Increasing profit

Growing business profitability is the best way to equip a farm business to deal with the volatility that is inherent in farming. 

Reducing our footprint

Climate change is a global issue. Every country in the world is contributing to it and every country needs to play a part to limit further climate change.

In New Zealand around a quarter of our emissions, come from dairy farming. To meet New Zealand’s GHG targets and to retain our place as the world's most carbon-efficient farmers, there is much we can do.

Areas of focus

Below are the key farm management areas that can be examined to determine the opportunity to increase profitability and reduce environmental footprint.

• Making the most profitable use of your pasture  
• Optimising feed eaten to reduce methane
• Reducing N surplus & leaching
• Managing marginal land to reduce GHG
• Reducing phosphorus, sediment and pathogen loss 

Questions and answers

• How can we get going if the policies are not set yet?

  • We want to continue to be the world’s most sustainable dairy farmers. We know the direction we’re going in and we know enough to get started. We want to get ahead of the game, we need to show the country we care, and we can do this.
  • We know it’s important to lift profit. More profitable farm businesses have choices to manage their future and are more internationally competitive. But we need to do this at the same time as decreasing our environmental footprint.
  • The government has set a target to reduce biological methane by 10% by 2030. Ruminants are 89% of this methane (the rest is from landfills). There’s still detail to be worked out, but right now, we’re assuming that the pastoral sector has to achieve a 10% reduction in total methane output by 2030, so making a start on this in ways that add to profit will help us meet these targets.
  • The Government is still developing its Essential Freshwater Policy. Farmers will likely be required to have a farm environment plan with good farm practice actions to address local water quality risks. The dairy sector is already committed to all farms having farm environmental plans by 2025.
  • Farmers in high priority catchments will have to reduce N leaching over time. Many catchments where N is a problem already have plans in place, for example Selwyn and Hinds in Canterbury, the Tararua District.

• Will this mean less milk will be produced by the sector?

  • Very likely unless there is a technical innovation (such as feed additives or a methane vaccine) widely available before 2030.

• If I grow more grass and eat more grass - doing this more efficiently will I meet the goals?

  • You should achieve the profit goal, but you will only achieve the methane or N surplus goal if you remove other feed from your system, more than your increase in pasture harvest.

• How will DairyNZ help me to understand how all this fits together?

  • By joining a Step Change group you will be given the tools and help to work out the links between the three goals, develop options for reducing methane, reducing N surplus and increasing profitability and get advice from other farmers on how you can go about making changes on your farm.

• Aren’t we already the most efficient producer of milk in the world?

  • That’s right when measured per unit of milk produced (emissions intensity). Which is something we should be proud of and strive to continue so we can put ourselves in a place where we can command future premiums as sustainable production becomes a more important differentiator in the market.
  • The govt has set a target of 10% reduction in methane by 2030. This is an absolute, not intensity-based target so we still need to reduce our total methane output.

• Will we get more value for our milk if we make all these changes?

  • There are no sure bets on this, but if we don’t make these changes, we will increase the likelihood of getting less for our milk over time.
  • The need to reduce GHG is a global requirement. Most countries are working out how to do this. Our opportunity is to hold the line or reduce our cost of production and our footprint, maintaining our competitive position relative to other countries.
  • Water is mainly a New Zealand issue. We need to do our bit to contribute to the overall quality of waterways in our country and maintain our social license.

Detailed information for the above key areas will be available soon. Stay tuned!