Presentations & Papers

Profitability trends of international pasture-based dairying, and what can the UK learn?

By David Beca

This presentation was delivered to LIC Europe’s Insights 2021 Webinar. It covers the following:

Outlines trends in dairy business performance for a number of countries.
Identifies a core group of ratios relating to profit and confirms the definition for economic resilience.
Reviews what the business impacts are of changes to pasture harvest, milk production per cow, and farm production system.
Reviews the impact of climate variability, or potential warming of the planet, on dairy farm performance.
Discusses what may be behind the trends in the UK and elsewhere with changing production systems.

There are six countries for which full farm business analysis trends are reported, with these being New Zealand, Australia, Argentina, Uruguay, South Africa and United States. There is also milk production and milk price trends for United Kingdom and Ireland. The trends in performance are reported over the period from 2003 to 2020. The presentation outlines which countries are more profitable and why, and which countries are less profitable and how the cost of production and change in farm production system has influenced these trends.

The presentation outlines the ratios that can be used to describe profit and that should be monitored by dairy farmers to determine the impact of farm management changes on profit and economic resilience. It then reviews how these ‘profit-monitoring’ ratios change as pasture harvest increases, milk production per cow increases, and farm production systems change through reductions in pasture as a percent of the cow’s diet.

The results of a farm model are presented, based on an average South African dairy farm, that demonstrate how increasing pasture as a percent of the diet reduces cost of production and improves both profit and profit margin. This improves economic resilience for a dairy business, with the results also confirming that these improvements are evident when climatic seasons are poor, including in drought or warming conditions.

Finally, the presentation discusses why so many farmers in countries like United Kingdom, Australia, Argentina and Uruguay have progressively increased the amount of supplement fed to their cows and reduced the percent of pasture in the cow’s diet. It also outlines some of the more significant challenges farmers would need to address to reverse this trend and improve profitability.

To view a video of the webinar with Q&A please click here.

To view and download the PowerPoint slides please click here.

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