3.3 Vision for NZ Agriculture and Forestry Landuse in 2010

The following is a summary of landuse projections by sector. The 'other pasture' sector is broken down into its component parts of sheep, cattle and deer. For a breakdown of landuse by region refer to appendix 1

Dairy landuse projection

  • A national average increase of 1.6 percent per annum is predicted over the 10-year period to 2010 as the fundamentals outlined above provide NZ with competitive advantages over alternative suppliers. In area terms this corresponds to an average annual increase of 26,500 hectares. Using an average conversion area of 300ha, this equates to 88 conversions per annum.

Figure 5: NZ dairy farm conversions 1994 - 2010p

While the number of dairy conversions has declined through the 1990's the size of individual conversions has increased in response to the drive for scale efficiencies.

Figure 6: Estimated NZ land in dairy farming 1990 - 2010p

Figure 6 above illustrates the rate of landuse conversion to dairy projected out to 2010, based on an average annual increase of 26,500 hectares.

Figure 7: NZ Dairy cow numbers 1990 - 2010p

The above chart illustrates a number of options. We believe the most likely to be option 3 where dairy cow numbers increase by an average of 81,000 annually over the 10 year period.

The following table illustrates the regional impact of the growth projection for the dairy sector. In absolute area terms, Canterbury leads with the greatest area change followed by Southland and Waikato/King Country.

Figure 8: Projected dairy sector landuse by region 1990-2010p

Other pasture category

Given the realities of other livestock operations running in conjunction with another (e.g. most sheep farms will also have beef animals and possibly deer) we have grouped these three livestock categories into one named 'Other pasture' which essentially means livestock usage other than dairy.

The following summarises the projection of the other pasture category and illustrates the regional impact.

Figure 9: Projected other pasture sector landuse by region

The area change of 512,790 hectares is a net loss to other categories. It includes an internal transfer of approximately 145,000 hectares from sheep & beef to deer.

Sheep landuse projection

Despite the good long-term market prospects and industry competitive advantages, the increased competition from alternative landuses (forestry on poorer land and dairy and deer on better land), will continue to reduce land area farmed with sheep. We expect the rate of decline to slowdown on that of the 1980's and 1990's and forecast a most likely 3% (i.e. 0.3% annually) decline (high 7%, low 1.5%) nationally in the 10 year period to 2010 (recognising there will be regional differences). In estimated land area terms this represents a loss of approximately 310,000 hectares over the 10-year period or an annual average of 31,000ha.

Figure 10: NZ sheep numbers 1990 - 2010p

Figure 11: Estimated NZ land in sheep farming 1990 - 2010p

Beef landuse projection

A brief period of increasing landuse is expected in 2001-2003, however this will be followed by a decline due to pressure from alternative livestock options (sheep, dairy and deer) that provide less risk/exposure to world market fluctuations.

Figure 12: NZ beef numbers 1990 - 2010p

Our prediction is for option 3 in the above chart with beef cattle numbers increasing to 4.95 million then declining 1.5 percent annually from 2003 as market prices weaken. The reduction over the 10-year period is approximately 160,000ha or an average of 16,000 per annum.

Figure 13: Estimated NZ land area in beef farming 1990 - 2010p

Deer landuse projection

An average annual 8 percent increase is predicted over the 10 year period (i.e. option 3 from figure 14 below) as returns from the deer sector continue to outperform mainstream beef breeding and finishing operations. Deer is also likely to gain from sheep farming as farmers look to spread risk.

Figure 14: Estimated NZ land in deer farming 1990 - 2010p

The increase in deer farming is projected to divert approximately 145,000 hectares from sheep and beef farming over the period to 2010. This represents an 80 percent increase in estimated land area in deer farming over the period.

Figure 15: NZ deer numbers 1990 - 2010p

The most likely projection is that farmed deer numbers will increase by an average of 150,000 animals per annum from 2003 (option 3 from above chart). This would result in deer numbers almost doubling over the decade to just under 4 million.

Forestry Projection

An average of 25,000 hectares annually of new planting is projected over the 10 year period to 2010 (the average throughout the 1990's was 55,000ha per annum, 1980's 39,000ha pa, ). This is largely in response to the increasing demand for grazing land as product prices for sheepmeat and deer products in particular prove to be more profitable than throughout the 1980's and 1990's. A greater percentage of planting will be restocking of harvested areas rather than new planting of pastureland. Alternative species to pine are expected to become increasingly popular with Douglas Fir plantations in Southland and Otago increasing (Douglas Fir is able to reach harvestable maturity in NZ more rapidly than in the Northern Hemisphere), along with plantings of Cypress and Redwoods on suitable sites in other regions.

Skill shortages will also impact and the sunk cost nature of forestry investment will struggle to compete with other land based investments that provide returns over a much shorter time frame. There is also a view that a significant amount of the most suitable land for forestry was planted in the 1990's. Remaining land is possibly less accessible and therefore of greater cost/risk to investors.

Figure 16: NZ forestry new plantings and restocking areas 1980 - 2010p

Figure 17: Total NZ planted forest area 1955 - 2010p

The above chart illustrates the projected planted forest area with the most likely scenario using an annual average increase of 25,000 hectares versus a maximum of 50,000ha and minimum of 10,000ha

The following figure 18 illustrates the regional impact of the projected changes in forestry. The regions with the largest projected area increases are Northland followed by Otago, Southland and the Waikato/King Country.

Figure 18: NZ forestry landuse by region 1990 - 2010p

Arable Projection:

The projection is for a decline of approximately 10 percent in total area - this equates to around 21,000 hectares over the 10-year period or an average annual loss of 2,100 ha.

Demand from the pork and poultry industry for feedgrain will result in an increased reliance on imports.

The following table illustrates the regional impact for the landuse change projection.

Figure 19: NZ arable landuse by region 1990 - 2010p

Horticulture

Projection:

Horticulture land is projected to increase 8 percent over the 10-year period to 2010. In land area terms this represents a national increase of approximately 8,000 hectares. Gisborne will see the largest area change followed by Bay of Plenty.

In other significant regions such as Auckland, Waikato, Hawkes Bay, Manawatu/Wanganui, Tasman and Canterbury there will be changes to more profitable horticulture crops within the existing horticulture landuse rather than significant overall area changes.

Figure 20: NZ horticulture landuse by region 1990 - 2010p

Viticulture

Projection

Market prospects are promising and the projection is for a 63 percent increase in land in viticulture over the 10-year period to 2010. This represents an increase of 8,500 hectares over year 2000 levels (see figure 14 below).

The requirement for irrigation is such that viticulture expansion will be directly linked to the availability of good quality irrigation. Other factors influencing growth in viticulture will be the availability of investment capital, planting stocks of the desired variety from nurseries, and climatically and physically suitable land.

The two tier environment that has a small number of large producers/processors and a large number of small boutique producers is likely to change due to the requirement for scale efficiencies and commercially acceptable returns. The larger players will be fewer in number but larger in size while the number of small boutique growers and wineries is expected to decline.

Regions close to large urban areas are most likely to see the retention of the boutique winery, which is complimentary to the tourist accommodation trade. The larger commercial players will concentrate on the most suitable regions for producing the product they desire in more economically sustainable volumes. Regional branding will remain critically important (e.g. Marlborough Sauvignon Blanc) and will complement the individual winery labels.

Figure 21: NZ vineyard planted area 1981-2010p

The following table details the projected regional impact. All current grape-growing areas are expected to increase with the major areas of Hawkes Bay, Marlborough and Otago leading the way.

Figure 22: NZ viticulture landuse 1990 - 2010p

Lifestyle blocks:

Reliable data is not available however anecdotal information suggests this sector has continued to grow throughout the 1990's (although precise data is not available) and we see this continuing in every region. As at January 2001 there were an estimated 8,300 lifestyle blocks accounting for 43,000 hectares (mean size 5.1ha) of often-productive land.

Modern communications and more flexible working conditions now allows people to work from home and we project demand for lifestyle blocks to make further in-roads into what has previously been productive farmland.

Vision summary:

The projected changes in the New Zealand agricultural landscape over the ten-year period to 2010 are illustrated in figures 23 & 24 below.

The major features are:

  • The area of land used for dairy farming is projected to increase by an average of 26,500 hectares per annum or 265,000 hectares over the 10-year period. Dairy cow numbers will increase by an average of 81,000 per annum or 810,000 to 5.16 million in 2010 (an average annual increase of 1.8 percent)
  • Deer numbers will increase by just under 80 percent to 3.95 million with the land used for deer farming increasing by 145,000 hectares to an estimated 329,000 hectares.
  • ·Sheep numbers will decline by an annual average of 0.3 percent to 42.8 million due to the ongoing competition for landuse from dairy and deer. Land loss will be in the vicinity of 312,000 hectares over the 10-year period. This will occur despite good market prospects and returns. The rate of decline will be less than the rate throughout the 1990's due to a reducing impact from forestry.
  • ·Beef numbers will increase in the period to 2003 (reaching a high of 4.95 million) before declining thereafter to end the period down 3.5 percent at 4.45 million in response to world market conditions.
  • Forestry is likely to increase in total area but at a rate much lower than occurred in the 1980's and 1990's due to increased competition from sheep, beef and deer. New areas planted will average 22,500 ha per annum over the 10 year period while harvested areas being replanted will account for a greater share of the annual plantings.
  • · * Arable is expected to decline by 10 percent to approximately 180,000 hectares due to the increased competition for land particularly from dairying in traditional arable regions.
  • Horticulture is projected to increase 8 percent to just under 110,000 hectares
  • Viticulture is projected to increase by 81 percent to 24,000 hectares over the 10-year period.
  • Lifestyle blocks are projected to continue in popularity and compete for class 1 & 2 land in all regions.

The rate of change from one sector to another is expected to be less dramatic than that which occurred throughout the 1990's due to generally good prospects in the 'other pasture' landuse category. This category covers deer, sheep and beef and the prospects of the respective sectors (refer below) are such that they are likely to provide stronger competition to dairy (on good land) and forestry (on marginal land) landuses. Suitability of soil types, topography and climate will continue to be key drivers for landuse and for large areas of most regions, 'other pasture' landuse will be the most profitable activity. The major change within the 'other pasture' landuse category is the growth of deer farming at the expense of both sheep and beef.

Some land planted in forestry in the 1970's and 1980's may be converted back to pasture for dairying (this has already occurred in parts of the Waikato/Central Plateau).

Figure 23

Figure 24

Arable land has been in decline and is expected to come under increasing pressure from dairy farming particularly in irrigable areas such as Canterbury.

Viticulture while small in total area is increasing and expected to feature more prominently in line with the sector's market prospects while horticulture is likely to increase gradually with declines in apples offset by increases in alternative crops. As illustrated in figure 24 above the areas in horticulture and viticulture are very small relative to other landuse options.

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