New Zealand dairy farmers should continue to focus on the competitive advantage they gain from their ability to grow good grass, says a world- renowned Irish farming leader.
Michael Murphy belongs to an equity partnership that owns a Canterbury dairy farm and also owns farms in Ireland and the United States.
He is a frequent visitor to New Zealand where he has addressed farmers on wealth creation and the dairy industry's international future.
He is leading a group of about 30 Irish and UK farmers on a three- week visit to New Zealand, the anniversary of the first visit here by the Republic of Ireland's Blackwater Discussion Group 40 years ago. The group, which was in Taranaki this week, has also visited Waikato and is now in the South Island.
As an Irish dairy farmer, Murphy greatly admired New Zealand's low-cost dairy production system. Its traditional strengths were the ability to grow and utilise good-quality grass and to undertake compact calving of its high-fertility cows at low cost.
Murphy said New Zealand produced 3.6 times the quantity of milksolids produced in Ireland, where the dairy industry had been stagnating since European Union production quotas were established, back in 1983.
Irish dairy production doubled between 1961 and 1972 and again between 1972 and 1983.
"We have plenty to learn from New Zealand's best farmers because we have stagnated."
Irish farmers wanted to develop their industry, so were studying and learning as much as they could from the dairy industry's 30-year expansion in New Zealand.
After the 2015 abolition of the EU quota, Irish dairy production is expected to increase by 50 per cent by 2020, Murphy said.
Visiting Kuriger Farms at Oaonui on Tuesday, Murphy described Louis Kuriger as a world expert in low-cost, grass- based dairy farming. The Oaonui farm is a partnership between Louis and Barbara Kuriger and their son, Craig, who runs it.
Even though the group wanted to learn from New Zealand farmers, Murphy noted the emphasis here had moved from profit per hectare to production per cow. "Getting a good return on your asset is the real purpose of being in business and I'm suggesting some farmers are focusing on the wrong goal.
"Some have lost sight of their competitive edge, which is based on low-cost production. They are now farming in a way that costs, so there's a severe loss of their competitive advantage because of their high inputs."
Some farmers had made bad investment decisions and bad farm systems decisions.
Murphy said he was dismayed to hear figures suggesting 28 per cent of New Zealand's dairy farmers were financially at risk, based on their borrowing levels and their ability to repay loans.
It seemed banks had lent money recklessly to farmers who had made poor investment decisions based on "crazy" capital gains and unlikely trading returns.
But farmers in Taranaki seemed to have been less reckless than those in other areas of New Zealand.
He said strong links existed between Ireland and New Zealand, whose similarities included climates ideal for grass-growing.
Ireland would double its dairy production in the next 30 years, as New Zealand had done in the past 30 years.
A world leader in dairy exports, Ireland exports 80 per cent of its dairy production and is second in the world to New Zealand, which exports more than 90 per cent of its production.
"We are like New Zealand in that our success lives or dies on the success of our export market," he said.
- © Fairfax NZ News
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