Smart new farming systems that will define agriculture in the 21st century are already in our backyard.

On farm, we have to do things smarter, not just because of the dilemma we face with water quality and quantity, but also as a result of a more volatile climate. These pressures mean we need ‘systems’ thinking on farm, excellent risk management and more consistent profits. And often, there is a need to balance family lives and values at the same time.

Smart new farmers are able to make a profit through good and bad years because they know their return on capital, and the key levers in their business that drive good performance. Profit is not always about producing more of a commodity (milk, meat), but rather about resilience.

Resilience describes an ecosystem’s capacity to respond to disturbance by resisting damage and recovering quickly. Funnily enough, economists use it to describe ‘safe’ investments. For farming, resilience relates to an ability to have a\ consistent return on capital, repeated across seasons, at different input costs, and through big swings in commodity prices.

It’s about having a ‘sturdy’ business more so than a ‘high output’ business.

A research paper to be released this month summarises this nicely, saying that intensification (high inputs and stock rates) has led to some farms producing at a level that is past the ‘sweet spot’ of maximum profit. Claims that de-intensification will result in lower farm profits are as yet unconvincing. Nevertheless, a lot of farmers are still led to believe that more output will mean more money. In my work with farmers, we do not always see this.

What ‘smart farming’ means

A client of ours in ‘Tomorrow’s Farms Today’ – the Upper Waikato dairy project undertaken on 25 farms over three years – says, “It is not the good years that make you, but the tough years that break you.”

Smart new farms will be resourceuse efficient, minimising their nutrient, pathogen and sediment losses and becoming very clever at retaining nutrient for re-use on farm, rather than letting it run off.

The public and our consumers will eventually require this.

These smart new farms will have the vulnerable areas (steep, wet and boggy areas) planted out to support bees, provide shade, protect soils and waterways. On some farms this may not just be 2-4%, but 10-20% of the farm area.

These areas are typically a liability to the farm anyway, as animals often get stuck in them.

Smart new farms will have wetlands in low lying areas to slow down and filter run off, acting like kidneys for the land. These areas would naturally have been swampy areas that were probably prone to pugging or water logging anyway. These farms are pleasant to work on and can be aesthetically more valuable.

In this next century, economic values will be attached to the nature services that these wetlands, plantings and hillclad steep slopes provide. I expect that to happen in my lifetime.

But meantime, we have smart new farmers now, in regions right across NZ.

Eco-efficiency

I am lucky enough to work with farmers who carefully consider the best land use for land type and farm it accordingly. They are quiet leaders, working hard at being profitable land stewards. These farmers are not getting enough recognition for their actions yet. They demonstrate high levels of eco-efficiency.

They have learnt how to create a high level of value ($ or product) from a given resource or service that is provided from the environment (water or soil absorption capacity).

In the future, the protein or energy our farmers produce will likely be linked back to units of resource used, because our consumers are increasingly concerned about things like water availability and quality.

For example, an eco-efficiency check used inside the farm gate might be the amount of milk solids produced per kilogram of nitrogen leached, or kilograms of protein produced per million-litres of irrigation water used.

There is a big focus on the effects of dairy on the environment, so let’s consider an example of milk production – kilograms of milk solids produced per kilogram of nitrogen leached (kg MS per kg N).

In the Upper Waikato (Broadlands– Reporoa area), where the rainfall is around 1,000 millimetres per year, and pumice soils are typical, dairy farms are showing a three-fold range in terms of an ‘eco efficiency’ measure.

Some farms sharing the same climate, soils and land use, are three times as efficient as others.

This has to be a profitable proposition though, or else farmers will be in the red while trying to be green.

The good news: many of these farms who are resource-use efficient are also consistently profitable – showing strong return on their total capital in the business that is repeatable across high and lower milk prices. These farmers have eco-efficient, profitable businesses whilst striving to improve things further.

Farmers can be profitable while having a low environmental footprint, and using their resources as efficiently as possible. Most farmers I meet agree with this, many just want to get on with doing it.

And some are already on that path. Headlands is fortunate to work with top farmers who are still trying to improve – some are high intensity, some low intensity.

Bruce and Donna Arnold, who run a complex and intensive system on alluvial silt and gley soils in the Waikato, won the Dairy Business of the Year Awards last year. They earned a 9% return on capital, while having an effluent system delivering nutrient to over 60% of the farm, reducing soluble fertilisers continually and leaching 19 kilogram N loss/ ha/year, which is around half of the Waikato average (35 kg N leached).

To the Arnolds’ credit, they have spent significant amounts of money mitigating what is an intensive dairy system, and are doing a top job in eco-efficiency terms, producing 80 kilograms of milk solids per kilogram of N leached. So the Arnolds are more than three times more eco-efficient at producing milk relative to the nitrogen lost from their farm than the Waikato average.

Euan and Sarah McKnight, family dairy farmers in the Upper Waikato on pumice soils, run a more extensive, simple dairy farm with 2.6 cows/hectare producing 477 kilograms of milk solids per cow. These farmers are leaching less than half the average, at 24 kilograms N leached, while their eco-efficiency is double the average, producing 52 kg MS per kg N leached.

Andrew Hayes, in the Lower Waikato at Horsham Downs, is another quiet leader. Andrew and Jenny have spent the past 20 years restoring Lake Kaituna, which lies at the bottom of their farm. The Hayes use scarcely any soluble fertiliser now, as they realise that years of intensive farming has resulted in enriched soils that need better optimisation now. Last year, soluble nitrogen use was less than 30 kilograms per hectare per year (one-fourth the average dairy farm use), while the rich soils, after years of fertilising, are now carefully managed to ensure top pasture growth and animal intakes in top 10% of the locale. Their milk production versus N leached is double the eco-efficiency of the Lower Waikato average, with half the average N loss.

These farmers are our new leaders. They run smart farming systems, make a tidy profit with minimal impact, and will be unlikely to be significantly affected by tighter nutrient loss rules in future.

Furthermore, with their careful plans to optimise on all fronts – profit, ecoefficiency and business resilience – these smart farms will likely be more valuable and saleable, because successful farming in the future will require resources to be used ethically, within profitable production systems that both protect and enhance the environment.

Alison Dewes is a vet, a 4th generation farmer, farming in NZ and Australia for 25 years. She now leads the Headlands team, supporting farmers to create innovative, resilient and profitable businesses that protect and enhance our environment.

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