It is no surprise that continued increases in dairy production have gone hand in hand with significant increases in the use of imported supplementary feed stuffs, such as palm kernel which, with increased rates of applied nitrogen, contribute to nutrient loading on dairy farms.
New Zealand is caught between the necessity for economic growth and our obvious geoclimatic limitations.
As an isolated exporter of commodity dairy products, our opportunities to add to our export value without increasing volume is limited, but to maintain our market share we need to increase volume.
New Zealand's dairy exporters have continued to explore opportunities for value-added products to increase our export values, but these initiatives are dwarfed by the impact of volume in the major commodity dairy products we export, and ultimately this is what motivates our farmers and the dairy industry.
The key here is the ability, or rather the efficiency, of ecosystems to convert nutrient inputs into product.
In Georgia, we can easily grow 10 tonnes more dry matter per hectare than New Zealand, with water and nitrogen inputs similar to those of New Zealand's top dairy farms.
What is perhaps more surprising is that linear responses to additional nitrogen inputs appear possible up to 40 tonnes dry matter per hectare, suggesting even greater productive potential without necessarily reducing nitrogen use efficiency.
The major reason for this higher yield potential is climatic. This has two benefits - a higher proportion of the nutrients is turned into feed (and ultimately milk) and, perhaps more importantly, fewer nutrients remain free to find their way into waterways or the atmosphere.
From a straight grass growth/utilisation perspective, our Georgia farm is less efficient than New Zealand farms.
We grow too much grass at times for our stock to eat, but the more efficient use of water and fertiliser means we are able to run higher stock rates than New Zealand and achieve high milk output per hectare without pushing the environmental limits to the extent New Zealand dairy farms are.
The expanse and value of the land in Georgia also means we can create an economic model that does not need to chase the level of intensification in New Zealand, so we can spread our production over a larger land base, which helps us minimise potential nutrient loading and its impact.
As Mike Joy pointed out, New Zealand farm land is becoming over-intensified with an ever decreasing marginal return on any additional nutrient inputs.
However, what compounds this situation is that there are vast tracts of land around the world that are grossly underused and in high demand.
Why? Because they have the capacity to out-produce New Zealand hectare for hectare. In addition, farmland in New Zealand (US$30,000/ha or NZ$38,000/ha) is up to six times more expensive than land in Brazil (US$5000/ha), Argentina (US$7000/ha) and the US (US$9000/ha) according to a 2014 Global Farmland Index survey by Savills World Research.
So although farmers and banks that have channelled billions of dollars into inflating the value of farmland through excess borrowing may not like to hear this or want to acknowledge it - rest assured it is happening.
Just ask Fonterra, which is investing in building supply opportunities in Brazil and China.
New Zealand needs to focus on new answers for growth in the dairy industry, no longer relying on increasing production on existing land units. We need to tap into our world-leading skills and expertise in agri-technology with the aim of employing this outside New Zealand.
This is how we will grow our export markets outside of primary products. This is our strategy on our farm in Georgia where land is cheap and climate conditions are favourable for high pasture production - this is where we need to channel more expertise, funding and resource. This is New Zealand's agri future.
