Saturday, March 30, 2024

Challenges ahead for dairy grazing

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Waikato drystock farmers are cutting dairy grazing numbers by 10-20% this year to give themselves a bigger feed buffer, sheep and beef consultant Brendan Brier says.
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Two challenging summers had led to sheep and beef farmers sacrificing store and capital stock to prioritise dairy heifers. Even then they were struggling to fully grow animals and heifers were returned to dairy farmers underweight.

“Farmers are focused on growing stock well and there have been some distressed people in the last two years.

“During the first drought, at least half of my clients had to dig into capital stock. Trying to keep them ticking over on top of the dairy heifers has been quite a challenge.”

High beef prices this season of $5.50/kg liveweight (LW) would support sheep and beef farmers’ decision to drop dairy grazing numbers, but many farmers wouldn’t have the capital to increase beef numbers so were locked into dairy heifer grazing.

Dairy grazing provided a good cashflow, but the system required review, he said.

“There has to be a re-evaluation on what grazing is worth. We have to do something different to make it work.”

New Zealand grazing systems were based on regular pasture supply, but because of dry summers, supplement was an increasing requirement.

Most graziers were set up to feed balage, but that was the first feed to go up in price in a drought and at $9/heifer/week, even palm kernel wasn’t affordable as a large part of the diet, he said.

“On a cost basis, palm kernel is too expensive for sheep and beef farmers to buy at 25-35c/kg drymatter (DM) while grazing returns are 14-16c/kg DM.”

Graziers who phoned dairy farmers during the drought either got a helpful response to share the cost of extra supplement, or were told by the dairy farmer that it was their responsibility, leaving no option but to under-feed the heifers.

Poor planning and no negotiation of supplement use meant it was currently unaffordable for many graziers to buy in extra feed for heifers.

There had to be a better solution to source and fairly divide the cost of feed, starting with having more flexible contract agreements, Brier said.

Grazing contracts were often done on a handshake without any discussion around drought clauses, but there needed to be better communication and a clear plan for when feed supply was short.

“The key is communication and understanding what the expectations are.”

Sheep and beef farmers decreasing dairy grazing numbers onfarm should be a concern for the dairy industry, Otorohanga DairyNZ consulting officer Sarah Dirks said.

“The NZ dairy industry has built its farm systems around relying on off-farm grazing. Dealing with multiple stock classes is challenging and it suits dairy farmers to send the young stock off-farm.”

The national dairy herd increased by at least 100,000 cows every year and some dairy conversions sacrificed grazing opportunities, so graziers needed to be looked after, she said.

Graziers had no industry representative to lobby on their behalf, but they were a vital part of the dairy industry, Dirks said.

While dairy farmers had flexibility of sending cows to the works or drying cows off, heifer graziers didn’t have that flexibility. 

“We expect graziers to hang on to our stock in hell or high water, which is fine if we pay them well enough and they have a good plan in place to get heifers to agreed target weights.”

After two dry summers in a row, Waikato farmers had to make changes, she said.

Failing to meet liveweight targets was not a new problem for the industry, but increasing dry summers and inconsistent winter growing conditions meant that for up to half the year grass growth didn’t meet demands.

Supplements or lower stocking rates were becoming increasingly necessary and should be accounted for in the grazing price, she said.

Most farmers paid grazing on a per head, per week system, and often had no financial strategy for coping through a drought.

For graziers to buy feed in a pinch they were competing against the milk price at the most competitive time.

Once a feed pinch hit, dairy farmers were often too busy buying supplements and feeding out themselves, without having time to worry about visiting the grazier to check on stock.

Dairy farmers shouldn’t be sending their most vulnerable stock off without sound grazing contracts and a plan for what would happen in adverse events.

Farmers and graziers needed to be on the same page about what the expectations are and have those conversations well in advance.

“We send hundreds of thousands worth of stock to graziers without any guidelines. What does good look like? What’s achievable in your region? People don’t have that conversation,” she said

Some Waikato heifers returned 20-30% less than target weight this season after the back-to-back harsh summers.

Cows were in good condition, but typically heifers didn’t have the skeletal growth, Dirks said.

“In my observation, even people with runoffs have struggled this year. Some farmers have had to put their heifers on once-a-day to catch up on growth.”

Under-grown heifers would take longer to produce a return on investment and it was a strong incentive for farmers and graziers to reassess their systems.

Dairy farmers had to negotiate with graziers on supplement use to avoid the same situation in future.

DairyNZ growth targets were 30% of total liveweight (LW) by six months, 60% LW by 12-15 months for mating and 90% LW by 22 months.

Good graziers averaged 0.6-0.7kg/day growth, and the difference between good and bad management was making the most of good growing conditions, Dirks said.

They could get animals to grow at 1.3kg/day to make up for the low growth periods of 0.2kg/day by making sure the stock were in good condition before hitting the troughs.

DairyNZ was working with key stakeholders to develop a new economic grazing model, which was due out in June 2015.

The model would account for different variables that could affect grazing prices around the country and provide transparent guidelines to develop fair grazing fees based on stock owner expectations and grazier services. 

Meanwhile, New Zealand Grazing Company offered a sound economic model to showcase the true value of grazing, managing director Ian Wickham said.

Grazing contracts worked best if they balanced the true cost of feed at any time of the year and included clauses for adverse events to ensure dairy replacements met target weights.

Dairy farmers were likely to pay an average of 25c/kg DM for grazing through the year for a professionally managed service, he said.

“It all depends on what the market is for feed cost.”

Dairy grazing was built on the concept that there was more value in dairy farmers sending young stock off-farm. In that respect, dairy grazing was more economic than running a self-contained farm, he said.

“The value of grazing is really how much return does a dairy farmer get from taking their young stock away from the milking platform and leaving that feed for milk production.

“About 30 years ago when beef was last as valuable as milksolids (MS), it took 160kg MS to graze a heifer from May to May. That has now reduced to 100kg MS.”

The recent change in the industry had been the widespread realisation that well-grown replacements were much more profitable than poorly grown heifers at herd entry, Wickham said.

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