The researchers at the university's Centre for the Study of Agriculture Food and Environment (Csafe) haven't yet answered that question, but their arguments for and against the notion have provided fuel for many a tea-break discussion.
Csafe director Associate Prof Hugh Campbell said there was a view the number of dairy farms in the traditional dairy strongholds of the Waikato and Northland was falling, due on part to urban sprawl, with the country's dairy growth being driven from the South Island.
The North Island herd peaked at 3.831 million in 2002.
In the past three years, cow numbers have been under 3.796 million.
Fonterra recently reported that in the last financial year milk production grew 0.4% to 1.3 billion kg milk solids.
South Island production grew10% and the North Island, which was hit by drought, fell 4%.
For two and a-half years Csafe, in collaboration with AgResearch, has been working on a project called Rural Futures, one aspect of which looks at life after dairy and life after sheep.
Prof Campbell said it raised the question of whether peak dairy had been reached, as happened with sheep when numbers hit 70 million in 1982-83.
"We know we have had peak sheep.
"The question is, have we reached or are we about to reach peak dairy?"
He said peak dairy could be measured in terms of milk production, but for this exercise it was measured in cow numbers.
One argument supporting the notion that peak dairy had been reached was the end of cheap credit which had help drive recent expansion.
"What are the chances of getting back to easy and cheap credit?" Prof Campbell asked.
The end of cheap credit made conversion of land in provinces like Southland more difficult, as had tighter environmental rules.
Prof Campbell said the proposal for large-scale dairying in the Omarama Basin was a sign the availability of cheap land was diminishing, especially in the North Island.
Rising energy costs would hit intensive dairying harder than other sectors.
There appeared to have been a major switch in Fonterra's growth strategy from growing local production to sourcing milk from overseas, Prof Campbell said.
Earlier goals of 4% annual growth in milk production had not been mentioned recently, he said.
Public perception about dairying was changing, with cow and dairy farm practices that were acceptable 10 or 20 years ago, such as cow induction, being questioned.
That concern was being picked up by Fonterra.
"The stake has been put in the ground.
"Things that were acceptable and taken for granted were no longer accepted, such as impact on water quality," said Rural Futures research fellow Paul Stock.
The researchers said several issues existed which could push dairying either way.
Dairying had no obvious competing land-use other than on the urban fringe, but if that was to change, then growth could by stymied.
New Zealand had no large, regular supply of cheap supplementary feed as was available in the United States and Europe, but if that was to change that too could reshape the industry.
Equally, high export prices could see the US and Europe expand their factory farms and increase milk production which was already allowing some cows to be milked three and four times a day.
In a similar vein, climate change could impact on dairy industries in countries like Australia, but equally, harvesting water in areas of New Zealand where rainfall was expected to increase could allow the sector to expand.
Water availability was the key factor determining if peak dairy has been reached.
Prof Campbell said successful implementation of proposed irrigation schemes in South Canterbury and Canterbury would open up new areas to dairying.
Its rejection would curtail that expansion.
The final format of the emissions trading scheme on agriculture could also impact, especially if policy changes were less sympathetic to the sector.
New Zealand farmers could still find cheap, easily accessible supplementary feed to significantly lift per-cow production, proving peak milk had not yet been reached.
Access to cheap migrant labour could also change the way farms were managed and allow expansion, as could further involvement of corporates.
Policy changes by either Fonterra, to focus on increasing New Zealand milk production, or by central Government, wanting more rapid economic growth, could encourage further growth.
Scientific developments with pasture and cow efficiency could also drive milk volumes.
Dr Stock said in his view the impact of dairying on water was the key issue, and one activists and pressure groups would keep fighting.
"You will not see a roll back," he said.
Equally, if the profitability of sheep and beef farmers was to improve, that would also stop the drift of land to dairying as many farmers felt forced to convert to dairying for succession and viability issues but preferred the lifestyle of farming sheep and beef.
Rob Burton, a rural geographer and visiting fellow, said economic drivers and people's mentality were targeted at more growth.
Potential constraints were the lack of cheap credit and if corporate investors decided to withdraw their funds, he said.