Friday, March 29, 2024

Much rests on this research

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There’s going to be a huge amount of interest in research to be released by DairyNZ later this year on the economic impact of farmers building wintering barns, and the effect on nitrogen leaching.
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While the recently lowered payout forecast may have consigned any thought of such a move to the back of the filing cabinet for many farmers, they as well as councils, environmental groups and the general public will be interested the results. More important will be where it’s likely to lead New Zealand dairying in the near future.

The project, by AgFirst consultant Phil Journeaux will build on work he did for DairyNZ last year for its submissions to Horizons Regional Council on the One Plan. It casts its net wider and considers a variety of dairy farming scenarios around the country. The aim is to give a comprehensive picture of just what further moves towards intensification could mean, both for farmers’ incomes and the environment.

Journeaux’s first report studied two average dairy farms in the Tararua district, based on LIC and DairyBase statistics. One had an effective area of 119ha, wintering 332 cows which were grazed off in June and July, and produced 113,400kg milksolids (MS)/year. The second farm had an effective area of 164ha, and wintered 470, again grazed off in June and July, and producing 163,000kg MS. Average drymatter (DM) production was assumed to be 13,750kg DM ha with 80% utilisation by grazing.

A base scenario was looked at with cows grazing pasture for four hours, morning and evening, from February to May, then placed in a wintering barn for the rest of the time. They were housed for all of June and July. The extra feed required was estimated at 622 tonnes of wet silage and 207t of palm kernel.

Then two intensification scenarios were studied with feed bought in to make the wintering facility pay its way. In the first, cow numbers were increased to 389 with milk production lifting to 162,700kg MS. The second scenario was with the same number of cows but with milk production boosted to 194,500kg MS.

The wintering facility costs were based on actual costs from Southland with a base assumed of $2000/cow for a free-stall barn with an effluent system with a depreciation rate of 6%. Feed was costed at $80/tonne for silage or 27c/kg DM and $280/tonne for palm kernel, or 31c/kg DM. It was assumed the cows ate a half-and-half mix.

An extra fulltime labour unit was needed, along with a larger tractor and associated operating costs. Repairs and maintenance on the barn were worked out at 0.5% of the cost, increasing by that rate through to year 11, from which it remained consistent at 5%.

Extra cows were estimated to cost an average of $1711 each.

The benefits of the wintering facility were increased pasture production, from reduced pugging and increased effluent application. There was higher milk production, a longer milking period, better cow condition with fewer dry or empty cows, and costs saved from not paying for winter grazing or applying fertiliser.

He found wintering facilities could mean a significant reduction in nitrogen leaching if there was no intensification of the farming system used.

“However, there is something of a catch-22 situation,” he said.

He calculated there would need to be a 17% increase in cow numbers and a 71% lift in MS production to cover the cost of building the wintering barn. An economic cost benefit analysis using a net present value at 8% showed the base scenario farm at -$770,000 and producing 342kg MS/cow. The first intensification scenario came in at -$440,000, producing 418kg MS/cow, while the second, more intensively stocked property came in at a profit of $160,000 with cows producing 500kg MS/cow.

At a payout of more than $7/kg MS the base farm rapidly moved into profit but intensification to stabilise a higher level of profitability with high-producing cows in lower payout years would increase nitrate leaching to well above local council limits, especially in high rainfall areas.

Systems were also very sensitive to supplementary feed costs, with an increase quickly pushing the farm into the red. AgResearch work had shown that total nitrogen losses increased in confined grazing systems if losses of gaseous nitrogen were included. If these were converted to CO2 equivalent emissions there would be a 62% increase under the intensification strategies but only a 27% increase for the base wintering scenario.

The new study, when released, is sure to provide even more food for thought and continued debate.

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