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Organic dairy farming - the current prognosis

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Growth in organic dairy farming will add up to $12 million per year to regional economies says dairy sector educator, Bill Quinn.

Organic dairy. Photo: Richard Bentley Fonterra is paying certified organic farmers seven per cent above standard payout for the first three years and twenty per cent above standard payout for the following three years and Mr Quinn says farmers in Waikato, Bay of Plenty and Taranaki are not only maintaining the production levels expected in dairy farming, but also reducing production costs. 


  Top production achieved                “There are a good number of farmers now achieving top levels of production at $1.50 per kg cost of production or less, whether on all grass or brought in feeds,” says Mr Quinn.

Opunake in South Taranaki is leading the way with over 2000 cows in the organic programme.  With herd sizes ranging from 200 to 500 cows, these farmers are not only changing farm management, but also contributing to local attitude change.

Conversion: The actual cost
            For many, the big question is how much production will be lost in changing to an organic system and what will be the additional cost.

In December 2004, Fonterra announced its intention to increase its organic milk production to 170 million litres of milk from 200 dairy farms, by 2009. 

So far there have been a mixture of people in the programme — sharemilkers, farm managers, and some bigger operators showing interest. Most see it as a way to diversify and address environmental concerns.

Mr Quinn says whether production is lost and whether there is additional cost comes down to the individual farm - and primarily whether they are changing to organics to save the planet or to run a very efficient farm.

Organic production is not necessarily a low input system but those that run low input systems whether organic or not, usually have lower production and lower return on investment he says.

He also referred to Fonterra specialty milk manager, Andy Goodwin’s 2005 assertion that despite research suggesting the contrary, in practice, commercially, the productivity of Fonterra’s farmers’ was more likely to be affected by climactic conditions than through conversion to organics.

Mr Quinn said there are some organic properties that don't perform but the single biggest issue that affects farmers’ attitude to certified organics is the fear they may have to join the Green Party. "Believe me, this is not the case!”

In top five per cent for production        “When we look at the existing organic farms we see businesses that have grown over their 20-year existence and ones that struggled - the difference is attitude,” he says.

There are organic dairy farmers who are in the top 5% of their district in terms of production and also in the top 3%Organic pasture. Photo: Richard Bentley for lowest costs.

He said in one case, the farmer was originally doing 1100 kgMS with heavy urea use, but in the first year of organic farming, with no urea, he achieved 1000 kgMS and reduced his animal health bill by about 40%.

Those that are doing well have invested in knowledge and grown their operation, not tried to save the planet — although this has been a by-product.


Incentives          However, the viability of organic dairying in the medium term depends in some measure on the incentives offered by Fonterra. These amount to about $90 per cow in the conversion years and about $270 per cow in the following three years. He said the scheme should continue given the growth in the demand for organic dairy foods world-wide.

The organic sector has some 200 input suppliers, ranging from the likes of Ravensdown to the growing vermicast operations, and from homeopathics to suppliers of salts and animal health tonics. 

All these firms supply non-organic farms as the core of their turnover and they hold the key to maintaining production and profitability, while converting to what Fonterra have identified the world market as demanding - certified organic product.

Quinn said there were also many orthodox farmers adopting sustainable ideas and concepts, such as homeopathy, which is now used by about 30 per cent of diary farmers - a big change from a decade ago. They have also become important customers for businesses that supply the organic sector with the likes of seaweed drenches and organic fertilisers. 

Two organic farmers' stories   Gavin Fisher and Ross Dawson talk about their experiences with reporter Richard Bentley.


  Photo: Richard Bentley

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