Keith Woodford argues restating the dairy messages of yesteryear is not the only path to dairy salvation & an open mind is needed on ‘pasture-plus’ opportunities

By Keith Woodford*

A key and consistent message over many years from DairyNZ to its 12,000 farmer members has been the importance of optimising the use of grass.  Aligned to this, has been an ongoing negativity to non-pasture supplementation.

 I know of no-one who disputes the ongoing importance of grass to the New Zealand dairy industry. However, there are many who would argue – and I am one of them - that DairyNZ has become blinkered to the opportunities that can arise from ‘pasture-plus’ dairy systems.

Ironically, despite the DairyNZ focus, there has been a steady drift by farmers to increasing use of supplement since the turn of the century, typically by matching stocking rate to peak pasture production and then feeding supplements in the shoulder seasons. At the same time, per cow production has been increasing significantly from 288 kg in 1999/2000 to 372 kg in 2015/16.  Not all of this increase will be due to supplementation - there will be a genetic times feed interaction – but it would be a brave person who argued that better feeding was not a key part of the story.

Given the dominance of DairyNZ within the rural communication system –  they are the industry body whose mandate is farmer-focused research and extension -  it has been challenging for those with alternative perspectives to tell their story.

However, there are a few out there who have tried to counter the narrow-focused approach. Most recently, Howard de Klerk has written several articles in farming newspapers and at this own website. (See notes at end for links).

Arguably, the long-time leaders in promoting pasture-plus dairy systems within New Zealand have been Sue Macky and Bryan McKay from DairyPro (DPSL). Although Waikato-based, they have clients from across New Zealand. Many of their clients have intensive systems, but others are low input. As Sue Macky says, “we help farmers whatever their system, but it is the more intensive farmers who typically come to us”.

Recently, I spent two days with Sue Macky and Bryan McKay. My key purpose was to learn more about composting barn systems. However, what I learned about composting barns will provide a story for another day.  

Much of my time with Sue and Bryan was spent discussing the basics of supplementation to enhance cow health and cow production. I saw clients with low veterinary costs, amazingly high six week in-calf rates, milksolids production of over 100% of cow liveweight, and cows still in the herd at more than 15 years of age. It was a story of happy cows and happy farmers.   

Of course, there will also be many high input farmers who don’t get it right. It definitely is not just a case of shovelling in the feed. That approach is a quick journey towards heading out the back door! As with any farm system, it is the detail that counts.

I have known for a long time that more intensive farming systems can be profitable. Some years back, I supervised two final year Lincoln B Agr Sci students whose dissertations involved case-study analyses of farmers who were using intensive ‘pasture-plus’ systems. One of them analysed a suite of South Island farms, the other studied North Island farms.

Typically, the non-pasture feed component on these farms comprised about 30-40% of the diet, but that still meant that pasture was very important as the base feed.

The outcomes from their analyses were clear: top-level farmers can make intensive systems work extremely well, but at least within seasonal milking systems, the efficient use of pasture as the base feed remains important.

For me, there were no surprises in these answers. This was because for more than five years I had been part of the judging team for the New Zealand Dairy Business of the Year. I could not help but notice that the most profitable farmers were often farmers who had strong elements of ‘pasture-plus’.  I also noticed that amongst these top farmers, they were achieving well above average per cow production, but doing so while still maintaining a low cost of production.

One of the messages that some people struggle with is that low input is not the only way to control costs. Cost of production involves both a numerator (income) and a denominator (production). And these profitable farms typically had a very strong denominator.

On occasions, I have discussed these and other results with DairyNZ personnel. The standard response is that this might be okay for top farmers, but this is not the way for average farmers. The other response which comes out occasionally - sometimes reported through intermediaries - is that ‘we don’t believe the figures’.

By chance, on the way back to Christchurch I met a farmer with an intensive system who had some years back been a regional winner of the Dairy Business of the Year. I asked him if he had gone into the competition again. He said ‘no’, and on further questioning he said he had experienced more than his share of ‘tall poppy’ syndrome. That is why many of the best exemplars prefer to quietly get on with life away from public attention.

In recent months, DairyNZ has renewed its arguments against supplementation, led by Chief Scientist Dr John Roche but with others in supporting roles. Dr Roche has talked in oral presentations of his ‘epiphany’ where he found evidence that low-cost pasture systems were indeed the optimal pathway for New Zealand farmers. So, I thought I had better go back and look at the data he was using.

In written material, Dr Roche refers regularly to a recent paper in the Journal of Dairy Science, co-authored by himself and five colleagues. This paper presents data from farmlet research trials conducted nearly 20 years ago, and then combines this with costings derived from recent DairyBase data.

The data relevant to pasture supplementation came from three Waikato farmlets, each of 5.7 ha, fertilised with 200 kg of N, and stocked at 4.41 cows per hectare.  The cows in one farmlet had no supplementation, in another they had 1.3 tonnes dry matter of cracked maize, and in the other farmlet 1.1 tonnes dry matter of maize silage. The maize silage was low quality (6% crude protein, 10.3 MJME per kgDM).  The initial weight of the cows averaged   497 kg.

Without supplementation, the cows only produced 267kg milksolids. There is only one way to describe that production from a 497kg cow: terrible. 

When supplemented with maize. the per cow production rose to 396 kg milksolids, and with maize silage production was 359 kg milksolids.

Although these are big responses, the production is still well below what many would consider desirable for this level of supplementation. With current-generation cows of that liveweight, we would be looking for at least 500kg of milksolids. It seems likely that the stocking rate of 4.41 cows was excessively high, and maybe other things were also astray in these farmlet trials.

To put an economic calculation on these data, the authors valued the maize at $500 per tonne of dry matter (which seems very high compared to recent prices) and costed the low-quality maize silage at 32 cents per kg dry matter. They then used data from DairyBase (which relies on accounts submitted by farmers) to further increase the overall costs of supplementation by about 20%. The additional milk produced was valued at $4.04 for fat and $7.35 for protein, which equates to approximately $5.50 per kg milksolids.

So, what the paper did was take below-par production data from NZ-bred cows of more than 15 years ago, added a below-average milk price, added in well above average feed costs, and then assumed that each extra dollar on feed increased other costs as well, bringing the additional costs cost to over $620 per tonne of cracked maize dry matter. Not surprisingly, the conclusion was that supplementation is uneconomic.

As for the maize silage, I would certainly not want to be paying 40 cents per kg dry matter (all costs included) for maize silage of such low quality. But even then, it basically did break even (despite the conclusion otherwise).

Ironically, the DairyBase data that they used, and which was published online in a supplementary table, showed that the pasture-plus farms (which DairyNZ calls System 4 and 5) did make bigger per hectare profits than the pasture-only farms (Systems 1 and 2). It was only when the DairyBase cost data was combined with production data from a totally different source that the results became uneconomic.

I am reminded of an old saying about using numbers like a drunk man uses a lamppost: for support rather than illumination.

So, my call to DairyNZ is that they would serve the industry better if they could take a more balanced perspective to issues of farming systems. The do not need to forego a focus on pasture-only systems, but they do need to take the blinkers off. They need to recognise that restating the dairy messages of yesteryear is not the only path to dairy salvation.

A starting point could be to bring in some of the experts on pasture-plus to upgrade their own staff.

Alongside this, if DairyNZ continues to use DairyBase data for analysing farming systems, then those analyses must be undertaken on a regional basis so as to avoid what statisticians call ‘confounding’. The analyses also need to be undertaken by people who understand not only the nuances of different farming systems, but can also use advanced statistical methods to analyse aggregate data.  Simple regression is not good enough.

From there, it is a case of going wherever the evidence leads.


Notes:
1) Howard de Klerk’s recent articles can be found at http://www.dnms.co.nz/
2) The farmlet trial published in the Journal of Dairy Science can be found at http://www.journalofdairyscience.org/article/S0022-0302(17)30570-2/pdf
3)   DairyNZ farmer extension material from Dr Roche focusing on the poor economics of supplementation can be found at  https://www.dairynz.co.nz/about-us/event-presentations/farmers-forum-2017/


*Keith Woodford is an independent consultant who holds honorary positions as Professor of Agri-Food Systems at Lincoln University and Senior Research Fellow at the Contemporary China Research Centre at Victoria University.  His articles are archived at http://keithwoodford.wordpress.com. You can contact him directly here.

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10 Comments

Hi Keith. I don't take issue with your article per se but there is one thing it doesn't address that is uppermost in most farmers mind - nutrients. It would be interesting to see what the nutrient budgets look like for these farms. The biggest change to BAU on the horizon is environmental constraints. To what extent will depend on what regional council you come under.

In 2014 the National Ballance Farm Award winners were dairy farmers with a barn system. Their N leach rate was around 45units/N/ha. If they were in Otago in 2020 they would have to reduce that down to 30 which would be unlikely unless there were some system changes and if the farm was near one of the main rivers it would have to be 20units/N/ha.

In Southland a farmer recently applied to increase their herd size while increasing their land size. (Less than 100 cows) The leaching of N/ha would not increase. However, the council decided that the leach rate was high anyway, so the farmer was told that they had to hold the total leach kg to what the farm was currently doing - which wasn't going to work with extra animals even with extra land, or reduce the leaching of N/ha from what it was currently doing. Again this was not possible.

I understand that intensive input systems do have variations in leach rates - some 'export' their effluent to neighbouring farms, some do not.

In some areas grassroots farmers are saying that if farmers graze off/have runoffs/export effluent to other farms then the dairy farmer should have to undertake due diligence to ensure that the land where their stock graze/effluent goes will meet regional council rules around nutrient management and will cause no adverse environmental effects.

Fonterra is also promoting its 'Trusted Goodness' programme which includes 'Certified grass fed'. I believe it is only a matter of time before we start to see incentive payments for things such as this. After all the co-op already has incentive payments for other things. Or perhaps it will put in penalties if you don't qualify as 'grass fed' - a bit like they have notified in regards to PKE.

I get a feeling that the mood now of the industry, is not wanting to encourage high input and or barn systems as without them we have a potential point of difference we can use for marketing.

DairyNZ have examples of real time budgets etc from real farms across various system types. It recognises that there are courses for horses and each farmer will make their own decision as to which system they choose to use. Some systems require more skill set, some less. Here's their link to the system 5 farm example https://www.dairynz.co.nz/business/budgeting/budget-case-studies/south-w...

Appreciate the perspective CO. I hope NZ can leverage our grass fed difference.

Casual Observer
The only way we are going to solve the nutrient issues is to get cows off pasture during the second half of autumn and winter. This is because of the concentration of nitrogen in the urine, which is particularly an issue when cows are fed pasture (which carries excess protein relative to cow requirements).
There si a range of ways to pay for the off-paddock investment - milking into winter and 12-month production are part of that story but requite a change of culture. Considerably lower winter-feed requirements and less pasture damage are also part of the story.
Also, shifting from highly-stocked low-producing cows to lower-stocked higher-producing cows (as at the Lincoln University Dairy Farm) will reduce nutrient loading. This is independent of wintering system but is dependent on high-quality feed.
Use of crops sucjh as maize silage (and other supplements) will reduce the amount of nitrogen excreted in urine.
If properly done, then off-paddock wintering ;plus higher per-cow production is actually the solution to our N leaching rather than the problem. The lessons are all there waiting to be larned from counties like the Netherlands who have alreaady travelled the nutrient-management journey.
Keith W

Hi Keith - There is research currently being done with grass/crops that result in lower urine N. e.g. Fodder beet https://www.dairynz.co.nz/about-us/research/forages-for-reduced-nitrate-...

This is a useful tool for farmers to look at various options for mitigating nitrogen losses - if that is the water quality issue in their catchment, after all N is not the main issue in all catchments. https://www.dairynz.co.nz/media/1237817/reducing-nitrogen-loss.pdf

Nitrate catchers may be an option - if you have a good supply of wood chip. There is an ongoing trial of these in the Waituna Project.
https://www.dairynz.co.nz/media/2006672/enviro-pub-dairynz-summary-nitra....
These are used in USA and Europe. Here's a academic publication of a study undertaken http://www.academia.edu/16813278/Performance_of_a_woodchip_filter_to_tre...

The Netherlands may have travelled their nutrient management journey but comparing their rules with say Southland's is cheese to potatos. There are headwinds for Dutch dairy farmers:
Following on from this, a system of phosphate production rights is due to be introduced with effect
from 1 January 2018. These measures will result in a significant decrease in the size of dairy herds and growth in milk production will be limited in the years ahead.
http://www.zuivelnl.org/wp-content/uploads/2017/06/Dutch-dairy-in-figure... An interesting article including world dairy data - incl Fonterra comparisons
Last year the Netherlands exceeded its phosphate ceiling set by the EU, despite shipping manure hundreds of miles to Poland, Hungary and Germany, where it is used for fertiliser. https://www.theguardian.com/sustainable-business/2016/nov/02/netherlands...

http://www.sciencedirect.com/science/article/pii/S1573521416300100
You would not get a consent to dairy farm in Southland leaching 125kg/N/ha - the Netherlands halved the surplus of nitrogen since its peak of 250 kg per hectare in de mid-1990s

Hi Keith .Great article .Great Observation! Casual Observer made a lengthy comment but misses the point that Keith's article is about Pasture plus and not fully barn feed cows! Pasture plus is where most Farmers are @ at the moment. Up to 70 :30 ratio is fine. The system promoted in the 80's and 90's with plenty of phosphorus , extremely high levels of nitrogen smaller cows with high stocking rate suited LIC and some of the Fertilizer Company's just fine. It was a one size fits all approach!
There is a lot more to it then that. Just ask the people who invested in "Dairy farming Uruguay".
What a disaster that was, simply pure ignorance!
By the way ,LIC shares still the same building in Hamilton with Dairy NZ! Hmmm,?!
Environmentally, Pasture plus can be very beneficial for your nutrient budget
and extremely rewarding for your back pocket, animal health and your very own peace of mind!

Ask the people.

300 cows. I am genuinely interested in knowing what the N leach rates (or variations) of a mixed system is with high production cows - those herds doing more than 450kgms/cow. It is great to hear that it can be 'very beneficial for your nutrient budget' but what levels are you talking about. Reducing levels to 30 or less could be worthy of consideration.

I wasn't referring to fully barn fed cows and you misunderstood my comment if you thought that was what I referring to. My comment was around high production and leaching, and variability in regional council rules and the need to be aware of system changes on nutrient budgets.

Keith
Your article is a good analysis of the production aspects of supplementary feeding systems, but I note that many would suggest the true game changer for NZ pastoral businesses will be adding marketing value around the natural grass fed provenance of our dairy and meat products.

It is conceivable in the future that producing less off a higher pasture %, will deliver a better financial outcome. Will be a challenge for dairy co-ops in the future when their highest end consumers increasingly ask for verified 100% natural and grass fed product, because that is what niche players in their own markets will be offering. This goes to the heart of the commodity versus added value debate.

I agree with your sentiments, and hope we have enough leadership and unity to propel our milk into a different league from that of our global competitors. My feeling is while natural grass fed provenace iis a nice part of the story, the distinctive nutritional quality of grass fed milk undiluted by grain or other supplement will be important in the differentiation.

Southerner,
Producing 100% grass-fed is expensive - Synlait pays a 35c per kg MS premium for milk meeting the Munchkin specifications, but most Synlait farmers find this insufficient to take on the challenge (despite the advantages of reliable irrigaton and hence reliable grass growth). Also, in most parts of NZ it is very challenging to make 100% grass-fed, except through highly seasonal prduction, and this creates a huge problem for most value-add products which require 12-month production (to meet consumer requirements, spread capital costs of manufacturing plant across the year and control inventory costs). To claim 100% grass-fed means not even using maize sialge! So grass-fed and commodities tend to go hand in hand..
KeithW

Keith
I agree the challenges with 100% grass fed, but just saying there will be some farmers who will want to take those challenges on producing less but making more, but hard to see them doing that for the big co-op.

Totally agree with your last statement about grass-fed and commodity tending to be hand in hand from a production perspective. Is the inverse of the market perspective.