levels from their land.

Federated Farmers predictably slammed the report, labelling it "poor science" and claiming, incorrectly, that all farmers were being pilloried. Waikato region Federated Farmers president Stew Wadey even went so far as to say there was "no problem" with water quality in the region.

Moss points out that the quality of the water in the Waikato River has improved markedly in the past 20 years, but that doesn't make it clean.

"Remember, Hamilton used to pump its waste into the river," he says.

This year, the focus is again on the sustainability of farming and EW, AgResearch and the Agriculture and Forestry Ministry sponsored the My Land, Our Environment premiere feature at this week's National Agricultural Fieldays at Mystery Creek.

To the layman, turning to organic farming seems a simple choice. But while that may be environmentally and socially sustainable, the debate remains whether it can be financially sustainable for the region's farmers.

It has to make a profit, he says.

"The big focus is to make money and to prove to ourselves that organic farming is a viable option and to prove to other farmers that they can make a profit through organic farming."

Moss points out that organic farming is not suited to every farm or every farmer.

"Every single farm would be different," he says.

Moss runs 180 cows on the 72-hectare conventional dairy farm he owns with wife Sharon just a few kilometres from Tokoroa.

It's among the smaller farms around, Moss says. It's generally accepted in farming circles that 180-cow farms are no longer viable, but Moss is putting that idea to the test, too: the farm rates in the top 20 per cent nationally in terms of profitability.

His background as a financial consultant no doubt plays a big part in his success. Moss enjoys crunching the numbers and seeing where savings can be made to boost profits.

"It's attention to detail.

"We can demonstrate that this 180-cow farm is seriously profitable on any measure."

Bigger is not necessarily better, he says, and increasing the intensity of the farm is a greater risk in relation to sustainability.

"There is no real advantage with high-input systems. More intensive systems get more money, but you've got to spend more to manage the environmental impact.

"If you go for a lower-input system, the environment is improved."

He wants to achieve the same sort of profit levels from the neighbouring organic farm inside four years and have it in the top 20 per cent of farms nationally, organic or not.

"Looking at the options, we felt that in a competitive environment, it [organic] was the best option to get to the level of profitability we wanted."

On the organic farm - which he owns in partnership with former Fonterra director Earl Rattray and his wife, Jo - Moss has 67 effective hectares with 150 cows and is two years into the five-year path of converting it to organics.

The early signs are encouraging.

"In the first year, the '07-08 season, the organic farm nearly outperformed the conventional farm by profit.

"This year, it will be marginally behind. We're talking about $200 either way per hectare.

"I didn't expect to go that close.

"On the organic farm, we weren't spending the money. The costs of organic appear to be less.

"We can use elemental sulphur and phosphate rock, but nitrogen is a big one that we don't have access to - and antibiotics."

He says both farms produced an operating profit per hectare of about $4000 last season.

"The organic farm was $4300 and the conventional one was $4100, give or take a few cents," he says.

He's confident the organic farm will turn a profit this year as well, even though it has "above average" debt.

It's not just costs that make the difference: the premium paid by Fonterra for the organic milk may tip the balance.

Once a farm is fully converted, organic milk is worth $1.05 more per litre than non-organic milk, and during the changeover period farmers are paid 45c per litre extra.

"As the milk payout comes back, organics become more and more competitive.

"The premium makes up a higher percentage of the total payout.

"About $6 [payout], you would have to question whether organics are the way to go."

But there is also a reasonable chance the premium will increase on the back of strong demand in the United States.

Moss has no problems revealing the numbers involved in his operations and says he intends putting everything on the table.

"We have to get a measure of profitability."

As a comparison, he wants to hold the production costs per kilogram of milksolids (MS) on the organic farm to under $2.20.

With the current payout of $4.55 and the 45c premium, taking the total payout to $5 per kg/MS, it leaves $2.80 leftover. "And out of that, we have debt servicing and we have to pay our farm manager."

On the non-organic farm, costs are higher, at about $2.40-$2.50 per kg/MS and the milk attracts no premium.

Moss says the organic farm needs a different approach.

"You have to be organised, you have to plan well ahead.

"You need to think about the next 12 months and have that approved.

"Everything has to be approved.

"You start thinking about the farm and what you want to achieve and what you need to achieve that.

"It's a different sort of work. It's more challenging."

But in some ways, it is easier because there are fewer options.

"You don't have to think about Do I buy palm kernel? because you can't."

He says animal health is comparable in both herds, despite the lack of antibiotics on the organic farm.

Faecal egg counts have been negative for parasites and liver biopsies taken from organic animals showed "they are very healthy," he says.

"We will soil test both farms and at this stage, there appears to be no difference in the base fertility."

Environmental assessments are also planned on both properties to see the impact they have on the environment.

"I personally think both farms will come up very well."

Moss has planted herbs - chicory and plantain - throughout the organic farm to boost animal health and says that's one of several measures he's also incorporated into the conventional farm.

"We are changing the pasture and we've dropped antibiotic use on the conventional farm."

He would "seriously look" at making both farms organic if it proved more profitable.

"In the worst-case scenario, we will end up with a far better conventional farm."

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