The town of Ashburton sits in the heart of the Canterbury Plains, one of the best places on earth for both cropping and dairy farming. World-record wheat and barley crops have been grown in this region.
Up until Christmas 2025, crops were looking fantastic and full of promise. Then it began to rain, with leaden skies, and someone forgot to turn the tap off for most of January. This kind of dreich weather, more akin to Scotland than Canterbury, never used to happen. It has ruined some crops and yield prospects have been dramatically reduced. With low global wheat prices, harvest 2026 will be painful for many.
But Kiwi farmers have an alternative that hundreds, if not thousands, have already taken. I am told at least 30 cropping farmers have already decided to convert their farms to dairying.
The free-draining soils are ideal, and irrigation is essential, with endless supplies of water from the Southern Alps. Cropping farmers already have pivot irrigation, so the only crop they have to grow is grass.
In this part of the world, milk is referred to as white gold. Fonterra, the giant dairy co-operative, has a legal statute to collect all the milk. This milk is then dried into milk powder and sold on the global market. The farmgate price has slipped from a record high of $10/kg of milk solids to around $9/kg. With a production cost of between $5 and $7/kg, dairy farmers are looking forward to another highly profitable year.
There is real concern among companies that sell highly expensive new kit, such as tractors and combines, that if too many farmers convert to dairy, their business model becomes unviable. Even the potato growers, who rely on cropping farmers to secure land to grow spuds, are getting concerned.
Dairy farmers here use rotary parlours, and most of the dairy staff seem to be from the Philippines. They are very good workers and, after five years, can apply for citizenship and bring their families here. Cows are dried off over the winter, allowing staff a decent break and time off.
There are no farm subsidies in New Zealand, so 100% of the focus is on being as efficient as possible. There is also no capital gains tax, so farmers nearing retirement can sell up and enjoy a comfortable retirement.
Dairy farming is so profitable that, in the wine-growing areas north of Christchurch, some vineyards are being removed and put down to grass for dairying.
Is there a downside to the boom in dairying? A collapse in global demand, if it lasted more than two years, would see those with the highest cost of production go out of business. But dairying would continue, as global demand for milk and dairy products like butter will increase. Consumers today understand that butter is a far healthier alternative to margarine, and milk is the best drink for children as well as adults, as we now understand the harm to health caused by ultra-processed fizzy drinks. Ask any dentist - they will tell you how such drinks rot teeth, while milk is good for our teeth and bodies.
My next port of call is to the very south of the South Island to see how the cropping farmers are faring. Irrigation is not needed here. These farms in Southland and Otago are mixed cropping farms with beef and sheep, so prospects are much better than for pure cropping farms.
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