De-intensification

A more common response has been to de-intensify. Since the introduction of the regulations over half of the farms in the western sector have sold nitrogen, either to the LTPT or to a dairy farmer in the northern sector. The consents associated with these transactions show that the sellers have either contracted to convert the land-cover to trees or to reduce their stocking rate from their benchmarked level. Often the stock type and stock mix are not changed (or are marginally changed) and thus it appears that no land use change has taken place. Stocking rate reductions are important, however, because they suggest a reduction in the productive capability of the land in perpetuity (assuming the same or similar land-use) that may not be balanced by other (potential) income earning land-use change.

The reality of operating a pastoral farm on a low NDA was described by a ballot farmer, located in the northern sector. A mistake in the benchmarking process led this farmer to sell more nitrogen than he intended and now he has a ballot farm with a very low NDA. His intention, at the time of the sale, was to fatten beef and raise lambs on the better land and to plant all land of low productive

capability in trees. With a much lower than expected NDA, however, he finds that he cannot raise sufficient animals to be profitable, despite having no mortgage. He has tried to purchase NDA to boost the pasture NDA level (and therefore enable him to carry more stock), but so far has only managed to purchase a small amount and to lease, short-term, a larger amount. To live off a low

NDA, he suggests, a farmer would have to be “…fulltime, mortgage free, not raising a family” and even then it would be “…existence living”. This low NDA farmer concluded, “…after my experience I

wouldn’t recommend anybody sell any NDA”, particularly if it involved a reduction in stocking rates,

Today, 150 beef cows [and lambs] do not make a living but I sold down to that level because I wanted to [semi-retire] … But time has moved on, expenses have moved up and the price of cattle has not moved up to match … I am now in a position where cost increases have caught up with me. I am working harder than ever before – but over winter I will have little to do.

Research has shown, in the dairy sector, that lower stocking rates can lead to higher incomes because with fewer animals and extra feed on the farm, higher levels of production per animal can be achieved (Dewes, 2014). But, as the farm manager below explains, in sheep and beef this type of system is risky, and requires a high degree of technical skill:

There is a fine line between the stocking rate coming down too far and the grass exploding in the spring and not being able to graze it sufficiently. If that happens everything grows slowly because the pasture quality has gone down … To run this kind of a system you have to be constantly going into OVERSEER® … and you have to be calculating the feed (in the feed budget) … and you have to be watching the markets…

Outside of the western sector, sales of nitrogen have also been accompanied by reductions in stocking rates. The table below lists farm practice changes involved as well as the percentage of nitrogen that has been sold in the western sector. Data for the northern and southern sectors can be found in Appendix I. Sale to LTPT or private % N sold from farm135

Land-cover change Land-use change Land-use system

change

LTPT 85 Forested 235 ha To plantation forestry

LTPT 20 Forested 800 ha To mixed farming –

woodlots and pasture

Change stock type Amalgamation of ex- Landcorp farms and ballot farms

LTPT 43 To sheep/beef Change stock type

Amalgamation of three ballot farms

LTPT 80 Forested 1150 ha and

created four lifestyle blocks.

To plantation forestry Amalgamation of four

ballot farms

135 _{The percentage of nitrogen sold from the farm approximates the reduction in the productive capacity of the}

farm (since NDA and farm production levels are closely linked) but it does not consider other land-uses that have been established and which may compensate for lowered production. Where woodlots have been planted, for instance, productive capacity may increase again once the trees reach a harvestable size and assuming harvesting costs (because of the small area involved) are not prohibitive (Park, Manley, Visser & Morgenroth, 2012). In another instance, a cut and carry operation has been established. Under this system, pasture is harvested and is sold as feed outside of the Catchment, but the profitability of the system is

unknown. An interviewed farm consultant, when asked about the economics of cut and carry, said that he was

“…doubtful” about the viability of such a land-use on a large scale. Dairy farm profitability, he explained, is sensitive to the cost of brought in feed (see Beukes, Gregorini, Romera, & Dalley, 2011), and, in-addition, the carbon emissions involved in harvesting and transporting the feed may be problematic when agriculture is

LTPT 12 Forested 153 ha To mixed farming

Private 37 To dairy support Reduction in stock

numbers

Private 60 No change Reduction in stock

numbers

Table 17: On-Farm changes resulting from sales of nitrogen in the western sector

(Source: LTPT, WRC and interviews) In summary, in the western sector:

• Two farms changed stock type (i.e. from dairy support to sheep and beef and from sheep and

beef to sheep/beef/deer). The amount of nitrogen sold was 43% and 20% respectively of their initial allocation.

• Five farms have been converted to forestry and are now owned by two landowners

• Two farms have de-intensified by reducing stocking rates, one by 60% (but this is a lifestyle

farm).

Thus, in the western sector, there has been a substantial reduction in animal numbers but this has been compensated by an investment in other farm systems or land-uses. In one case amalgamation of ballot farms with ex-Landcorp farms has resulted in an extensive operation, and economies of scale. In a second case, land has been converted from sheep and beef to forestry.

This compares with the situation in the southern sector where sales of nitrogen have resulted in substantial reductions in stock numbers, and reductions in NDAs (ranging from 7 to 44%, see Appendix I), often apparently without investment in other income earning ventures. De-

intensification of this type has enabled farms to raise capital at the same time as contributing to reduced levels of nitrogen entering the Lake, but the flow on effects to the community are unknown. Although no owners or Trustees in the situation described in the quote below were interviewed, one Trustee of a farm in the southern sector commented that:

The worry is that the money that they [other Trusts] have received will be spent and not available for reinvestment [on farm] … So the issue is not about costs outweighing expenses it is more about how much capital gets reinvested in the farm or whether that capital gets diverted to other uses.

The trend to de-intensification identified in the table above may prove problematic for the viability of farming in the Catchment if alternative, viable, income sources are established.

In the northern sector sales of nitrogen resulted in the establishment of forestry blocks (one with a carbon contract) of between 25 and 930 ha, of lifestyle subdivisions and, in one case, of a less intensive feeding system for cattle.

Alternative income sources that would enable a viable economy in the Catchment are currently limited. In the wider district, there is an acknowledgement that farming (particularly dairy farming) underpinned economic growth in recent years and that this income source is preferable to tourism because of the low wages paid and the itinerant nature of employees in this latter industry. The Chair of the Economic Development Agency (Enterprise Great Lake Taupo) commented:

Although tourism is still number one in terms of jobs in terms of GDP agriculture, forestry and geothermal have really come up. There has been quite a rebalancing in this economy … The amount of dairy cows in this region now is what is keeping us afloat.

The comments were supported by a Taupo District Council Councillor who suggests that We need stability because of the up and down nature of the tourist business and stability comes from having higher paid jobs. Tourism is renowned for paying lower wages although it is as high as the industry can afford. But if you had some better industry that needed a higher skill set you would end up with higher paid people in the community with more money in their back pocket to spend and there is the trickle down that comes from that. So that is what Council are trying to do – to get a higher paid type industry in the district. Tourism staff are also transient because it is so seasonal.

Thus tourism, often considered an alternative source of income for the district if environmental restrictions lower farm production (McDermott Fairgray, 2001), may not be problem free, and the contribution of farming and forestry may be valuable.