Billions of dollars could be added to farmers’ profits if they focused more on pasture renewal, a new study reveals.

The Pasture Renewal Charitable Trust this week suggested a switch in focus from animal improvements to pasture development was required to increase farm productivity.

The trust commissioned Wellington-based company BERL (Business and Economic Research Ltd) to complete an economic analysis of the value of pasture to New Zealand’s economy.

BERL determined that pasture was worth $20.5 billion to New Zealand’s gross domestic product (12.1% of GDP) and $10.2 billion to producers at the farm gate.

Trust chairman Murray Willocks told NBR that the low cost of animal feed is New Zealand’s economic edge, and it could be expanded on to the tune of billions of extra dollars each year.

“All our dairying and beef and sheep farming operations are dependent on our pastures,” Mr Willocks said.

“As we look to economic growth, we should look at investment in pasture as a key contributor.”

Pasture renewal rates are the key. Mr Willocks said sheep and beef farms should renew 8% each year, while dairy farms should be looking at 12%.

BERL’s report determined these rates of pasture renewal would add $1.6 billion of value at the farm gate and about $3.1 billion to GDP.

In addition, the report suggested more than 44,000 jobs would be created as result of the production boost.

“Looking at pasture-based products, the largest contributor to farm gate values was the dairy industry,” the report stated.

In the June 2007 year dairy was worth $6.6 billion, or 65% of the total value of pasture based products.

“Depending on the level of pasture renewal response, farm gate values for sheep and beef farms could increased from 8-27% and from 6-25% for dairy farms.

“When considering rhe effect that the pastoral sector has on related industries, such as agricultural services and the food processing industry, as well as the additional spending generated by salaries and wages paid by farmers, the GDP of pasture-based products is much higher,” the report writers explained.

“To put this in context, it would require approximately 460,000 international tourists additional to the present 2.4 million to generate this level of additional expenditure for the tourism industry.”

Mr Willocks said the report would be used to target policy and decision makers rather than farmers directly.

Current annual pasture renewal rates are estimated at about 2% for sheep and beef farms and 6.1% for dairy farms.

Mr Willocks said the challenge was to increase overall pasture production through the genetic gains made in the breeding of both ryegrass and white clover cultivars coupled with improved pasture management.

Earlier this year both New Zealand’s major fertiliser companies, Ravensdown and Ballance Agri-Nutrients reported falling rates of application, which would result in lost production.