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Home > Promotions > Excellence > Dairy
New Zealand is the world's largest producer of internationally-traded dairy products. Some other countries have larger national herds, but produce mostly for domestic consumption. In New Zealand 95% of milk is made into products such as milk powders, butter, cheese and casein and exported to 140 countries. More than 13 billion litres of milk are produced annually on New Zealand's 13,500 dairy farms, containing 1.1 billion kilograms of milk solids (protein and fat). Total export production is around 1.5 million tonnes, including 600,000 tonnes of milk powders, and 250,000 tonnes each of butter and cheese. The export production comes from 3.5 million cows, in an average herd size of 250 cows, which are producing on average 3,700 litres in a milking season of up to 300 days, containing 315kgs of milksolids (about 180kgs of milkfat and 135kgs of protein). While this per cow productivity may seem low to dairy farmers in North America and Europe, the New Zealand cow is almost exclusively fed on pasture and on conserved feed such as silage made from surplus pasture in the spring months. Few New Zealand dairy farmers use grain-based supplements, which introduce a higher cost structure into dairying. They keep the feed input costs as low as possible, measuring the volume and feed value of pasture in detail, and using contractors wherever possible, to cut, carry and store conserved fodder. Only 10% of the world's dairy cows have pasture grazing as the major component of their total food intake. These cows are found in New Zealand, Australia, parts of South America and South Africa. In some districts of the United States and Great Britain there has been a swing back to out-of-doors, all-year-round grazing systems based on the New Zealand model as a reaction against the high-cost, machinery-intensive indoor housing and feeding systems, which use hays, cereal grains, horticultural and arable by-products. One kilogram of milk production requires the consumption of one kilogram of dry matter by the cow. Therefore the feasibility of any feeding system is influenced by the cost of the feeds relative to the farmgate return for milk. In England, a kilogram of grain might cost 12p, while the farmer receives 22p per kilogram of milk; in New Zealand the price of suitable feed grain is 30c per kg or more, while the farm receives only 30c per kg of milk, i.e. grain feeding is not economic. New Zealand's 3.5 million dairy cows make up only 1.5% of the world's total population of dairy cows, and 12 million tonnes of milk produced annually is only 2% of the world's milk production. However, the majority of the milk produced in the world is consumed in the country where it is produced, with the farmers being paid the domestic market price, which may be considerably higher than the world market price for that milk, when made into dairy products, especially if tariffs are used to protect the domestic market. In European countries, USA, Canada and Japan, farmgate milk returns are strongly influenced by the demand for fresh milk and dairy products from large local populations, plus the subsidisation of farming by governments to maintain smaller herd sizes and farms and keep rural people and services in place. In the United States the average dairy herd size is 100 cows and in Europe it is only 25 cows. New Zealand has an average herd size of 250 cows, which has grown quickly from 150 cows in the late 1970s, and these are farmed on 100ha (250 acres) at an average stock rate of one cow to the acre. The farms require two full-time labour units, but these may be made up with part-time workers. In New Zealand the main measurement of production tends to be milk solids per hectare (or acre), not per cow, because the hectare represents the main source of feed and the main capital investment. Top ^ New Zealand dairy farmers receive between $3.50 and $5.00 per kilogram of milksolids (24c to 40c per litre) produced for export and sold through Fonterra Co-operative Group. The reason for the wide variation is the lack of price supports, subsidies or incentives, which means that dairy farmers receive the "world price" for dairy products, often the commodity price for milk powder or butter. Those world market prices are heavily influenced by the need of the European Union or the United States to dispose of surplus dairy commodities purchased under government market intervention programmes and sold to Eastern Europe, the Middle East, Africa and Asia. New Zealand dairy farmers, organised to compete on world markets through their giant co-operative Fonterra, only survive in business by ensuring that all dairy products are sold and that the whole New Zealand industry has the lowest cost of production in the developed world. An average cow must eat about 4,000kgs of dry matter (DM) to produce 300kgs-plus annually of milksolids, which is worth to the farmer between $1,050 and $1,500 annually, plus the value of the calf born. Gross milk value is therefore about 26c to 37c a kilogram DM and the cow's feed must cost, on average, much less than this to enable a profit to be made after all other costs are paid. "Milk Production from Pasture" says the approximate costs of some feeds are:
Grazed pasture is much cheaper than any other feed of similar high quality. Feeding grains and concentrates will in New Zealand often not be profitable based on the milk and fodder cost structure. Dairying land is also bought and sold with valuations related to its productivity in terms of milksolids produced per hectare. When milksolids are providing a gross farmgate return of $4/kg, fully developed dairy land, including fences, roads, buildings and water rights, may be valued at $20 per kilogram, or in other words five years of gross revenue. For a 100ha (250 acre) farm running 250 cows and producing 800kg milksolids per hectare, the farm value could be $2 million. Annual profitability depends on the underlying cost structure; ownership of cows, genetics, milk yields, animal health expenses, wages and seasonal weather conditions. Farm costs usually account for 65-70% of total farm income, leaving 30-35% as cash surplus, from which must be paid tax, interest, and capital depreciation, wages of management and living expenses. Return on $1.5 million of capital employed on a farm may be say 5% p.a., plus any capital value appreciation during ownership. Return on capital can be much higher, perhaps three times greater, for sharemilkers who contribute cows, labour and possibly machinery to a seasonal partnership with the dairy farm owner. This allows the owner to "retire" from milking cows and concentrate on capital improvements, fertiliser programmes and off-farm investments. The gross revenue from milksolids is often split 50:50 and the sharemilker also keeps the proceeds from all calves born in the herd, which is owned by the non-landholding partner. Top ^ SEASONAL DAIRY PRODUCTION FROM PASTURE Although New Zealand dairy cows and heifers are kept outside all year round, avoiding the need for housing and extra labour in feeding and mucking out, the pattern of milk production is seasonal and the lactation length is generally short (240 to 300 days). Cows harvest their own feed and spread most of their own dung and urine. However, feed demand must be synchronised with pasture growth and farm systems are very much dependent on good weather to promote fast pasture growth and peak milk flows. Milk yields from a herd can vary between years, and the scope to use supplementary feeding such as silage and hay is limited by cost. Farmers may dry off their cows early because of pasture shortages in autumn (fall). Milk collected and processed by the dairy companies rises steeply in the early spring (August-September) and the volume is maintained throughout the summer and early autumn months (October to April). Milk composition can vary because of pasture quality and as the season draws on, the proportions of fat and protein both increase relative to milk volume. Cows must become pregnant during a short period from October to December, in order to calve in July to September the following year, depending on region and climate. Some 80% of all New Zealand dairy cows are artificially inseminated (AI) with fresh semen supplied by genetics companies such as Livestock Improvement and Ambreed. AI technicians travel in dairy farming districts during the mating season and are supplied with fresh semen collected from high genetic merit bulls kept at artifical breeding (AB) stations. When cows give birth their calves are allowed to suckle for two days to obtain the colostrum milk packed with disease antibodies, and then removed from the cows and either sent to slaughter (for veal) or reared on collected milk, reconstituted milk powder and/or dry feeds in nurseries and calf paddocks until weaning, when the rumen is developed to derive all feed value from pasture. The cows themselves are then milked twice a day, morning and evening, through spring, summer and early autumn. They are then dried off before winter, so that their dry (non-lactating) period occurs during the winter period of the year with the slowest pasture growth. New Zealand cows are often fed with silage during the winter months to maintain their body condition during pregnancy and to ensure that they enter the lactation in the best possible condition to produce milk and get back in calf again. However, this silage or hay, made during a period of surplus pasture growth the previous spring, does not amount to more than 10% of total feed intake on an annual basis. Top ^ Because cows must be milked twice a day for most of the lactation, milking is a major factor in the work routine on all dairy farms. Cows must also walk anything up to 2kms to 3kms from paddocks to dairy parlour and return, and the interval between milkings is 10 to 14 hours. Grazing time can be reduced by walking time and darkness. New Zealand dairy farms now have staffing levels equivalent to 100 to 200 cows milked per person, according to the time spent milking and the design of the dairy parlour. The most efficient designs are now rotary machines on large revolving platforms which can accommodate 60 or more cows at one time, with automatic positioning and exit of cows. The New Zealand dairy industry has put a great deal of time and effort into designing effective farm layouts and dairy parlours to minimise the worker effort required. Laboursaving devices such as automatic gate openers, in-line milk metering and sampling, teat washing and cup removers have been developed and are available from New Zealand exporters. Farm plans and yard designs have also been refined to include automatic backing gates (to advance the cows into the parlour) and wash-downs. Design and monitoring of dairy effluent disposal systems is also highly developed, along with irrigation methods, cow heat detection, mastitis detection, bloat control, oral drenching and cow rescue methods when they go down. New Zealand also leads the way in milk cooling, storage methods on farm, collection by road tankers every one or two days, and rapid testing for bacteria and other contaminants and feeding those results back to the farmer. Up to 5 million litres a day are received by the big dairy processing plants around New Zealand during the peak season, to be made into dairy products for export. Unsatisfactory test results on a milk vat at collection will result in a quick stand down of that farm until the problem is rectified. Top ^ Growing pastures must be managed, and the access by cows controlled, to ensure that sufficient high-quality feed is presented for the cows to graze but that it does not go to waste, either through trampling or being left behind when the cows are moved. Nor must grasses be allowed to go quickly into a reproductive state, because the feed value for cows is less. In New Zealand this is often controlled by topping, using a rotary mower towed behind a tractor. New Zealand ryegrass-dominant swards contain between 15-20% dry matter, and between 10-11 megajoules of metabolisable energy per kilogram of DM, depending on the time of the season and the condition of the pasture. When quick stimulation of grass growth is required, nitrogenous fertilisers and irrigation water are applied. This can get the cows through a pinch feed period, either during cold weather or drought. During the peak spring growing season, when warm soil and air temperatures are combined with regular falls of rain, New Zealand ryegrass and white clover pastures will grow faster than the farm stocking rate of cows will utilise. Paddocks will be shut for several weeks to let pasture covers build until mechanical harvesting begins the ensilage programme. Conserved fodder can be kept one or two years and fed out during the winter or drought pinch periods. On New Zealand dairy farms, paddocks are usually between 3 and 6 hectares (7.5 to 15 acres) in size, so as to allow intensive grazing for a period between milkings for the full herd of 250-300 cows. Paddocks or part-paddocks are fed in rotation, with fresh pastures after each milking. Rotational grazing utilises the available pastures more efficiently, disperses the dung and urine more evenly, discourages selective grazing of the most palatable plants and enable pastures to be rested between grazing to build up cover. Dairy farmers put their cows into paddocks carrying around 2,700 kgDM/ha and graze that down to 1,700 kg before moving off. They make calculations of the daily feed requirement (about 17 kgDM/cow in lactation) times the number of cows in the herd, divided into the intended pasture for consumption (1,000 kgDM/ha) to find out how many cows that paddock will support and when they must be moved. The estimation of pastures is assisted with plate meters, which provide a semimechanical reading of the grass cover and the dry matter content. Farmers will also split up larger paddocks for controlled grazing, and "strip graze" or "break feed" larger areas of forage plants and green feed crops, particularly in the winter, by using temporary power fences, often called hot wires. New Zealand invented the power energizer for delivering high voltages over long distances of wire or conducting polytape, and the auxiliary products needed. Energizers are mains electricity, solar or batteries powered, and are classified according to their joules of stored energy. The high voltages delivered give animals a short, sharp, non-harmful shock to prevent them from going further. Electric fences can often be made permanent, with insulating timber posts and insulators to attach two or three wires, instead of the seven or eight (often including barbed wire) wires of the traditional permanent fences. The rotation measured in days taken to get around all available paddocks on the farm is shortened or lengthened according to the rate of regrowth of pasture. In winter cows can be taken off paddocks to prevent damage to pastures and soil structure, called pugging, and fed supplements on hard surfaces, called feed pads. Dairy farmers also send their herd, and often their replacement heifers, away to winter grazing while they are not lactating, to allow the pasture covers to build on the home farm ready for calving and the start of the milking season. Top ^ |
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