The economic downturn in dairying is New Zealand’s best chance for a farming revolution.

Our ‘Tried and True’ dairy at the 2009 Fieldays worked a treat. We were able to communicate directly with the farming and rural sector about how Fonterra’s business strategy is contributing directly to the current economic, environmental and social demise of dairy farming - big issues that threaten to overwhelm New Zealand.

The situation was well summarised in the editorial in our “Better Times” newspaper, produced for Fieldays - ‘The Perfect Storm Threatens NZ Farming,’ Simply, the headlong rush by Fonterra into milk powder commodity markets has forced farmers down an intensification path, which is creating a huge rise in greenhouse gases and having negative impacts on New Zealand’s waterways.

At the same time this intensification has eroded farmers’ profits by increasing the costs of all the chemical fertilisers and supplemental feed needed for intensive farming. This is known as the ‘treadmill effect’ whereby ongoing pressures to increase production, combined with downward pressures on price, contribute to the sensation of ‘running to  stand still.’ This is a core driving force behind the intensification of NZ farming systems and subsequent rise in environmental impacts.

Dairy farmers are facing scary times. The Fonterra commodity bubble of last year has burst and now threatens the survival of a number of farms. A significant number of dairy farmers who we talked to were angry at Fonterra’s total commitment to the commodities market at the expense of value added finished products such as cheese, butter, yoghurt, etc.  This takes away a good income for farmer’s hard work – commodity markets are about a ‘race to the bottom’ on price with other countries also producing milk powder.

Despite this potentially depressing situation, a hopeful theme emerged at the event. Many farmers, scientists, commentators, and government officials agreed that just as the worldwide economic crash was an opportunity to reconfigure our economies to low-carbon ones, the ‘dairy crash’ was an opportunity for NZ to start a farming revolution. This could provide solutions for sustainable farming with reduced greenhouse gas emissions and better returns for farmers – a true ‘win-win’ that would strengthen NZ’s clean and green brand.

Smart farming ( is about low inputs of chemical nitrogen fertilisers (ideally down to zero) and supplemental feed and not stuffing huge numbers of cows into every hectare. Given that dairy farmers are struggling to pay for all these expensive inputs, reductions are already being made. Some farmers said economics had forced them to reduce their use of chemical fertilisers.  As their farms had not fallen over, they now realised Fonterra and the rest of NZ agri-business had been getting them to use chemical nitrogen fertilisers that were actually not needed to maintain production.

Government must now follow through and put in place policies for smart farming methods to keep farmers from going back to the previous bad practices of intensive farming. This will help protect farmers’ incomes and reduce greenhouse gas emissions and water impacts. The question is whether the Government will act and seize this opportunity for a farming revolution in NZ.