Production and economic responses to intensification of pasture-based dairy production systems.

It is often difficult for farmers of pasture-based systems to know if intensification will be profitable since a number of variables will influence the decision. It is certainly not always profitable to do so. Production can be increased by increasing nitrogen (N) fertilizer application, increasing stocking rate, feeding concentrate supplements, or utilizing a combination of these possibilities. Increased production can improve profitability, provided the cost associated with the additional milk produced is less than the income from the additional milk. This was the topic of a study in New Zealand by Dr K.A. MacDonald and colleagues which they have published in the Journal of Dairy Science, Volume 100 of 2017, page 6602 to 6619. The title of their article was: Production and economic responses to intensification of pasture-based dairy production systems.

They monitored a three-year experiment to investigate the biological and economic consequences of intensification. Seven experimental farmlets were established and managed independently during the course of the three years. Paddocks and cows were randomly allocated to farmlet, such that three farmlets had stocking rates of 3.35 cows per hectare (ha) (low stocking rate [LSR]) and four farmlets had stocking rates of 4.41 cows per ha (high stocking rate [HSR]). Of the LSR farmlets, one treatment received no N fertilizer, whereas the other two received either 200 or 400 kg of N per ha per year (200N and 400N, respectively). No concentrate supplements were used for the LSR farmlets. Of the four HSR farmlets, three treatments received 200N and the fourth treatment received 400N. The cows on two of the HSR-200N farmlet treatments also received 1.3 or 1.1 ton of dry matter (DM) per cow per year concentrate supplements consisting of either cracked maize grain or maize silage, respectively. The data were analyzed for consistency of farmlet response over years using mixed models, with year and farmlet as fixed effects and the interaction of farmlet with year as a random effect. The biological data and financial data extracted from a national economic database were used to model the financial performance for the farmlets and determine the economic implications of increasing milk production per cow and per ha (that is whether intensification paid off).

By applying 200N or 400N pasture grown per hectare and milk production per cow and per hectare were increased. Increasing stocking rate did not affect pasture grown or milk production per hectare, but reduced milk production per cow. Supplementation on the HSR farmlets increased milk production per cow and per hectare. The additional milk production responses to additional feed (whether by pasture or supplement) were between 0.8 and 1.2 kg milk per kg of DM offered and the additional response differences between feeds were due to feed energy content differences. The additional milk production response to additional feed was quadratic, with the greatest milk production generated from the initial investment in feed (whether pasture or supplement). The economic modelling showed that the additional cost for the milk produced from the pasture resulting from applied N fertilizer, was less than the additional milk income; therefore, the use of N fertilizer to increase pasture grown increased farm operating profit per hectare. In comparison, the operating profit declined with concentrate supplement, despite high additional milk production responses.

The results have uncertain implications for the strategic direction dairy farmers on pasture-based systems take, particularly in situations when the prices of milk and feed inputs are subject to considerable volatility. Where volatility is less, the outcomes of decisions simulated in this experiment may be more certain.