The hidden cost of chasing extra milk

Homegrown pasture and crops sit at the centre of New Zealand dairy’s productivity and global advantage. Yet, over the past two decades, supplementary feed has been playing an increasing role in underpinning milk production.

While supplements help fill feed gaps, profitability depends on how efficiently they are used.

To understand the cost of marginal milk – the milksolids produced from extra supplementary feed – Northland Dairy Development Trust led a multi-year trial, supported by DairyNZ and other partners.

AgFirst project manager Kim Robinson, who co-led the study, says this science can help farmers assess whether their feeding strategy is delivering the returns they expect.

“When supplements are used to increase milk production, costs rise and margins tighten. Not all additional milk produced from supplements is profitable.

“The key drivers of profitable supplement use are milk response and, to a lesser extent, supplement price. Milk responses are maximised when pasture residuals drive the decision to feed supplements rather than propping up daily milk production”.

DairyNZ senior scientist Dr Paul Edwards says the study also helps farmers align their feeding decisions with their farm goals and risk tolerances, which look different for everyone.

“Not everyone seeks profit maximisation. In terms of risk, lower-input farms are more at risk from adverse weather events that affect pasture growth. On the other hand, higher-input farms are more exposed to milk and feed price volatility.”

Putting different systems to the test

The trial took place at the Northland Agricultural Research Farm over three seasons from 2018 to 2021 and compared three systems: Pasture-only (homegrown silage only, no imported feed), PKE-only (palm kernel expeller only used to fill pasture deficits) and PKE-plus (unrestricted supplement use).

All systems followed the same farm management rules, with pasture residuals closely monitored and supplement use adjusted to maintain a target of 1600 kilograms of dry matter per hectare (kgDM/ha).

Income, feed use and operating costs were recorded for each farm, including labour, machinery and milking-related costs, to capture the full cost of feeding supplements.

How does this apply to other feed types?

While PKE was the main supplement used in this study, the core principles translate across all supplement types. What will differ is how each supplement is utilised on-farm, along with variations in quality and cost.

When supplementary feed pays off

Paul says supplementary feed is most effective when it is used tactically rather than to maximise milk production. This includes filling a genuine feed deficit and maintaining pasture utilisation to deliver a high milksolids response.

Tools like DairyNZ’s Supplement Price Calculator can help identify these conditions, he adds.

“The results show how making back-of-the-envelope calculations about the return on supplement can be misleading.

“It challenges assumptions that putting more feed into the system when the milk price is good automatically equals better returns, and reinforces the need to understand the economics behind ‘extra milk’.

“When the full cost of feeding supplements effectively doubles, this can have a major impact on farm profitability.”