5.0 TRENDS IN THE DAIRY INDUSTRY 1972/73 TO 1995/96
The dairy industry has undergone significant change over time. Changes over the period between 1972/73 and 1992/93 are well documented in "Changes in Sharemilking 1973 to 1993" (Hall and Martyn, 1993). This section is intended to provide an extension of this data to the present day. The majority of data available at this time is to 1994/95.
5.1 FARM NUMBERS
TABLE 1: Number of Farms Between 1972/73 and 1994/95 by Operating Structure
| OPERATIONAL STRUCTURE | SEASON |
| 1972/73 | (%) | 1992/93 | (%) | 1994/95 | (%) |
| Owner operators | 13185 | (67.6) | 8207 | (56.7) | 9627 | (65.7) |
| Contract milkers | 84 | (0.6) |
| Sharemilkers: Less than 20% 20 - 28% 29% 30-38% 39% 40-44% 50% (45% +) |
0 0 1075 0 1075 0 4174 |
(5.5) (5.5) (21.4) |
44 269 130 157 126 102 2803 |
(0.3) (1.9) (0.9) (1.1) (0.8) (0.7) (19.4) |
83 560 158 245 138 106 3642 |
(0.6) (3.8) (1.1) (1.8) (0.9) (0.7) (24.9) |
| All sharemilkers | 6325 | (32.4) | 3631 | (25.1) | 4932 | (33.7) |
| Operating structure unknown | 2626 | (18.2) | 6 |
| All dairy farming | 19510 | 14458 | 14649 |
[ Data for the 1972/73 season is a compilation of all sources and therefore may
not be as reliable as later years.]
Source: Economic Survey of Factory Supply Dairy Farms 1973; Dairy Statistics
1992-1993 and 1994-1995; NZ Year Book 1975.
As can be seen in Table 1, farm numbers have dropped by approximately 5000 (25%) over the past 23 years. However, in the 1994/95 season farm numbers were up by 191 (1.3%) on the 1992/93 season. Despite some farm amalgamations and other suppliers exiting the industry, relatively good payouts over recent years has meant interest has remained high in the dairy industry. This, combined with poor returns to sheep and beef products over the same period, has resulted in a lot of suitable land on the fringes of established dairying areas, and in other areas where dairying was not previously strongly represented (such as Canterbury and Southland), being converted to dairying. This trend has led to a net increase in supplier numbers over the last five years.
In 1972/73, there were 4174 50% sharemilkers. This dropped to 2803 in 1992/93 and climbed back to 3642 in 1994/95. However, unknown operating structures had also decreased by 2620, which suggests that a good part of the increase is due to farm operating structures being better classified. A better indication of changes over this period is that the number of 50% sharemilkers compared to all farms with classified operating structures. The number of 50% sharemilkers has increased from 21% of all classified farms in 1972/73, to 25% in 1994/95.
The greatest change in numbers has occurred in the 29% and 39% sharemilker category. From 1972/73, when there were approximately 1075 of each of these types of agreements, numbers have fallen significantly and were 130 and 126 respectively in the 1992/93 season. Since then, the population of 29% and 39% sharemilkers has remained relatively static and now sit at 158 and 138 respectively, in 1994/95. However, the majority of these agreements are reserved for family members (Hall and Martyn 1993).
Other lower order agreements (those which are not 29%, 39% or 50%) have increased in numbers over the last 23 years. In 1972/73 such agreements were virtually non-existent. In 1992, they accounted for 16% of all sharemilking agreements and by 1994/95, 20% of all sharemilking agreements were of variable order. The lower order variable agreement is seen to provide a better return to the farm owner than either the 29% or 39% agreements. This is the most likely reason for the disproportionate increase in their number.
To see a more accurate account of what has happened with farm numbers over recent years, Tables 2 and 3 give detailed numbers on a season by season basis. From this, we can ascertain that there was a decline in sharemilker numbers over the early 1990's. However, in 1994/95, total sharemilker numbers were at their highest point for 10 years.
This lift is apparently due to an increase in 50/50 type agreements, up from 3140 in 1990/91, to 3642 in 1994/95. This represents an increase of 502. Numbers of "other" types of sharemilking agreement have also increased, almost doubling from 1990/91 numbers, to 794 in 1994/95. The biggest increase has been in the 20-28% range.
The 29% and 39% agreements, as previously mentioned, are showing a steady decline as a result of a change in the law governing these agreements and farm owners try to maximise their returns. Contract agreements have also diminished in number, probably due to their ambiguous taxation status, from 525 ten years ago, to 84 in 1994/95.
TABLE 2: Numeric Trends in Operating Structures Since 1984/85
| Operating structure | 84/85 | 85/86 | 86/87 | 87/88 | 88/89 | 89/90 | 90/91 | 91/92 | 92/93 | 93/942 | 94/95 |
| Sharemilkers: |
| 29% | 306 | 304 | 367 | 317 | 354 | 314 | 322 | - | 130 | 118 | 158 |
| 39% | 511 | 507 | 424 | 344 | 401 | 363 | 146 | - | 126 | 108 | 138 |
| 50% | 3,196 | 3,248 | 3,163 | 2,933 | 3,079 | 2,667 | 3,140 | - | 2,803 | 2,714 | 3,642 |
| Leased | 117 | 116 | 56 | 110 | 156 | - | - | - | - | - | - |
| Contract | 525 | 536 | 71 | 165 | 290 | 444 | 130 | - | - | 97 | 84 |
| Other | 204 | 203 | 240 | 207 | 163 | 220 | 467 | - | 572 | 583 | 994 |
| All sharemilkers | 4,859 | 4,915 | 4,321 | 4,077 | 4,443 | 4,008 | 4,205 | - | 3,631 | 3,620 | 5,016 |
| Owner operators | 9,734 | 9,584 | 9,800 | 9,695 | 9,316 | 9,349 | 9,220 | - | 8,201 | 8,344 | 9,627 |
| Unknown | - | - | - | - | - | - | - | 13899 | 2,626 | 2,633 | 6 |
| TOTAL | 14593 | 14499 | 14121 | 13772 | 13759 | 13357 | 13425 | 13899 | 14458 | 14597 | 14649 |
[ No survey was carried out for the 1991/92 season.]
[ The large number of unknown agreements in these years has resulted in decreased
numbers in most categories. Therefore, comparisons using these years as a base should not
be made.]
Source: Dairy Statistics 1992-1993 and 1994-1995.
TABLE 3: Percentage Trends Operating Structures Since 1984/85
| Operating structure | 84/85 | 85/86 | 86/87 | 87/88 | 88/89 | 89/90 | 90/91 | 91/92 | 92/93 | 93/94 | 94/95 |
| Sharemilkers: |
| 29% | 2.1 | 2.1 | 2.6 | 2.3 | 2.6 | 2.4 | 2.4 | - | 0.9 | 0.8 | 1.1 |
| 39% | 3.5 | 3.5 | 3.0 | 2.5 | 2.9 | 2.7 | 1.1 | - | 0.9 | 0.7 | 0.9 |
| 50% | 21.9 | 22.4 | 22.4 | 21.3 | 22.4 | 20.0 | 23.4 | - | 19.4 | 18.6 | 24.9 |
| Leased | 0.8 | 0.8 | 0.4 | 0.8 | 1.1 | - | - | - | - | - | - |
| Contract | 3.6 | 3.7 | 0.5 | 1.2 | 2.1 | 3.3 | 1.0 | - | - | 0.7 | 0.6 |
| Other | 1.4 | 1.4 | 1.7 | 1.5 | 1.2 | 1.6 | 3.5 | - | 4.0 | 4.0 | 6.8 |
| All sharemilkers | 33.3 | 33.9 | 30.6 | 29.6 | 32.3 | 30.0 | 31.4 | - | 25.1 | 24.8 | 34.2 |
| Owner Operators | 66.7 | 66.1 | 69.4 | 70.4 | 67.7 | 70.0 | 68.6 | - | 56.7 | 57.2 | 65.7 |
| Unknown | - | - | - | - | - | - | - | 100.0 | 18.2 | 18.0 | 0.0 |
| TOTAL | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 |
Source: Dairy Statistics 1992-1993 and 1994-1995.
5.2 FARM SIZE
Technological advances over time, for example the rotary farm dairy compared to the walk through shed, have enabled farmers to milk and care for a greater number of stock, with a proportionally lower number of labour units. As a result of this, there have been economies of scale available which have enabled farmers to increase their farm size. Changes in farm size over the last 23 years are detailed in table 4.
TABLE 4: Trends in Farm Size Between 1972/73 and 1994/95 by Operating Structure
| OPERATING STRUCTURE | 1972/73 SEASON (ha) |
1992/93 SEASON (ha) |
1994/95 SEASON (ha) |
| Owner operators | 70 | 71 | 75 |
| Contract milkers | 124 |
| Sharemilkers: Less than 20% 20-28% 29% 30-38% 39% 40-44% 50% (45% +) |
78 852 682 |
105 97 81 86 76 83 86 |
106 97 90 86 71 79 90 |
| All sharemilkers | 68 | 86 | 90 |
| Operating structure unknown | 68 | 88 |
| All dairy farming | 69 | 74 | 80 |
[ Data for the 1972/73 season is a compilation of all sources, and as such, may not be as reliable as the later figures .]
[ Includes home farm and runoff. ]
Sources: Economic Survey of Factory Supply Dairy Farms 1973; Dairy statistics 1992-1993 and 1994-1995; New Zealand Year Book 1975.
Trends in farm size since 1972/73 show a 16% increase for all farm types, from 69 ha to 80 ha. Over this time, the rate of increase has been different for sharemilkers and owner operators. Since 1972/73, the average size of a 50% sharemilking farm has risen by 22 ha (32%), while owner operated farms have only increased in size by 5 ha (7%) over the same period.
In 1972/73, with an average farm size of 69 ha, the total area in dairying was 1.34m ha. By 1992/93, the average farm size had risen to 74 ha over all farm classes. However, total farm numbers had fallen to 14458, a decrease of 26%. At this time, total land occupied by dairy farming was 1.07m ha. The average increase in farm size over this period was not due to dairy farming expanding to occupy more land, but was a direct result of either farm amalgamation or exiting of the smaller farmers, thus raising the averages. In all likelihood, both of these mechanisms were operating, resulting in the increased farm area.
The reason for the decrease in dairying area is likely to be due to lower payouts to dairy farming and attractive alternatives, such as kiwifruit in the Bay of Plenty or other livestock/arable enterprises, especially in the early 1980's when dairy farmers received lesser subsidies than their counterparts in other areas.
By 1994/95, 1.17m ha of land was in dairying, an increase of approximately 100,000 ha. This indicates that dairy farming has started to expand over the last four to five years. It is also evident that the increase in farm size is not due solely to amalgamations but also to land being converted to dairy farming.
5.3 HERD SIZE
As a consequence of increased farm size and technological advancement in areas such as fertiliser, pasture species and farm management, the average herd size has also increased over time. This is detailed in Table 5.
TABLE 5: Trends in Herd Size Between 1972/73 and 1994/95 by Operating Structure
| OPERATING STRUCTURE | 1972/73 SEASON | 1992/93 SEASON | 1994/95 SEASON |
| Owner operators | 114 | 167 | 177 |
| Contract Milkers | 298 |
| Sharemilkers: Less than 20% 29-28% 29% 30-38% 39% 40-44% 50% (45% +) |
146 141 135 |
248 245 199 204 177 205 217 |
268 246 214 208 164 192 224 |
| All sharemilkers | 138 | 216 | 224 |
| Operating structure unknown | 170 | 201 |
| All dairy farming | 122 | 180 | 193 |
[ Data for the 1972/73 season is a compilation of all sources and as such may
not be as reliable as the later figures.]
Sources: Economic Survey of Factory Supply Dairy Farms 1973; Dairy Statistics 1992
- 1993 and 1994 - 1995; New Zealand Year Book 1975.
In 1972/73, the average herd size was 122 cows on 69 hectares. This represents a stocking rate of 1.77 cows/hectare. By 1992/93, average herd size had increased to 180 cows on an average farm size of 74 ha, a stocking rate of 2.43 cows/ha. Although cow numbers once again increased to 193 in 1994/95, average farm size had also increased to 80 ha. The net result was a slight decrease in stocking rate to 2.41 cows/ha.
Sharemilkers had a stocking rate of 2.0 cows/ha in 1972/73, 2.5 cows/ha in 1992/93 and 2.49 cows/ha in 1994/95. In 1972/73, the difference between owner operators and sharemilkers was 0.2 cows/ha. By 1992/93, this gap had closed to 0.1 cows/ha and remained that way through to 1994/95. This may partially explain the discrepancy in production between owner operators and sharemilkers.
5.4 FARM PRODUCTION
With an increase in farm size, herd size, stocking rate, stock quality and knowledge of farm management practices over the past 23 years, there has been a corresponding increase in production. Table 6 details this progress.
TABLE 6: Trends in Farm Production (Milksolids) Per Hectare and Per Cow Between 1972/73 and 1994/95 by Operating Structure
| OPERATING STRUCTURE | 1972/73 SEASON |
1992/93 SEASON |
1994/95 SEASON |
| HA | COW | HA | COW | HA | COW |
| Owner operators | 367 | 226 | 630 | 257 | 657 | 271 |
| Contract milkers | 690 | 273 |
| Sharemilkers: Less than 20% 20-28% 29% 30-38% 39% 40-44% 50% (45% +) |
411 369 449 |
219 223 226 |
632 688 678 650 640 666 683 |
260 262 263 260 255 260 258 |
694 724 684 679 664 674 699 |
273 273 273 271 277 272 271 |
| All sharemilkers | 419 | 224 | 680 | 258 | 698 | 272 |
| Operating structureunknown | 690 | 267 | 617 | 270 |
| All farming | 385 | 226 | 653 | 259 | 671 | 271 |
[ Data for the 1972 - 73 season is a compilation of all sources and as such may
not be as reliable as the later figures. The data has also been converted to milksolids
using the ratio of 1kg MF : 1.74 Kg MS. ]
Sources: Economic Survey at Factory Supply Dairy Farms 1973; Dairy Statistics
1992-1993 and 1994-1995; New Zealand Year Book 1975.
Farm production has increased between 1972/73 and 1994/95 by 74% per hectare and a more modest 20% per cow. This seems to be attributable to a combination of a rise in stocking rate from 1.76 cows/ha to 2.41 cows/ha, a 37% increase, as well as improving cow and pasture quality and improved management techniques.
Production for the 50% sharemilker has, for the same period, increased by only 56% per hectare but per cow production has risen by 21%. Sharemilkers in 1972/73 were producing approximately 14% more milksolids than their owner operator counterparts. In recent years, that has shortened to between 5 and 10%.
Exactly why this difference exists is open to conjecture. The most likely reason is that it is due to the difference in stocking rate between sharemilkers and owner operators, as outlined in Table 6. Another popular theory is that sharemilkers are more motivated and technologically aware than the typical owner operator.
Contact for Enquiries
Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0675
Fax: +64 4 4 894 0745
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