Key performance indicators for grazing in New Zealand

Published 20 November 15

At a series of LIC technical workshops, held across the country last week, New Zealand-based consultant Paul Bird talked about developments on dairy farms in his country, as well as key performance indicators for grazing, many of which are also applicable in the UK.

Dairy farmers in New Zealand have seen a huge range in milk price over the past few years. The $/kg MS is estimated to be about 4.60 ($4/kg MS equates to about 15ppl, at 8.5% fat and protein) for the 2015/16 season, and, with the average break even milk price point around $6, pressures are building up on farm.

The industry in NZ has seen similar trends to those in the UK. Herd numbers have fallen (from just below 16,000 in 2004/05 to just below 12,000 in 2013/14), while average herd size has risen dramatically (standing at nearly 420). Yearly production per cow has also risen from an average of about 260kg MS/cow in 1992/93 to about 370kg MS/cow in 2013/14.

While costs such as labour, fertiliser, and animal health and breeding, have remained relatively stable, feed costs have risen from an average of 0.80 $/kg MS in 2004/05 to around 1.60 $/kg MS in 2013/14 season. Maintenance and running costs have also risen, to about 0.40 $/kg MS, probably reflecting the extra costs associated with the higher feed costs.

One of the key trends involved in this shift is the introduction and increasing adoption of palm kernel extract (PKE) in the diet of the New Zealand dairy cow. Over two million tonnes of it, a by-product of the palm oil industry in South East Asia, is now fed to dairy cows. The main attraction of PKE is the low cost per MJ of ME and, in fact, it has been used successfully to build autumn grass cover or bridge gaps at times of real grass shortfall. But, increasingly, it is being fed throughout the season, having a marked effect on grazing management.

New Zealand dairy farms have, as a rule, seen an intensification of system. In 2000/01, 70% of farms were classified as low input (self-contained or imported feed for dry cows – imported feed includes silage or crop made from a support block), 17% medium (imported feed to extend lactation, up to 500kg DM/cow) and 13% high input (using purchased feed all year). By 2013/14, the percentages moved to 30, 41 and 29%, respectively. While feeding levels are not comparable to those in the UK, the figures demonstrate a trend towards intensification on New Zealand dairy farms.  

A comparison of operating profit/ha and farm system shows that, although it is at about $8kg/MS, the high-intensity systems pay. The range of profitability across both high and low input systems is huge. The message to New Zealand dairy farmers has increasingly become, whatever system you are operating, concentrate on moving up that profitability range.

Physical analysis has shown that there are a few key indicators that these top farms, on any system are demonstrating;

  • They are growing two tonnes dry matter/ha more grass than those at the bottom of the range.
  • They are utilising this grass well
  • Their reproduction figures are good, with a six week in calf figure of 78%, and a 90% submission rate in the first three weeks of mating.

While it would seem to make sense to switch between systems when conditions and milk price allow, in reality it is very hard to take feed out, when a system and work force have been geared towards it.

Paul Bird’s personal challenge to farmers is to shift back towards the low to medium input production systems. Based on operating profit/ha, he believes a higher input system will only give significantly higher profits in years when the milk pay out exceeds $7/kg MS. Realistically, this will occur relatively infrequently compared with years below $7.

In New Zealand, as in the UK, it is crucial to get back on top of the grazing management that has suffered as a result of the inclusion of supplementary feed, in order to have a system robust enough to cope with large price fluctuations.

Evidence from New Zealand shows that over 50% of all grazing decisions are wrong. Each paddock will only be grazed on average ten times per season, so it works out as a large percentage of feed presented to the cow. Every single grazing needs to be as good as it can be. It is the grazing perfectionists that are at the top of the range of profitability. For them, it is not an option to let cows move on until residuals are perfect.

Stocking rate needs to be set in order not to need supplement in spring, when it’s very hard to make money that way. Balancing the correct covers is a great starting point to get grazing management right. Post-grazing covers needs to be 1,500kg DM/ha with no dead matter in the base (in good weather). Pre-grazing covers need to be at 2,500-3,000kg DM/ha, again with no dead matter in the base. You need the quality feed this will help grow in order to get cows back into calf. Graze to a low average farm cover (AFC) at magic day (1,800 – 1,900kgDM/ha) and the quality will take off, setting you up for mating.

The time spent on strategic planning for your business is crucial. Know the key performance indicators (PKI) for your business and how to perform above the average. Crucially, make sure you communicate all the targets, and how you’re going to get there, to your team on farm.

A Tasmanian research project looking at a return on skills has shown that it is pasture management and business management that have the best return on capital. Be good at both of these and you will really shine.