The dairy industry can look forward to welcoming hundreds of new suppliers to its ranks at the start of next season.

In Southland alone it is estimated 100 farms will start milking for the first time in August and other areas such as South Canterbury and North Otago are also seeing many farms changing over.

Southland Federated Farmers Dairy chairman Rod Pemberton says the state of the sheep industry, combined with the record payout forecast, are driving the change.

‘A lot of them are sheep farms. Morale is low in that industry and there seem to be any number of farms on the market, mainly sheep farms. You get the feeling the freezing companies don’t have the will to fix the problem,’ he says.

He doesn’t believe that the boom will lead to bust, but newcomers and existing players will need to be on top of their management, especially effluent management, to prevent negative publicity, he says.

With Dairy Trust’s Awarua development, and Fonterra building a new dryer at Edendale for the 2009-10 season, increases on the 700 or so farms milking cows in the region look set to continue, he says.

``There could be 900 [by 2009-10] I suppose if we do 100 conversions a year. But if the sheep industry gets its act together a bit quicker that would slow it down.’’

Jeffrey Cunningham, who farms in partnership with his brother near Gore and converted their 340ha property to dairy seven years ago, echoes Pemberton’s comments.

He says it is not so much the numbers converting to dairy that is the concern, as the state of the sheep industry that is driving them to it.

‘As long as we can control the environmental side of it, dairying has to be a good thing for Southland and this is a good time to be in dairying.

‘But there is a lot of land that will never be converted. Sheep farming is still the mainstay in Southland and probably always will be.’

Dairy Trust field liaison agent Miles Herdman says few people realise the potential of the area until they visit.

‘The growth is absolutely tremendous. Southland is the perfect model for farming because of our long, reliable, production season, whether it is sheep, beef or dairy cows. That reliability is a real plus.’

For dairy farms, it means a less pronounced peak to the supply curve, milk continuing to pour into the vat in volume right into the autumn.

Admittedly, wintering costs are higher but that is more than compensated for by lower production costs of ‘natural irrigation’ and a longer season, he says.

For every dairy conversion there will be other farms going into dairy support, he says.

‘I think what’s happening in the meat sector is having a major influence. At $50 to $55 for a finished lamb is it damn near uneconomic to farm.’