There is a growing diversity and complexity of dairy farming systems in Australia. Feeding systems based on the provision of mixed rations to dairy cows grazing perennial pastures (termed partial mixed rations or PMR systems) have emerged and present the dairy industry with opportunities for improved production and feed efficiency, but also with significant challenges. Early research results are beginning to define the situations in which PMR systems are profitable and the mechanisms responsible for the improved milk responses. This review focuses on the role of PMR feeding systems in temperate dairying regions of Australia, highlights initial research findings, and identifies some of the gaps in current knowledge that warrant further research. The key findings were that, when very low allowances of pasture are offered to cows, milk production responses were driven mostly by increases in dry matter (DM) intake, and there appeared to be a minimal contribution to increased energy supply from improved whole tract DM digestibility. Differences in milk responses became apparent when >10 kg of total supplement DM was consumed (0.75 : 0.25 concentrate to forage) as PMR. There was a consistent maintenance of milk fat concentration when increasing amounts of concentrates were consumed as PMR, in contrast with supplements consumed in the dairy. There was also a consistent finding that replacing some wheat in the PMR with canola meal resulted in cows consuming more grazed pasture despite the limitations of very low pasture allowances (10–15 kg DM/cow.day, expressed to ground level). This was accompanied by further increases in energy-corrected milk yield. The potential to improve DM intake was further highlighted when pasture allowance was increased, with intake increasing from 3.6% to 4.5% of liveweight (from 20 to 25 kg DM/day for a 550-kg cow). There was also an indication that ~50% of the milk production benefit from PMR can be captured by providing the concentrate supplement as a grain mix in the dairy. There did not appear to be negative impacts of PMR systems on the social and grazing behaviour or health of cows.

Milk production per cow and per farm in the irrigated region in northern Victoria have increased dramatically over the past 2 decades. However, these increases have involved large increases in inputs, and average productivity gains on farms have been modest. Before the early 1980s, cows were fed predominantly pasture and conserved fodder. There is now large diversity in feeding systems and feed costs comprise 40–65% of total costs on irrigated dairy farms. This diversity in feeding systems has increased the need to understand the nutrient requirements of dairy cows and the unique aspects of nutrient intake and digestion in cows at grazing. Principles of nutrient intake and supply to the grazing dairy cow from the past 15 years’ research in northern Victoria are summarised and gaps in knowledge for making future productivity gains are identified. Moreover, since the majority of the milk produced in south-eastern Australia is used in the manufacture of products for export, dairy companies have increased their interest in value-added dairy products that better meet nutritional requirements or provide health benefits for humans. Finally, some examples of the impacts of farm system changes on operating profit for some case study farms in northern Victoria are presented to illustrate the need for thorough analysis of such management decisions.

A case study and modelling approach was used to examine options for a dairy farm in the high rainfall area of Gippsland (southern Victoria) that would enable it to maintain or increase profit in the future (next 5–10 years) in the face of a continuing ‘cost-price squeeze’. The economic performance of the business under a range of development options, identified by an ‘expert panel’, was analysed for a planning period of 10 years. The options analysed were: (i) increased herd size without purchasing more land, (ii) increased milking area and (iii) purchasing non-milking area for production of conserved fodder. Expanding the milking area by purchasing more land without significantly increasing herd size (reducing stocking rate from 2.5 to 2.1 cows/ha) increased annual operating profit without increasing variability in profit between years compared with the base farm. The increased profit resulted from a reduction in the amount of purchased feed. The purchase of an additional outblock for fodder production reduced risk compared with the base farm system, but did not improve the profitability of the farm system. Other options significantly reduced profit while increasing risk. The most appropriate changes to dairy farm businesses in response to changes in the operating environment will vary from farm to farm. The analysis suggested that there may be an alternate path to the historical trends of larger and more intensive operations. It has also highlighted the importance of home-grown feed and efficient supplement use to increase or maintain profitability in the medium term.

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A case study and whole-farm modelling approach was used to examine the potential impacts of negative associative effects on milk production and economic performance of two dairy farms in northern Victoria. The two case studies differed in herd and farm size, calving pattern, forages grown and use of labour, but both had production systems based on grazed pasture, grain fed in the dairy at milking and conserved hay fed out in the paddock. The feeding system of each farm was altered by implementing a partial mixed ration (PMR), where cows grazed once a day and received supplements in a well formulated mix once a day. Negative associative effects between feeds were included in the biophysical modelling by deriving a relationship from published studies between declining neutral detergent fibre digestibility and increasing grain intake. Before applying a PMR system, both farms were profitable and earning competitive rates of return after tax, with mean real internal rate of return higher than 5%, and positive mean annual operating profit and mean net present value, at a discount rate of 5%. Feeding a PMR enabled both farms to increase profitability and internal rate of return, particularly if milk production was increased as well, but only when associative effects were less than those in the feeding system based on grain fed in the dairy and hay in the paddock. Increased profitability was also associated with higher standard deviation in annual operating profit, internal rate of return and net present value, in other words risk increased under the PMR feeding system, as the businesses would be more vulnerable to fluctuating supplementary feed prices.