Monday, 11 June 2012

Dairy Growth Strategy might be Flawed

The push for continued dairy farm growth and expansion may not be a desirable path for New Zealand or NZ farmers. The concept that growth always leads to a better outcome is definitely misleading and probably incorrect.
Those advocating a steady growth of say 4% in my view don’t fully understand what they are advocating. They don’t understand the "Exponential Function" a very simple but badly understood piece of arithmetic.
If you are an advocate of the dairy industry growing, watch this very important video.
Watch this YouTube
Those people & industry groups advocating a steady growth of 4% in the dairy industry are in fact advocating a doubling of output in the next 17.5 years. Doubling time = 70 divided by 4% growth per year. That could mean a doubling of the number of cows too. Is that what we either mean or want?
The recent film seen in NZ called Growth Busters” also seriously questioned the concept that continued growth also led to either better economic or better environmental outcomes 
 So why are we advocating continued growth in the dairy industry in NZ. Part of the reason is clearly that all New Zealanders gain from a strong profitable dairy industry but is that a reason to advocate further growth. Are we now confusing growth with profit.

What is required in NZ is a greater focus on smarter Farm Business Management practices and cost control to increase the profitability & the well-being of farming families & hopefully all New Zealanders will benefit. Dairy farmers are now faced with a lower farm gate milk price and possibly a period of instability both in costs & income. Dairy farm businesses will be vulnerable & must show resilience. Few we are told have greatly reduced on farm debt during the past two years. So the smarter businesses will need to reduce operating costs to maintain profitability.
Expansion if you are not already highly profitable, if you don't know your costs(per litre or per kg MS), if you have excessive debt or if you don't have a clear precise business plan is outright dangerous. We have plenty promoting the upside opportunities but few talking about the downside risks.
At an industry level a call for continued growth means each farm increasing output or more farms being converted to dairying. Continued growth in output can be achieved in two different ways, either with greater inputs (cows, purchased feed or fertilizer) or with less inputs i.e. extracting greater efficiency from the resources currently being used.(pasture consumption & production or feed efficiency use by genetically superior cows).

There is a limit to dairying growth in NZ. Where is that limit & how will we know what that limit is?
Growth is limited with a fixed finite physical environmental resource. New Zealand is a very small country with wonderful pristine natural resources but they are not inexhaustible.
Here I’m talking about good quality land, water, soil carbon & land capability. Historically there are very good reasons why some farms & some land has not been farmed for dairying. Simply adding irrigation water or farm tracks doesn’t necessarily change the soil capabilities. I would argue that few long term irrigation schemes around the world have in the long term either been successful or not been environmentally damaging. Some like in California are now desperately short of available water.
In Marlborough there is no more available water for additional dairy farms.

It is clear that dairy cow intensity (numbers of dairy cows & stocking rates) is linked to nitrate levels & nitrate leaching. I’m not sure we fully understand this relationship with regard to NZ river & stream water quality. The maps seem to indicate a close relationship i.e. the higher nitrate levels are where the higher dairy cow densities exist. So if this is the case now how can we continue to grow numbers of dairy cows without environmental damage? One possible answer is through better on farm management & technical scientific research break-throughs that will reduce the impact & mitigate the damage.
Personally I am concerned that environmental research will not deliver any short term silver bullet answers. The problems are complex & not fully understood yet. It is not easy to separate the impact of farming from the impact of a higher urban population & the impact of towns & cities on the environment. If NZ is to manage & improve the environment everyone in the community must contribute. Is the change in water quality in NZ an “exponential function” of changes that have already happened to dairy cow numbers & practices? (described by Prof Al Bartlett in the video….see earlier in the blog)

There seems to me an unhealthy push to increase per cow production in NZ. There is very good evidence of “Systems creep”. By that I mean farmers moving from Systems 1 & 2 (low input systems) to higher input systems 3, 4 & 5. Why is this happening? Is it peer group driven or debt driven? Often farmers seem unaware they have quietly moved into a more intense system.
 Per cow production on dairy farms is very rarely related to profitability.
This is true on any pasture based dairy farm in the world. NZ is losing the competitive edge of being the lowest cost producer of milk. NZ is no longer the lowest cost producer of milk & we are rapidly becoming like other dairying nations. We seem to be hell bent increasing per cow production. Ask yourself does NZ have a competitive advantage in grain feeding or PKE? No we have a competitive advantage producing pasture. Why are we not concentrating on our competitive strengths & low input simple pasture systems?

Time for a strategic rethink? Time to carefully rethink the direction you are driving your dairy farm business. Time to rethink profitability!What really is the best option for NZ?

I think the dairying growth strategy might be flawed. What do you think?


  1. How about some comparative research; DairyNZ to examine/compare the standard dairy model vs one of the high-profit/low-impact/added-value dairy operations , like Biofarm.
    It would be interesting to see which has the best future prospect with least environmental impact

  2. The least environmental impact is most likely to be in a dairy system that uses a standoff or housing for a large part of the cows day.This would spread urine more evenly than cow urination in the paddock and avoid soil phosphate movement to waterways in adverse weather.The limits to growth could be very high.The economics would be helped with maize grown using effluent.A mixture of the best of northern and southern hemisphere systems

  3. The least environmental impact is certain to be the result of a dairy operation which has the following features :-

    1).permanent pasture:-
    i.e. rarely occasional / no cropping. There might be more pasture species diversity needed if pastures are to be truly perennial.

    2). low stocking rate :-
    e.g. a rate that the farm is largely able to sustain through all but the worst events. There will be feed reserves on-farm. (pasture hay/silage)
    No "dairy support", or bought in feed (additional nutrient loading would be the result)
    Feed pads may be unnecessary.

    3). avoids treading/compaction/ponding damage to soil:-

    Optimal drainage is assumed.
    This will mean not having high stock densities at critical periods but principally late winter/early spring. This means not building a pasture wedge for early season utilisation at high stock densities. Allocating more area /cow/day means a faster grazing rotation .
    Possibly autumn calving.

    4). applies no nitrogen fertiliser other than that from atmospheric nitrogen sequestered on the farm :-
    This could mean changes to grass/legume balances in pasture.

    5). deeper/more carbonaceous topsoil:-
    More ion exchange capacity.

    6). uses RPR + elemental Sulphur regularly:-
    (every 3-5 years)

    7). maintains a suitable microflora for effluvia incorporation into topsoil.

    8). uses sufficient limestone to maintain a thriving earthworm population.

    Have I omitted anything?

  4. if we are talking about minimising the environmental impact then choosing a suitable soil type for a dairy farm has to be high on the list.
    And what about irrigation?
    On shallow soils, like the stony soils in parts of Canterbury, irrigation will increase the nutrient losses, won't it?

  5. In recent months it has become clear that the issues surrounding limits to dairy growth are converging on the single measure of nutrient loading on soils, and to a lesser extent, on the related measure of stocking density.
    It is submitted that both of these issues can be encompassed in a single unit of measure , readily understandable by all dairy farmers, namely cows/Ha/day(24hrs.)
    Returning to the first comment in this thread , we find the following:-

    1. The named farm, which meets all the conditions for minimal impact listed in the third comment, is in this month(July) operating at 25cows/Ha/day and Gross income/cow of $25/cow/day.

    2. The standard dairy model herd is at 1000 cows/ha/day (strip grazing-back fenced) and is not producing income.

    This comparison makes it clear that the standard model is arguably operating a CAFO(feedlot) operation on pasture , without a resource consent, since large amounts of supplements are being fed in a very confined area, causing considerable soil damage and probably nutrient overload. The degree of nutrient overload is unknown because there are currently no standards.

    The industry is reacting to the suggestion that resource consents will be required for what has been standard practise , and on some soil/climate combinations , wintering on high DM/Ha crop situations will be prohibited by the Regional Councils using the RMA.

    In other words , in the absence of some proactive re-design of the industry , there are going to be LEGAL limits to dairy growth, probably taking the form of limits on stock densities/unit time.

    It is suggested that it may be timely to have a complete rethink of the standard seasonal dairy model , if the future requirements of regional councils are going to be met, while maintaining an economic industry.

    It might be a very good idea if this discussion were to take place in a much wider forum than that offered by a column such as this.
    On the other hand , the dairy industry may not wish to have a full exposé of its current practices aired in the cafés where dairy publications could become a common feature.