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Discipline: economics; Key words: dairy, grassland, farm systems, milk production, economics
As land becomes limiting for pasture-based dairy farming, the inclusion of purchased supplementary feeds to increase milk production per cow (increased dry matter intake) and per hectare (increased stocking rate) is often proposed as a strategy to increase profitability. Although a plausible proposition, there is very little published on the effect of such a strategy on the profitability of pasture-based dairy farm businesses. The objective of an investigation by Dr G. Ramsbottom and co-workers therefore was to study the biological and financial performance of dairy systems differing in the proportion of the cow’s diet coming from grazed pasture versus purchased supplementary feeds over four years. The results of the study were published in the Journal of Dairy Science, Volume 98 of 2015, pages 3526 to 3540, with the title: Factors associated with the financial performance of spring-calving, pasture-based dairy farms
Biological and financial performance data from 1561 seasonal-calving, pasture-based dairy farms in Ireland between the years 2008 and 2011 were used in analysis. The data set was divided into geographic regions, based on latitude, rainfall and soil characteristics that relate to drainage; these factors influence the length of the pasture growth season and the timing of turn-out to pasture in spring and re-housing in autumn. Farms were also categorized by the quantity of feed purchased: farms in which cows received less than 10, 11–20, 21–30, or more than 30% of their annual feed requirements from purchased feed were considered to be categories of increasing levels of system intensification.
Geographic region was associated with differences in grazing days, pasture harvested per hectare, milk production per cow and per hectare and farm profitability. Farms in regions with longer grazing seasons harvested a greater amount of pasture [an additional 19 kg of dry matter (DM) per hectare per grazing day per hectare] and greater pasture harvested resulted in increased milk component yield per hectare (58.4 kg of fat and 51.4 kg of protein more per tonne of DM pasture harvested per hectare) as well as net profit per hectare (€268 per hectare more per tonne of DM harvested). Milk yield and yield of milk components per cow and per hectare increased linearly with increased use of purchased feed (additional 30.6 kg of milk fat and 26.7 kg of milk protein per tonne of DM purchased feed per hectare), but, on average, pasture harvested per hectare and net profit per hectare declined (−0.60 tonne of DM per hectare and −€78.2 per hectare, respectively) with every tonne of DM supplementary feed purchased per hectare. The results indicate an effect of purchased feeds not usually accounted for in marginal economic analyses (e.g. milk to feed price ratio): the decline in pasture harvested per hectare, with the costs of producing the unutilized pasture in addition to the cost of feed resulted in lower profit.
In conclusion, greater milk component yields per cow resulted in increased profit per hectare and increased use of purchased feeds resulted in an increase in the yield of milk components. However, on average, increasing yield of milk components through the supply of purchased feeds resulted in a decline in pasture harvested per hectare and profitability. The decline in pasture harvested per hectare with increased use of purchased supplements per cow is probably the primary reason for the low milk production response and the failure to capitalize on the potential benefits of purchased supplements. The associated costs of growing the unutilized pasture, in conjunction with increased non-feed variable and fixed costs outweighed the increased milk production and revenue from supplementation. Farmers considering intensification through use of purchased supplements to increase the stocking rate/carrying capacity of the farm must ensure that they focus on management of pasture and total cost control to reap the potential benefits of supplementary feed use.