Opportunities for New Zealand dairying. Dr Andrew West,

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1 Opportunities for New Zealand dairying Dr Andrew West,

2 Dairying is New Zealand s most important industry...it is scientifically based and demands a high level of skill. NZ needs it to improve productivity at over 3% annually. How can you do that?

3 How well are you doing now? Statistic Value Comment N o of herds 11,700 Falling N o of cows Effective hectares farmed 4.4 million Rising Average ha/ farm 134 Rising 1.6 million Up 60% from 1990; sheep industry shrank Average cows/ha 2.8 Up 20% since 1990 this is a key gain Average milk solids kg/ha 910 Up 40% since 1992 driven by cows/ha and milk solids/cow Ratio kg milk fat to kg milk protein 0.76 No change since 1992; this industry is focused on volume Average litres/ cow 3,600 Static since 2003 less milk, more solids Average milk solids kg/cow 320 Up 23% since 1992 this is the other key gain; impressive

4 So, what does this tell us? 1 Dairying is on the rise and don t we know it! 2 On farm productivity gain is largely at the per cow level, driven by: (a) stocking rate (b) milk solids (c) technology replacing labour (data not presented here) 3 The focus is on volume and input efficiency, not differentiation 4 The pricing signal to boost the milk protein fraction is not working

5 If you had a single card to play to raise productivity in New Zealand, what would it be? More irrigation? More public servants in Wellington? A miraculous victory by The Chiefs over The Crusaders? Or Better nutrition of livestock? And the opportunity is.

6 Better nutrition of livestock! (But don t rely on breaking the line..)

7 Ruminant nutrition is where it s at! The Gap in productivity Average Milk Soilds per Cow Average BW (Potential Production) New Zealand s single greatest opportunity for productivity gain ruminant nutrition A New Zealand cow s genetic worth has long outstripped the capacity to exploit it; we can more than double her production of milk, often economically

8 Volume of milk And what are we trying to do with dairy nutrition? In part, this... Increase the rate of early lactation Maintain the volume of lactation and the days in milk The annual lactation curve Course of the year

9 There are four great genetic engines on a pastoral farm The ruminant The forages The rumen microbes The soil microbes

10 You farm ruminants. So, what are they and how do they work?

11 A ruminant; an even-toed ungulate (hoofed, herbivorous, quadraped, placental) mammal that chews cud regurgitated from its rumen...cattle, sheep, deer etc Ruminants evolved to efficiently digest high-fibre plant material with the aid of the rumen The rumen; the first stomach of a ruminant, which receives food or cud from the esophagus and that is digested in part with the aid of micro-organisms

12 The rumen is one great fermentation vat...

13 The deal is.. The ruminant provides microbes with one of the most oxygen deprived (anaerobic) environments in Nature; they like that. Young grass contains 40% cellulose + hemicellulose; structural carbohydrates that are not affected by the digestive enzymes secreted by mammals; that s why we can t eat grass. But they are digested to at least 50% and possibly to as much as 80% by rumen micro-organisms. Products of this digestion from micro-organisms provide 80% of the energy needed by a cow or a sheep. The ruminant animal belches out the carbon dioxide and methane gases produced in this anaerobic fermentation

14 So, you pretty much feed THESE.. Not THESE..

15 Microbial enzymes And the biochemistry is.. Starch Sugars Proteins Absorbed by microbes Volatile fatty acids

16 It happens here.. A four-chambered stomach (rumen, reticulum, omasum and abomasum) allows the ruminant to process plant material into energy and nutrients that eventually produce milk and meat Fermentation occurs in the first chamber, the rumen; here microbes break down plant material into volatile fatty acids that the ruminant Subsequently digests. In a manner, plants feed the micro-organisms that feed the ruminant. Rumination (chewing the cud) is the process where forage and other feedstuffs are forced back to the mouth for further chewing and mixing with saliva. This cud is then swallowed again and the solid portion moves into the rumen for fermentation

17 The rumen the second-most complex microbial environment on the planet? One drop of rumen fluid ( 1 / 20 ml) contains almost ten times as many microbes as there are people on Earth (50 billion vs 7 billion)! A cow s rumen is c.100 litres and if only 50 litres of that is fluid, that means there are fifty quadrillion microbes seething away in there. If this was one bug (see it?)... Here s one trillion Here s one quadrillion

18 Of these 50 quadrillion about... 55% are bacteria 40% are protozoa They are big in the world of microbes; Protozoan Fungus Bacteria Digest structural & non-structural CHOs and proteins Digest bacteria, starch, sugars and proteins Up to 5% are fungi <3% are archaea A residue are viruses Hydrolyse lignin to structural CHOs Troublesome critters scavenge H and produce CH 4 Bacterial terminators

19 So, turning to the feeding of calves & cows...

20 Definition of dairying feed systems Dairy NZ economic survey Production system Definition % feed importe d % of owner operators 1 All grass. No cows grazing off milking area Dry cow feed purchased. Grazing off milking area Extended lactation in autumn & for dry cows Both ends of lactation & for dry cows Feeding all year round >30 <5 Messages There is no single dairy farming system in New Zealand. However, all systems rely on grazed pastures and the majority of owner-operators import over 10% of their feed

21 Grass and clover are always going to be big, but maybe not as big as you d think

22 What are supplementary feeds then? Not these, but if you grow them on your own land, perhaps not these either... But largely some of these...soy, cotton, canola, palm, rice, barley etc Plus many vitamins, minerals and probiotics, plus blocks and liquid feeds (refer later slides)

23 In the form of: Cow and calf pellets Blended loose feeds & silages Calf museli

24 Kg DM / Hectare Daily Systems 1 and 2 grass based days in milk Daily pasture growth rate Daily herd feed requirement Aug Oct Dec Feb Apr Jun

25 Kg DM / Hectare Daily System 3 Imported feed to fill autumn feed deficit days in milk Daily pasture growth rate Daily herd feed requirement Aug Oct Dec Feb Apr Jun

26 Kg DM / Hectare Daily System 4 Imported feeds at both ends of lactation lifts demand days in milk Daily pasture growth rate Daily herd feed requirement Aug Oct Dec Feb Apr Jun

27 Kg DM / Hectare Daily System 5 feed throughout season (peak yield x 200 = lactation yield) days in milk Daily pasture growth rate Daily herd feed requirement Aug Oct Dec Feb Apr Jun

28 Comparison of feeding systems Dairy NZ data; economic survey Factor 1; grass 2; 4-14% 3; 10-20% 4&5; >20% 4/5 vs 1 Peak cows milked % MS kg/cow % Cows/ha % MS kg/ha , % MS kg/ FTE 45k 45k 49k 60k +33% $ operating profit/ha 1,600 1,600 2,000 2, % ROA 5.6% 3.6% 4.2% 7% *1.3 ROE 5.2% 1.3% 1.8% 7.2% *1.4 Growth in equity 7.4% 3.4% 3.2% 9.6% *1.3 Debt to asset 39% 43% 48% 54% *1.4 Messages - Production systems 4 & 5 are the highest performing and most profitable They also sustain (or suffer) more debt They are also more flexible and arguably more adaptable to climate

29 Square the curve helps more than just farmers Gives greater efficiency for this... and this and this

30 So match nutrition with the cow s lifecycle Today we focus on calves and cows Opportunity exists to provide integrated, intergenerational feeding of dairy animals matched to epigenetic 1 requirements ( 1 gene-environment interaction)

31 But wait, there s more! But what about heifers and bulls?

32 We need to manage cows intergenerationally, and comprehensively Generations of cows Whole of lifecycle philosophy 1 Genomics, epigenomics and nutrition 2 Physiology, health and welfare

33 Put the ruminant at the centre of a farm system BCS is the target not the residue

34 So the equation is rudimentary; feed em well Happier cows More milk/ cow More profit Happier farmer

35 And the benefits extend a long way Better cow health Better cow fertility Better cow welfare which means Lower vet bills Empty rates <6%, not 15-20% More productive livestock

36 Growing trade off with: o recreational lifestyles o other industries, esp aquaculture & tourism But it is not just about more milk; there are rising environmental concerns over pastoral farming: Nutrient inefficiency inherent in: o some plant nutrition products, o many of their applications and o parts of the pastoral cycle Domestic urban population now demanding: o substantially higher environmental standards o internalising what were externalised costs

37 And those concerns extend beyond just nutrients into: Impacts on human safety through faecal coliform pollution Long-term damage to soil health through compaction or erosion Global warming and incipient C and N pollution Volumes of freshwater consumed And welfare

38 There are four great genetic engines on a pastoral farm The ruminant The forages The rumen microbes The soil microbes

39 The most complex micobial environment on the planet (?) lies here in the soil In one gram there are >billion bacteria Up to billion fungi 15 kms of fungal hyphae 100,000 micro algae 100,000 protozoa <100 nematodes

40 So, if the cow is the centre of attention, and within her the rumen microbes, then Neither should we neglect the soil It is where most all of our food starts: don t compact it care for the soil microbes keep the ph up let the microbes feed the plants fertilisers = plant nutrition

41 The combination of better nutrition with the partial housing of animals offers much for rumen and soil microbes Importing feed onto a farm = importing virtual fertilisers This increases the nutrient loading and places pressure on effluent management Capture and spreading of manure and urine improves: soil carbon, N & P plus waterholding capacity, and avoids compaction some farms with 20% complementary feeding and partial housing, stocking rate >3 can reduce fertiliser applications significantly (bit light on N&S) if camping of stock is avoided

42 Evidenced by good farmers We increased feed utilisation (and provided) shelter... lameness fell from 45 cows to just 12. The empty rate fell from 7% to 3.5% Grant Wills, Fonterra Shareholders Council

43 So why don t more farmers choose to feed supplements or use partial housing???? A focus on lowest cost Profit It s a way of thinking, an embedded culture Underpinned by the concern of a <$4.50 payout Current farming paradigm is cost driven New paradigm will be profit driven - eventually

44 Dairy farming limits its own potential; Comes down to skills and risks Yes, Fonterra needs the lowest marginal cost of production BUT, that does not imply the lowest on-farm cost of production Focusing on quality can lower the unit cost of production for the farmer Yet cost minimisation on farm has meant less milk produced than otherwise at times of the year and at protein-fat ratios less attractive to Fonterra Fonterra itself focuses on value not cost; that is why it runs Scania tankers at, say, $700,000 each rather than Japanese tankers at maybe half the price

45 So in summary, I think dairying should & will change to a Focus on profit With the animal and its health and well being the heart of it all With superior management of the rumen and its microbes With superior management of soils and their microbes By using: 1 better nutrition & 2 partial housing