Development of a dairy industry in a new area - land use change in Canterbury, New Zealand

Abstract

Canterbury dairying increased from 20,000 ha in 1980-81 to 255,000 ha in 2013-14. During this time, Canterbury production increased from 2% of New Zealand’s milk to 19%. This paper examines factors that influenced this increase. The analysis draws on case studies of industry participants, a survey, and secondary data. There were three waves of development. Wave 1 (1980s) farmers were entrepreneurs who saw Canterbury as a desirable place to live with new economic opportunities related to dairying. Wave 2 (1990s) convertors were a mix of corporate entities and traditional sheep/crop farmers who aimed to increase farm profitability. Wave 3 (since 2000) convertors have included cropping farmers and expanding dairy farming businesses developing large, intensive farms. This wave included substantial investment from non- farmers, particularly through equity partnerships. The research identified growth factors that could be classified as enablers, drivers, and facilitators – with some factors fitting into more than one classification. Enablers were necessary for growth but by themselves did not create the growth. In contrast, drivers were the fundamental determinants of growth. Facilitators were factors that did not either enable or drive growth, but did influence growth. Enablers included aspects of the political and economic environments. These included new institutional sources of finance. The prior existence of a local processing cooperative and an established vertically integrated supply chain were also of critical importance. Drivers of land change included changing levels of profitability between farming systems, the development of a new resource (irrigation) and the perceived potential to grow wealth through business growth and thereby fulfil personal objectives. Increased industry profitability then fuelled further development. New irrigation technologies were both enablers and facilitators. Extension, consulting and the development of input supply companies were all important facilitators.