Landcorp will scale back the conversion of former forestry land to dairy farming at the Wairakei Estate north of Taupo following a slump in milk prices and concern about the environmental impact.
The state-owned farmer "will significantly reduce dairy's footprint from the original plans and instead include alternative uses for the 14,500 hectares of former forestry land it leases from Wairakei Pastoral", it said.
Landcorp has a 40-year lease to develop and farm the former forestry land, and since 2004 has developed 13 dairy farms with 17,000 cows over 6400 hectares of the property.
A new land-use model will see the eventual number of dairy farms and cows on the Wairakei Estate significantly reduced from the 39 originally planned, it said.
"Under the new plan, the land leased from Wairakei Estate would be used for dairy (irrigated and dryland), dairy support, sheep milking and other potential uses being investigated," Landcorp said.
The land-use changes will lessen the impact on the environment and improve the profitability for Landcorp, it said.
The company expects to spend between $25 million and $35 million less than originally planned on the development, improving returns, it said.
"This decision makes environmental and economic sense," said chief executive Steven Carden.
Landcorp expects to post a full-year net operating loss of between $8M-$12M.
An early economic assessment for the Wairakei Estate was based on milk prices of $7 per kilogram of milk solids, since then, prices have slumped.
Greenpeace welcomed the move to scale back the plans.
"These plans would have resulted in huge amounts of pollution from the dairy industry damaging our rivers and lakes," it said.
The Green Party says the decision by Landcorp was "brave", and a victory for the environment.
"Landcorp's decision to not proceed with its intensification programme, in part because of environmental concerns, is a huge victory for the farmers, iwi, fisher people and all those worried about the impact of increasing dairying on the Waikato river, water spokeswoman Catherine Delahunty says.
A petition with more than 8000 signatures calling for Landcorp to ditch its plans was presented to Parliament last year.
Labour's primary industries spokesman Damien O'Connor says Landcorp had "no choice" other than to get rid of its plan because of the poor short- and medium-term outlook for the dairy price.
"The question now is what Landcorp does with the land at Wairakei Estate.
"The Government is out of ideas. It has failed to diversify the economy and put all its milk in one bucket."
Newshub. / NZN