The implications of winter milk premiums for sustainable profitability of dairy systems

Abstract

Abstract Matching seasonal pasture growth to cow demand has been the key to New Zealand's ability to produce milk competitively. However, driven by the need to process milk all year for value-add products like UHT milk, Fonterra has increased the incentive for producing milk in the winter. This has some farmers questioning their spring calving approach and considering calving outside spring to increase profitability of their system using the winter milk premium. In an attempt to answer farmer's questions, modelling was done using OVERSEER® for the environmental footprint and Farmax Dairy for the economic impact of changing the calving season. The objective of the modelling was to highlight key factors that need careful assessment for individual farm situations before deciding to change calving season. Whole farm system modelling was done for Ruakura and Pukekohe pasture growth profiles in the Waikato, and Te Hana and Maungatoroto growth profiles in Northland to consider the implications from both a profitability and environmental perspective. In the four districts modelled results suggest the key drivers for autumn calving profitability are: seasonal pasture growth profile, soil type, winter milk premium and cost of infrastructure/equipment upgrade. Regions with pasture growth profiles that remain profitable after changing from spring to autumn without the winter milk premium are the most ideal, as there is no guarantee the premium will stay at the current level. Keywords: modelling, winter milk premium, pasture growth profile, profitability, nitrogen leaching