New Zealand’s dairy farms must get back to cost-effective grazing systems if we’re to regain our competitive advantage globally and for many that could mean once-a-day (OAD) milking.
That was the headline message long-standing low-cost-dairying advocate Colin Holmes had for scientists, farmers and seed and supply industry representatives at the New Zealand Grassland Association conference in Masterton last month.
Delivering the association’s keynote Levy Oration (see panel) Holmes spelled out how increased supplementary feeding to boost production has hiked both operating and capital costs on most farms over the past decade, usually far more than expected.
“These are not marginal changes: they’re whole system changes,” he warned, presenting photos of facilities now common on New Zealand dairy farms: feedpads; large tractors, feeder wagons, forage harvesting gear, barns and silage bunds.
“There are some very good farmers using some or all of these things and I’m not saying they’re all bad, but they are all very expensive and because of that you have to use them extremely well if you’re going to make a profit,” he said.
And it’s not just machines used to make or deliver extra feed that push up costs. Waste, both at ensiling and feeding out, is often far higher than anticipated. From 100 tonnes harvested, “if you do it well you might get 90t down the cow’s throat; but if you do it badly you might end up only getting 50t down the cow’s throat, and that has a big effect on the cost [of the feed].”
Time required for feeding is also almost always longer than anticipated so labour costs balloon too, he said.
“What does baleage really cost? I’ll bet it’s not worth it at the current milk price.”
Holmes presented Dairy NZ data from 2000-01 and 2013-14 showing production per hectare and per cow was up 28% and 19% by 2013-14, but operating costs, assets and liabilities were 48%, 63% and 100% greater (see table). At $4.96/kg milksolids (MS), 2000-01 was a high payout year for the time.
“Previous years it had been under $4/kg MS.”
In the first $7/kg MS payout season, 2007-08, operating costs leapt 35% from $3.64/kg MS in 2006-07 to $4.92/kg MS, mainly because of increased feed, grazing off and fertiliser. That was a key point in the shift to higher costs. Operating costs at $4.92/kg MS were okay at a $7/kg MS payout but at a $5/kg MS payout such costs “are a disaster”.
“It doesn’t mean you stop spending any money. That would be ridiculous, but you spend money to make a profit and the bottom line is crucial.”
All too often production targets are quoted in isolation, without a corresponding financial target, and Holmes made a plea to farmers and consultants present to ensure they didn’t fall into that trap.
“You cannot have targets of physical things only and then expect to make a profit.”
International Farm Comparison Network data shows globally, and in NZ, grazing systems produce the lowest-cost milk, coming in 50-70% below even big feed lots, and certainly well below the confined (indoor) systems, Holmes said.
“We export 95% of our milk therefore we have to be [internationally] competitive. If we’re not competitive 95% of our milk will not find a home. Moving away from our basic competitive advantage of grazing is a risky thing to do.
“There’s a danger people look at grazing systems and think they haven’t changed, they’re old-fashioned, we have to do something different, but of course they have changed.
“There have been enormous improvements in every key component: soils, pastures, animals, milking; they’ve all improved. And probably the way the components are put together have improved too. So they’re not old fashioned.”
Dairy NZ data shows just 13% of NZ’s farms are now system 1 or 2, compared with 70% in 2001-02.
“When you think those low-input farms are our competitive advantage and we only have 13% of them, you have to say to yourself, ‘where are we?’.”
Holmes said low-input grazed herds, milked OAD, had to be the future.
“We have to play to our national competitive advantage of grazing. I can’t see it any other way.”
Milking systems and cow evolution
You might think they are boring, but milking systems are incredibly important because milking dominates a dairy farm’s day and affects performance in many other areas on the farm, Colin Holmes told the NZGA conference (see main story).
Highlighting landmark changes in milking systems over the past century, he suggested once-a-day milking would, or should, be the next major one for New Zealand.
“Assuming herds will get bigger, if you insist on being old-fashioned and milking twice-a-day you’ll have to invest more and more in large, more automated milking systems and that costs, obviously, whereas if you milk once-a-day you can milk an awful lot of cows through a relatively simple system.”
For example, he knows a farm milking 2500 cows OAD through a 60-bail rotary with plans to increase that to 3000 through the same dairy – “a very efficient use of a very expensive piece of equipment.”
A 600-cow herd could easily be milked OAD through a 40-aside herringbone.
Dairy efficiency aside, for a modest 10-20% reduction in production OAD goes a long way to redressing the negative energy of grazing cows at peak lactation, coming into mating, with associated benefits in fertility.
It could also allow areas previously too far from the dairy to be grazed by milking cows to be brought into the rotation, reduce lameness, cut veterinary costs, increase cow longevity and reduce the number of replacements, and cost, needed.
“For all those reasons I think New Zealand grazing systems and OAD are perfectly fitted together,” Holmes said.
Some OAD farmers, such as Wairarapa Ballance Farm Environment Award winners Leo and Rebecca Vollebregt, are matching top twice-a-day operations for profit but with “much less effort and stress,” he said.
Explaining how the national herd had evolved to milk well without pre-milking or stimulating following the widespread adoption of herringbone sheds, Holmes said genetics shouldn’t be a problem for OAD either, though a selection system was needed.
“We have to have sires identified that produce cows that suit OAD.”
In the meantime, farmers making the switch can generally sell any cows that don’t suit OAD to others persevering with twice-a-day.
Levy Oration
Instigated in 2012, the New Zealand Grassland Association’s Levy Oration is the keynote address at its annual conference, delivered by a long-standing and respected, industry-leading farmer, researcher or consultant.
Introducing Professor Colin Holmes, who retired from Massey in 2007 after 40 years’ research and lecturing on pastoral dairying, Dairy NZ’s David Chapman described him as “one of the legends of the dairy industry”.
Incoming president of the NZGA, AgResearch’s David Stephens, said a Google search of Holmes’ name produced thousands of results “and most of them do refer to our Levy orator,” adding that Holmes, who arrived in New Zealand from Northern Ireland in 1966, had “laid the foundation for what we do in the dairy industry”.
He’s the only person to hold the three highest honours of the NZ Dairy Association and his book, Milk Production from Pasture, was a bible, Stephens said.
