This has sparked a number of debates between farmers about the relative profitability, risks and opportunities of low- versus high-input systems. While it makes for interesting discussion, it has been well proven through DairyBase analysis that all systems can be highly profitable if managed well.
So, assuming you have already made the decision to run an intensive dairy production system, what good management practices are required to optimise profitability?
I’ve had the opportunity to observe and analyse the success of a group of Waikato farmers through a High Input Discussion Group over the past three years. The analysis showed there are a wide range of factors that can influence profitability of farms that import more than 25% of their feed (system five).
It has been demonstrated for years that there is a strong relationship between operating costs and farm profit. The difference is that these farmers spend between 40% and 60% of their total costs on feed.
For the farmers in the high-input discussion group, a significant portion of the purchased feed is either contracted or supplied by a source under their control. This helps to reduce the risk of spot feed price variations that can erode the margins between feed price and milk revenue.
This successful group of farmers also reduce wastage through very good feed harvesting, preservation, storage and feeding-out techniques. Due to the high quantities of purchased feed, small losses at each part of the process can develop into thousands of dollars of lost profit.
Average response rates to supplements are quoted at about 60 grams milksolids(MS)/kg drymatter (DM) which can seriously challenge the viability of purchased feed. This group of farmers was generating 80g MS/kg DM through good farm management practices.
Firstly, this requires an ability to grow and harvest the maximum amount of feed from the platform. On average they were able to grow an additional 2-3 tonnes DM/ha through well-timed nutrient applications, either from effluent or solid fertiliser. They also used cropping, mainly maize silage, to increase total pasture and crop production.
Secondly, while their comparative stocking rate was low (65-70kg liveweight/t DM) they carried a high physical stocking rate, took crop area out during peak pasture growth and had high days in milk, often by split calving. All these factors combined to create large feed deficits on pasture alone in an effort to optimise pasture growth and quality.
Probably the most important attribute of a successful system five farmer is the level of accuracy they apply to all aspects of the farming business. Here are some examples.
Benchmarking
By benchmarking they identify performance trends against their own business and look for opportunities compared with other high-performing businesses
Analysing
They regularly analyse feeding levels, feed price, make-up of the diet and the performance of groups of cows being fed.
Nutrient management
These farmers invest in good effluent management infrastructure, including storage and irrigable area, to allow nutrients to be spread across large areas of pasture or crops to optimise growth response rates and reduce fertiliser spend.
Simplicity
Farms tend to have a simple physical layout which minimises time spent on feeding, machinery wear and tear, and stock movement.
Information addicts
They source information from a wide variety of sources including other farmers, private consultants, and written publications that help fine-tune the business.
For more information about how your system measures up, tools like DairyBase or groups like DairyNZ’s High Input Discussion Groups are a good way to assess opportunities. For more information visit www.dairynz.co.nz.
Wade Bell is DairyNZ’s regional leader for South Waikato.
