Waikato, June 11, 2018:The notion that farmers can reduce stock numbers and maintain or increase profitability has been allowed to infiltrate society with little challenge or even any real questioning of why they aren’t doing so … if it is true.
Karyn Hay of RadioNZ’s Lately programme did pose the question given that ‘farmers aren’t stupid’ but no definitive answer was given.
A clue lies in a recent media article in the Herald by the chief executive of New Zealand’s largest farming business, the state-owned enterprise Pamu (previously called Landcorp).
Steven Carden stated that “by focusing on fewer cows, our milk production per cow has increased and offset some of the reduction in cow numbers thanks to a focus on better feed management and animal genetics”.
It is important to note that Carden said that “some” of the reduction in cow numbers had been offset by better management, but of more importance is to acknowledge that farmers who already have good feed management and high genetic merit cows can’t destock without having an impact on their profitability according to reports published in nzherald.co.nz
The cynic might also note that in March Pamu gave no dividend to its shareholding ministers, and posted a half-year profit after tax of $21.9 million, a significant contributor to which was a $39m gain in the value of livestock. Without that revaluing, a $17m loss might have been posted.
Carden explained that amongst other farming difficulties, the wet spring which turned to drought meant that feed had to be purchased hence profit was affected.
Although more recently he has said that Pamu’s reduced stock numbers means that there is more feed on hand, thereby building resilience and lowering risk around bad-weather events, high genetic worth cows need more than just grass.
DairyNZ principal scientist John Roche, now also chief science advisor for MPI, has talked about Ferrari cows on 91 octane, suggesting that improved feeding management is paramount for the modern cow.
Maximising pasture intake and optimising management is certainly key, but the use of high-energy, low-protein feed in addition to grass helps increase milk production, while decreasing the amount of nitrogen in urine, which therefore reduces potential environmental contamination.
The feed also buffers the farm enterprise when weather events mean that grass doesn’t grow – wet winters, cold springs, dry summers and autumns, and floods at any time.
Farmers are balancing not only the biological systems they manage, but also the financial systems in which they are working.
Having no grass means no milk and no cash flow.
Having reduced stock numbers can also result in reduced cash flow which, when the milk payout is low, can result in insufficient income to function.
There have been studies that have indicated reducing the stocking rate and maintaining profitability is possible, notably in Canterbury and the Waikato. In these cases the decreased stocking rate was calculated (using the OVERSEER model) to reduce nitrogen loss as well.
The use of a shelter or feed pad also reduces nitrogen loss. Research at Massey University indicates that losses can be halved while maintaining stock numbers and hence income to pay for the shelter or feed pad according to nzherald.co.nz
The efficiencies gained are the amount of milk per unit of land area, the amount of nitrogen lost per unit of milk, the ability for the milk companies to collect and then process that milk, and the maintenance of the dairy contribution to New Zealand’s export economy.
DairyNZ has what it describes as top farmer budgets on its website. These show that year-on-year, for farms in similar geographic regions, farmers using high-energy feed inputs as well as grass create more milk and are more profitable than those on all-grass and with lower stocking rates. In addition, their debt per unit of milk is lower.
The top farmers have the income to be able to invest in infrastructure and new environmental technologies such as feed pads and shelters. They are also the ones that are contributing most revenue per hectare to DairyNZ for research so that they can do an even better job next year.
Karyn Hay was right: farmers aren’t stupid. But some of them are wondering why they are bothering.