There have been several analyses of the economics of pastoral dairy farm systems in New Zealand using real farm data, as well as several relevant international studies. However, these analyses have often used a dataset with a limited number of years that do not reflect long-term exposure to volatility, or do not allow for regional differences, and often focus on imported feed without due attention to other important characteristics of profitable farms. Several prior analyses have failed to consider the importance of a business that is resilient to major risks. We re-examined the relevance of their conclusions for New Zealand dairy systems against 12 years of DairyBase data, focussing on two major regions, deriving key insights on relevant strategic choices for profitable and resilient businesses at a farm and, by extension, industry level. Within years and regions, the top quartile of observations was identified, on the basis of ranking by operating return on assets, as a proxy for farms achieving their potential, and compared with the remaining observations. Within geographical region, the greater profitability of the top quartile was associated with greater pasture and crop eaten, greater stocking rate and production per cow, and lesser operating expenses per hectare and per kilogram milksolids (MS), defined as fat plus protein. However, greater profitability was not associated with greater use of imported feed. Linear regression was used to determine that increases in total operating expenses were associated with increases in the costs of imported feed (including winter grazing and silage made on farm). On average, for every NZ$1 spent on imported feed, total costs increased by NZ$1.66 and NZ$1.53 for the Waikato and Canterbury–Marlborough regions, respectively. This is consistent with the international literature for temperate grazing systems and is likely the reason why profitability was not greater even if above-average responses to supplement were achieved on farm. Indeed, greater use of imported feed was positively associated with operating expenses per kilogram of MS, implying that the marginal cost of additional MS was greater than the cost of the base milk, and often higher than the value of the milk produced. If gross farm revenue per kilogram MS (which is largely made up of the milk price, with a lesser contribution from livestock sales) was greater than NZ$7.50 (which it was the case in only 3 of the past 12 years), farms could generate higher profit from more imported feed use; however, the reverse was true at lower milk prices. When milk prices are low, (i.e. gross farm revenue is less than NZ$6.50/kg MS, which occurred in half of the past 12 years), farmers are often under cashflow pressure. Therefore, farm systems that are less reliant on imported feed provide a better chance for farmers to meet financial commitments, although they fail to maximise profitability when the milk price is high (e.g. >NZ$7.50/kg MS). In conclusion, maximising pasture harvested, and minimising reliance on supplementary feed, and effective cost control (minimising expenditure) are the key factors that lead to profitable businesses that are also resilient to the low milk prices that occur in volatile markets.
Although food from grazed animals is increasingly sought by consumers because of perceived animal welfare advantages, grazing systems provide the farmer and the animal with unique challenges. The system is dependent almost daily on the climate for feed supply, with the importation of large amounts of feed from off farm, and associated labour and mechanisation costs, sometimes reducing economic viability. Furthermore, the cow may have to walk long distances and be able to harvest feed efficiently in a highly competitive environment because of the need for high levels of pasture utilisation. She must, also, be:(1) highly fertile, with a requirement for pregnancy within~80 days post-calving; (2) 'easy care', because of the need for the management of large herds with limited labour; (3) able to walk long distances; and (4) robust to changes in feed supply and quality, so that short-term nutritional insults do not unduly influence her production and reproduction cycles. These are very different and are in addition to demands placed on cows in housed systems offered pre-made mixed rations. Furthermore, additional demands in environmental sustainability and animal welfare, in conjunction with the need for greater system-level biological efficiency (i.e. 'sustainable intensification'), will add to the 'robustness' requirements of cows in the future. Increasingly, there is evidence that certain genotypes of cows perform better or worse in grazing systems, indicating a genotype × environment interaction. This has led to the development of tailored breeding objectives within countries for important heritable traits to maximise the profitability and sustainability of their production system. To date, these breeding objectives have focussed on the more easily measured traits and those of highest relative economic importance. In the future, there will be greater emphasis on more difficult to measure traits that are important to the quality of life of the animal in each production system and to reduce the system's environmental footprint.
Although several forage species such as perennial ryegrass are predominant, there is a wide range of forage species that could be grown in subtropical and temperate regions in Australia as dairy pastures. These species have differing seasonal patterns of growth, nutrient quality, and water-use efficiency, as demonstrated in a large experiment evaluating over 30 species at the University of Sydney (Camden, New South Wales, Australia). Some species can be grazed, whereas others require mechanical harvesting, which incurs a further cost. Previous comparisons of species that relied on yield of dry matter per unit of some input (typically land or water) did not simultaneously take into account the season in which forage is produced, or other factors related to the costs of production and delivery to the cows. To effectively compare the profitability of individual species, or combinations of species, requires the use of a whole-farm, multiperiod model. Linear programming was used to find the most profitable mix of forage species for an irrigated dairy farm in a warm temperate irrigation region of New South Wales, Australia. It was concluded that for a typical farmer facing the prevailing milk and purchased feed prices with average milk production per cow, the most profitable mix of species would include a large proportion of perennial ryegrass (Lolium perenne) and prairie grass (Bromus willdenowii). The result was robust to changes in seasonal milk pricing and a move from year-round to a more seasonal calving pattern.
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