Target hits Lincoln University's farm profitability
Some difficult and possibly costly decisions are coming up fast for managers of the Lincoln University Dairy Farm as they navigate around a self-imposed nitrogen target.
The options they take could help provide a blueprint for dairy farmers running a profitable and environmentally sound business in the future.
Milk production is running close to last season's levels and whether this can be continued while maintaining a nitrogen target and restricting losses into water will depend on the decisions made by the farm's managers. The options were explained to 280 farmers at a focus day on the farm yesterday.
South Island Dairying Development Centre executive director Ron Pellow said some big challenges and "bold decisions" lay ahead of the farm for the rest of the season as its managers worked out how best to work with the nitrogen target as defined in Environment Canterbury's Land and Water Plan.
"The high interest now is how we address the remainder of the season given we have some challenges around the total nitrogen loss we want to farm with."
The farm's target takes into account all nitrogen contributors in the grazed pasture system such as the amount of fertiliser put on pastures to grow grass, outside silage, nitrogen fixing clover and stocking rates contributing cow urine.
Pellow said the managers wanted to farm within the target while maintaining maximum profitability, cow health and business viability.
The direction the farm took would give farmers some idea of the implications of working with nitrogen loss targets for their businesses and working within limits set by the Land and Water Plan, he said.
The plan was notified last month and requires farmers to operate within nitrogen losses from 2009-13. This is a holding pattern until zone committees set wider targets for local catchments.
The decisions of the Lincoln farm managers are likely to revolve around how they manage feeding cows extra silage, the stocking rate and setting a drying off date for the herd which all have a bearing on the farm's nitrogen loss, environmental footprint and business profitability.
The temptation during a high payout year is to give cows more supplementary feed to produce more milk and lift income, but this option would contribute to more nitrogen entering the farm.
An extra challenge is that the farm is unable to use the nitrification inhibitor, Eco-n, which is off the market after traces of an ingredient were found in processed milk.
Lincoln farm managers voluntarily took the step a year ago of using less nitrogen fertiliser and maximising the naturally fertile soils of the irrigated farm and good sunshine levels. However, pasture growth is down and more grass silage has been fed to cows.
Pellow said the farm could run over the nutrient baseline if it brought in more outside supplementary feed.
"We are about to evaluate how we best mix the options of when we dry off the cows, how much feed should be brought in and the stocking rate. We can either run all cows to the end of the season or start [drying some cows] from now on and that has a significant impact on milk production and nitrogen loss."
Capping milk production could cost the farm $200,000 in lost revenue during a high payout year of about $8 a kilogram of milksolids as experienced this season.
Pellow said the financial loss could be $50,000 in a payout year of about $6kg, but higher costs would remain and that could put the viability of some farm businesses in question unless consistently higher prices could be found for milk products in the marketplace.
He said farm managers would have more answers at the next focus day in May.