Regional dairy production: short-term projections and expected demand for inputs

Abstract

Over the period 1991-2003, New Zealand’s milk production more than doubled. At the same time, dairy farming expanded its boundaries into non-traditional dairy production regions. The distribution of regional production is of particular interest because of effects on supply and demand balances for key inputs and outputs. Changes in the geographical distribution of dairy production alter local economic output and, consequently, income distribution and community viability. The aim of this paper is to present regional short-term estimates of demand for selected key production inputs and milk output. Short-term estimates for milk production and land use were derived based on past growth rates in stocking rate, cow numbers and productivity per cow for each region. Input demand forecasts were, in turn, derived using regional milk production and land use forecasts and baseline estimates of input and energy use reported in Wells (2001). Results indicate that by season 2006/07, the effective area devoted to dairy production will be at 1.56 million hectares, a 7% increase with respect to the 2003 baseline. However, contrary to what happened prior to 2003, almost all the gain in dairy area is explained by increases in the South Island. Over the same period, national milk production is expected to increase by 20% to 1,431 million kgs. MS. Similarly, the South Island accounted for much of the gain, increasing its share in total milk production to 34% up from 28% in 2003. It is expected that the use of inputs such as nitrogen, potassium, phosphorous and sulphur per unit of area will intensify for all dairy regions. However, the increase in the use of inputs per unit of area relative to the baseline is lower in long-established dairy regions, Northland, South Auckland and Taranaki, than in non-traditional dairy regions like, North and South Canterbury, Otago and Southland.