Do grass based systems maximize farm profit? This was the question addressed by DARD's Ian McCluggage at the recent Irish National Dairy Conference.
"The answer, I feel, depends on what is the farm's most limiting resource," he told delegates.
"In Northern Ireland with land the most limiting resource increasing milk output per cow and per hectare has allowed dairy farm incomes to improve against a backdrop of lower milk prices. Additional milk sales have been achieved through harnessing dairy cow genetics coupled competitive variable input costs e. g. alternative forages and concentrates, allowing overheads to be spread over more litres.
"Using the data from the top 10 per cent of farms in each system and the economic principle of maximizing output to the most limiting resource a number of key conclusions can be made." "Only where milk quota is the most limiting resource is herd profitability increased under the grass based system. Where land is limiting, profitability can be increased by over 20 per cent by opting for more milk output per cow. At 170 kg of N per hectare, and cow numbers limited then the high output system again produces the most profit per herd. Only at milk prices of less than 12ppl (17.5c/l) does the grass based system become 'more profitable".
As milk price increases above 17ppl (25c/l) the differential between the two systems widens. The high output system provides the opportunity to significantly earn more money."
Ian McCluggage went on to say that increasing scale of production will become more important in the future - but only on the basis of efficiently increasing milk sales from the farm in terms of both quantity and quality. "And the figures clearly show that the high output system provides a greater opportunity to do so," he concluded.
"Balancing all the factors, likely to influence Northern Ireland dairy farms, the system, which provides the best opportunity for farm development, is a high output foragebased system.
"However, to achieve the results and benefits from such a system will require new innovative thinking coupled to a flexible and adaptable business attitude to the management of the whole farm business."
