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Keith Woodford spends a morning at the Lincoln University Dairy Farm hearing about stocking rates, nitrogen and ryegrass

Rural News
Keith Woodford spends a morning at the Lincoln University Dairy Farm hearing about stocking rates, nitrogen and ryegrass

By Keith Woodford*

Dairy farmers fit broadly into two camps: those who believe dairy farming should be ‘all grass’, and those who favour a role for supplements.  I don’t fit neatly into either camp, because as in so many things, I think there is more than one way to succeed.  It all depends on the situation.

As a visiting farm systems professor put it to me this last week, amongst academics this is called ‘flat-line optimality’. Or as Mark Twain made famous, drawing on others who had gone before, ‘there is more than one way to skin a cat’.  And just to set that story straight in terms of political correctness, the cat was actually a catfish.

Although there is usually more than one way of doing things, there are also different levels of efficiency with which it can be done. So last week I spent a morning with Peter Hancox, the manager of the Lincoln University Dairy Farm (LUDF), learning how he was making all-grass farming work at Lincoln. 

First of all, to define the term ‘all-grass farming’, it only applies to the lactation period. In the South Island, there is no way we can farm efficiently without making use in winter of forage crops, silage, or other forms of supplement such as grain or PKE. And at the LUDF it is also influenced by reliable irrigation, which means there is no such thing as a drought.

The opportunity to pick Peter’s brain is open to anyone who wants to undertake the weekly farm walk which involves 8km of power walking and plate-metering across every paddock each Tuesday morning. Last week, we were somewhat like the United Nations, with some ten or so disciples from Brazil, Argentina, Ireland and New Zealand, plus a DairyNZ adviser who comes from Uruguay.  Following the walk, the data all went into the computer and we talked about what it meant for this week’s operational tactics.

The march of the plate-metres at LUDF

The reason I was so interested to spend time with Peter Hancox is that he has been manager at the LUDF for about 12 years. Most recently, he has been the person who has had to operationalise the evolving strategies as the focus has shifted from simple profit maximisation to working within environmental limits.

Before the days when nitrogen leaching was perceived as being a major issue, the LUDF strategy was straight forward. Essentially it involved high stocking rates of about 4.2 cows per hectare, grazing down to about 1500 kg dry mater (DM) per hectare or even slightly lower, and using lots of nitrogen. Under this system, and with dry cows grazed off in winter, then production per hectare increased to between 1700 and 1800 kg milksolids (MS) per hectare.   Production per cow was about 400 kg MS, or in some years a little more.

Starting in 2011, the focus has moved to lower stocking rates, less nitrogen, and increasing reliance on tetraploid ryegrasses. The tetraploids give higher production but with different seasonality and also different grazing metrics.  The cover can be increased to about 3600 kg DM before feed quality starts to drop, and desired grazing residuals have also increased to about 1700 kg DM.

Last year, with this system, per cow production peaked at 2.5 kg MS per day in October and 522 kg MS for the lactation. This is from cows weighing about 495 kg ’walk on’ weight at the shed.  Production per hectare was 1812 kg and farm working expenses, with all wages and salaries included, were $3.47 per kg MS. The cash operating surplus based on $4.30 total payout (milk price plus dividend) was $1711 per hectare.

This year the cows have reached 2.45kg MS but may not have peaked yet. So lactation production is on-track again for at least 500 kg, and farm working expenses, including fully-costed labour and some catch-up items, are budgeted for $3.85 per kg MS.

Under the old system, and prior to 2013, it was possible to reduce nitrogen leaching by use of Eco-n. However, that is no longer allowed because of concern about chemical residuals getting into the milk. Last year, with the new system and no Eco-n, the leaching calculated out as approximately 30 kg of leached nitrogen, compared to a baseline allowance of 40 kg.

Environmental fencing at LUDF, allowing cows to graze but not trample where surface waster drains

In this article, I have no wish to get caught up in the debates about Overseer. We all know – or should know – that the calculation method has serious limitations. There are lots of anomalies. But the big-picture message is that in relative terms, nitrogen leaching is being seriously reduced. However, as part of the Selwyn-Waihora catchment, Lincoln will need to get down even further by 2022.

This current season has been a funny season. Soil temperatures are considerably warmer than last year but a lack of sunshine has meant the grass has low dry-matter content – right down to 11.9%. That means that the plate metre readings, this week giving pasture growth of about 95kg DM per hectare per day, are tending to over-estimate. So the plate-metre is used as a guide to overall planning but the cows move to the next paddock whenever utilisation is at the desired level. On the day of our farm walk, Peter expected to be changing paddocks at about 8pm.

The key to maximising production and also maintaining cow liveweight during the spring is maintaining high metabolisable energy (ME) and making sure intake is not constrained. The Lincoln pastures are currently round 12 megajoules of ME per kg DM which is about as good as it gets.

Whereas the old system of high stocking rates, heavy grazing and lots of nitrogen was very simple, manging the new system is more complex.  One of the tools in the kitbag is pre-graze mowing.  Another is placing more weight on grazing at the three-leaf stage rather than just accepting what the plate-metre says.

Farmer experience is that pre-graze mowing increases cow intake and also sets the paddocks up better for the next round. This is despite the currently available science-trials suggesting no benefits. Nevertheless, many of the financially better-performing Canterbury farms that I see are now using this as an operational tactic.  What is evident is that it works best when there are no volume constraints on cow intake.  On the Lincoln dairy farm, about half the paddocks are pre-graze mown once during the season, and the other half twice.

Grazing at the three-leaf stage – preferably just as the fourth leaf is about to emerge – is another key metric. The science on this has been around for about ten years, but it is only now becoming routine in farm monitoring.

One of the biggest challenges with the LUDF system is getting cows pregnant. Heifers calve two weeks before the older cows, and this helps them get back into calf the next season. But there is still an overall 12-14% dry rate each year.  There are no easy answers within the current system.

Lincoln also now has an active program of testing for Johnes disease and culling accordingly. Last season this meant that 18 healthy-looking high-producing cows were culled. It is expected that it will take between four and six years to solve the Johnes issue.

This issue of Johnes is a sleeper on many if not most New Zealand farms. Increasingly, I get emails from overseas asking me the status of New Zealand herds. For too long we have put it in the ‘too hard’ basket. I see overseas market attitudes to Johnes disease, and the associated health status of our milk, as one of the two big long term risks for the New Zealand dairy industry.   Sweden and Western Australia are the only places that I know of where the disease is absent, so we are not alone in having some challenges to face.

One significant change this year is that Lincoln is mating the 15-month heifers by artificial insemination given that the grazier now has good handling facilities. When writing about the LUDF a year ago, I noted that the failure to use AI on heifers meant that Lincoln was foregoing the opportunity to get replacement animals from the cohort with highest genetic merit. So I see this as a step forward. Overseas visitors to New Zealand are always perplexed as to why most New Zealand farmers forego this genetic merit.

In Lincoln’s case, given the challenges in getting cows pregnant, and the additional three percent culling for Johnes-positive cows, then increasing the availability of replacement animals is important. Given the premiums for A2 cows in Canterbury, I remain surprised that Lincoln is not also using A2 semen. In time, I think they will regret this.

The over-riding issue for many Canterbury farmers, as elsewhere in New Zealand, is nitrogen leaching and the associated emerging permission-to-farm situation. The prospects are that come 2022 Lincoln may well be able to meet the new Selwyn-Waihora standards, but with the important proviso that the cows, as now, are wintered off the farm. That means the leaching-burden is shifted elsewhere rather than eliminated.

Lincoln is currently investigating off-paddock wintering systems, but this is on its Ashley Dene property some 15 km distant. These issues of off-paddock wintering are going to be issues that many New Zealand dairy farmers will have to wrestle with in the years ahead.

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. 

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High input systems have been encouraged and driven by misleading Fonterra claims of being desperate for more milk for expanding markets. While the payout was above $6.50 this was all okay, except they got caught out by the EU increase in production. Meanwhile farmers have been tempted to look at all ways of increasing profitability on their over inflated farmland milk price is sub $6.00 the whole model is broken. It has to go back to low input, low debt and it will be forced to do so unless you want to work for nothing. This needs to be clearly led, no more sit on fence and be FOMO'd by high input production


Perhaps it is not quite that simple. Some low input farmers have low cost of production and some have a high cost of production. Similarly, some farmers who use supplements have low costs of production and some have high costs of production. Also, shifting to a lower input system increases debt per kg MS. But what the LUDF does show is that all-grass farming during the milking season can work very nicely on a Canterbury irrigated farm. However, if nitrogen leaching is to be managed to acceptable levels (with this acceptable level reducing further over time) then the system does become more complex to manage.


Adding $725 per hectare of investment income from Fonterra VA activities to ebit per hectare is not cricket, that requires further capital investment ( shares ) and has nothing to do with the ebit from cows & grass / farm management.
Your quoted ebit number should be $986 / hectare


Westminster, from a perspective of profit and allocation of capital, you are correct. However, currently, farmers are more interested in availability of cash to pay interest on debt and hence my focus on EBIT cash. The name of the game right now is still survival until the sun shines again.


I understand your second point Keith , my point $986 EBIT / is far to low for a first class farm /cows & management achieving high production even at $3.90 Milk price . Cost of production is still to high .If this all the best farms can achieve in the South Island then people will be waiting a while for the sun to shine again


In Canterbury, it is very difficult to get the cost of production lower than the LUDF figures. Many Canterbury farms have higher irrigation charges than LUDF. Some North Island farms will report lower costs of production, but often that is without full costing of owner labour and wages of management. As well as the milk income, there is also livestock income. Most Canterbury farmers are paying interest rates in the 'mid fours' which on say $22 debt per kg MS (this is the average NZ debt) means that on-farm costs plus interest total about $5. Livestock income of say 50c plus milk income of say $4.50 plus 40c dividend gives a cash surplus of about 40c as a cash return on capital. Of course very few farms are 'average'. Also, I have not factored in depreciation into these figures, given that my focus here is on cash and survivability. Any commodity-based industry is always going to be volatile and the key issue is to be able to survive the bad times. Share markets hate income volatility and it is why corporate agriculture has largely been dominated by private equity. Also, the debt on some farms is very high for a volatile industry. The sun will shine again but it may or may not be quite as soon as some people currently think.
Keith W