Low-Cost Dairy Production: What Really Drives Profit? | Paul Bird, DairyNZ
Positive Farmers
3,374 views
What really separates the most profitable pasture-based dairy farms from the rest?
In this Positive Farmers Conference 2024 session, Paul Bird of DairyNZ examines the key components of low-cost dairy production and the management decisions that have the greatest influence on farm profitability.
Drawing on New Zealand DairyBase data and international comparisons, Paul looks beyond milk output alone to examine the relationship between pasture utilisation, operating costs, supplementary feed, stocking rate, financial management and return on assets.
The analysis shows a striking difference between the top 25% of farms and the remaining 75%. The higher-performing group generated greater operating profit per hectare and a substantially higher operating return on assets, while maintaining lower operating expenses per kg of milksolids.
A central theme is getting more value from pasture. The data presented indicates an additional NZ$350 of operating profit per hectare for every extra tonne of pasture and crop eaten, with the value varying according to milk price.
Paul also challenges the assumption that increasing supplementary feed automatically increases profit. His presentation shows that additional supplement expenditure brings other costs with it, and argues that extra inputs should increase profit rather than simply increase production or break even.
The session explores the importance of:
• Maximising pasture and crop eaten per hectare
• Matching stocking rate to the feed available
• Optimising grazing management
• Keeping the farm system simple and manageable
• Controlling operating expenses
• Questioning whether additional inputs genuinely add profit
• Budgeting and monitoring monthly cash performance
• Benchmarking farm performance
• Long-term financial and equity planning
• Considering return on assets when investing in land
Paul illustrates how stocking rate can be calculated from pasture grown, supplementary feed and cow liveweight, and highlights research showing the importance of combining an appropriate stocking rate with rotational grazing.
Financial discipline is another important part of the presentation. Paul encourages farmers to scrutinise both farm and personal costs, be discerning about products and services that claim to “add value”, understand all 12 monthly cash results rather than simply the annual outcome, and periodically use zero-based budgeting.
The presentation finishes by looking at farm business value and return on assets, demonstrating why the price paid for land can have such a significant influence on the return ultimately achieved.
The underlying question for farmers:
Are the extra inputs, costs and complexity in your farming system actually delivering additional profit?
Paul Bird | DairyNZ
Positive Farmers Conference 2024
🌱 Positive Farmers
Practical ideas, evidence and farmer experience to help farmers question, learn and make better decisions for their own businesses.
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Low-Cost Dairy Production: What Really Drives Profit? | Paul Bird, DairyNZ
Positive Farmers
3,374 views
What really separates the most profitable pasture-based dairy farms from the rest?
In this Positive Farmers Conference 2024 session, Paul Bird of DairyNZ examines the key components of low-cost dairy production and the management decisions that have the greatest influence on farm profitability.
Drawing on New Zealand DairyBase data and international comparisons, Paul looks beyond milk output alone to examine the relationship between pasture utilisation, operating costs, supplementary feed, stocking rate, financial management and return on assets.
The analysis shows a striking difference between the top 25% of farms and the remaining 75%. The higher-performing group generated greater operating profit per hectare and a substantially higher operating return on assets, while maintaining lower operating expenses per kg of milksolids.
A central theme is getting more value from pasture. The data presented indicates an additional NZ$350 of operating profit per hectare for every extra tonne of pasture and crop eaten, with the value varying according to milk price.
Paul also challenges the assumption that increasing supplementary feed automatically increases profit. His presentation shows that additional supplement expenditure brings other costs with it, and argues that extra inputs should increase profit rather than simply increase production or break even.
The session explores the importance of:
• Maximising pasture and crop eaten per hectare
• Matching stocking rate to the feed available
• Optimising grazing management
• Keeping the farm system simple and manageable
• Controlling operating expenses
• Questioning whether additional inputs genuinely add profit
• Budgeting and monitoring monthly cash performance
• Benchmarking farm performance
• Long-term financial and equity planning
• Considering return on assets when investing in land
Paul illustrates how stocking rate can be calculated from pasture grown, supplementary feed and cow liveweight, and highlights research showing the importance of combining an appropriate stocking rate with rotational grazing.
Financial discipline is another important part of the presentation. Paul encourages farmers to scrutinise both farm and personal costs, be discerning about products and services that claim to “add value”, understand all 12 monthly cash results rather than simply the annual outcome, and periodically use zero-based budgeting.
The presentation finishes by looking at farm business value and return on assets, demonstrating why the price paid for land can have such a significant influence on the return ultimately achieved.
The underlying question for farmers:
Are the extra inputs, costs and complexity in your farming system actually delivering additional profit?
Paul Bird | DairyNZ
Positive Farmers Conference 2024
🌱 Positive Farmers
Practical ideas, evidence and farmer experience to help farmers question, learn and make better decisions for their own businesses.