New Zealand farmers are not alone in facing the challenge of striving for value while mitigating their environmental footprint. Senior reporter Richard Rennie is in Australia to find out how our neighbours are approaching the issues of gene technology, carbon farming and sustainability.
By 2030 more than a third of Australia’s cows will be housed indoors as the sector responds to the ever-pressing impacts of climate change.
“We estimate at present 20% of Australian milk production comes from these [indoor] systems. Estimates are that by 2030 that may be nudging 35-40%,” said Dr John Penry, Dairy Australia’s principal scientist.
Work by Dairy Australia has found the impact of climate change over the past decade and going forward amounts to a negative .4% to .6% a year.
“That is a pretty scary number and as a headwind it is already affecting us, while farmers are now having to think of ways they can adapt their farm systems to climate change.”
A sector response has been to adopt more containment-style milking operations in one of three forms, which include the standard United States-style system.
The ability to use the contained systems to control the negative impacts of a warming climate are a key driver, keeping animals cooler in summer.
“Where it is really being driven is in places where irrigation water pricing has been more volatile, and where issues are experienced over the ability to grow perennial ryegrasses in hotter conditions,” Penry said.
Some properties are now experiencing pasture runout only five years after planting because of heat’s effect on ryegrass, and inconsistent rainfall patterns.
“For example, this February most of Victoria only had 5mm of rainfall.”
Amid sliding cow numbers, depleted export volumes and overall lower production, the Australian dairy sector is also repositioning itself in an environment where competition for domestic milk supply has intensified. The amount exported has declined to an all-time low of about 30% of total production.
Penry said when he started his career in the early ’90s the sector boasted 14,000 farmers. Today that has dropped to 4100.
Farm consolidation took care of a portion of the reduction early on. But in the past two years the sector has lost almost a million cows to total 1.5 million, with production dropping from 11.6 million tonnes of milk to 8.5 million tonnes.
The change is also being driven by the impact that climate change is having on farm systems themselves.
Dairy Australia, a levy-funded organisation like DairyNZ, has spent the past five years building resources to help farmers determine what containment system is best for their location and goals.
“It’s important to get it right. The costs to build the infrastructure for such systems are $A2500 [just under $2700] to $A4000 a cow.”
The changes are being made largely by family farm operators, who also see the shift as an opportunity to, in many cases, double the operation’s size.
“It is all about how do you de-risk a dairy operation around a more volatile climate, and also achieve better water use efficiency? It also helps reduce milk price risk – if you can have a flat supply curve over 12 months, supply is more reliable and there’s less seasonality.”
He said the economics of conversions indicate that profit-wise there is an upside in the conversion option.
The larger farms do require more labour, recently a major issue for Australian dairy farmers and one that prompted many to exit to beef.
But government initiatives to get more migrant workers on farms have proven successful, and as in NZ, Filipino workers are now common among staff members.
Australia’s eastern states face a significant “milk border” with two-thirds of its dairy based in Victoria, requiring transport to the majority market in Sydney and northwards.
Conversion to containment systems may provide an opportunity to base herds closer to those population centres that need raw milk supply.
Meantime for those farmers wanting to convert, the time has never looked better financially.
Due to the tighter milk supply, dairy farmers’ milk is in hot demand, and returns are isolated from lacklustre global values with them being paid the equivalent of A$9-A$10 per kg.
“They are operating well and truly above their net farm operating target of A$1.50.kg milk solids.”
