How to cut emissions and turn a profit

When it comes to the Kiwi dairy sector reducing its emissions, it's not all doom and gloom, according to new research.

Agriculture business Headlands Consultancy is buoyant about the results of its research, saying that, by making a few tweaks, farmers can mitigate concerns that the Government's emission pricing plan could devastate the dairy sector.

Managing director Warren Morritt told The Country's Rowena Duncum that Headlands' modelling showed farmers could reduce the carbon footprint of milk, greenhouse gas (GHG) emissions, nitrogen leaching, dairy cow numbers and land used - while maintaining total milk production and increasing on-farm profit.

"All of which is achievable while remaining within Fonterra's pasture-based milk criteria, with total feed consumption being 80 per cent homegrown feed."

The research shows that with systematic refinements, and the inclusion of a moderate amount of concentrate feeds to fewer, but better cows, the total amount of feed required per farm reduces dramatically, but total milk production per farm is retained, increasing feed conversion efficiency.

However, under the Government's proposed GHG calculator, the main lever left available to farmers was to reduce total milk production, "which completely ignores any potential gains to be made out of increasing feed conversion efficiency".

"Our modelling research clearly shows that the dairy sector can build a system that achieves and exceeds the 2030 climate change and greenhouse gas targets while improving animal welfare and ensuring we don't compromise on profitability and total production," Morritt said.

Research and results

Headlands' modelling used the Waikato "average" farm from DairyNZ statistics 2018-19 season and compared five scenarios against this "control farm".

The scenario with the greatest environmental benefit shows that dairy farmers can continue to achieve the same total farm milk production levels, with a 36 per cent reduction in cow numbers per hectare, coupled with 8.5 per cent of dairy farm land being retired for alternative use, delivering a 22 per cent increase in operating profit.

The reduction in total GHG emissions (15.6 per cent) exceeds the Government's emissions reduction targets for 2030 (10 per cent), while there is also a strong reduction in nitrogen leaching (15.5 per cent) compared with the control scenario.

GHG emissions associated with growing and sourcing off-farm supplement was accounted for in the modelling.

Recent industry recommendations include scenarios where cows per hectare are reduced by 15 per cent with a limited option to use supplemental feeds.

When modelled, these recommendations resulted in a reduction in total farm GHG emissions (14.4 per cent) and N leaching (9.7 per cent) compared with the control farm.

However, there was also a severe reduction in milk production (11 per cent) and profitability (7.4 per cent) while having minimal impact on the carbon footprint of the end products (3.9 per cent improvement).

By comparison, the modelling showed a scenario which could achieve a similar total farm GHG reduction (15.6 per cent) but maintained milk production, and increased profitability by 22 per cent while reducing the carbon footprint of the end product by 15.7 per cent.

Morritt said the key to reducing GHG emissions at farm level, and per unit of product produced, was by producing milk more efficiently, and this required increasing feed conversion efficiency.

"Supplementing the cow's diet with concentrates is a critical tool to achieving this feed conversion efficiency that enables each cow to consume more feed and nutrients in total, channelling a much higher proportion of feed energy towards milk production.

"This in turn allows a much lower number of cows per hectare while maintaining farm production levels."

The key difference of this modelling compared with previous research is that introducing these concentrates wasn't done with a view to increasing total production levels (intensification); rather, they were used to drive feed efficiency, allowing a lower number of cows per hectare, while maintaining total farm milk production and improving environmental outcomes, Morritt said.

According to Morritt, the GHG emissions calculator in the Government proposal used a fixed amount of feed per kilogram of milksolids to calculate the GHG emissions of each farm, which if adopted, would remove the ability to reward improved feed conversion efficiencies which deliver GHG emission reductions.

Adopting this "overly simplified" method would drive a severe reduction in milk production and farm profitability, for a sub-optimal environmental outcome, he said.

"With the Government's proposed GHG calculator, reducing milk production would be the key lever to reduce GHG emissions. Our modelling shows this approach would be both flawed and unnecessary.

"It's vital policies and GHG emission tax calculators do not use a fixed amount of feed per unit of milk production to calculate farm emissions, or unfairly penalise the use of concentrate feeding in dairy systems."

Morritt said moderate amounts of concentrate feeds were critical to improving feed conversion efficiency and a crucial tool for achieving positive outcomes.

Headlands' modelling research has been peer-reviewed by some of New Zealand's leading dairy scientists including Dave Clark, formerly a principal scientist at DairyNZ, and Dr Eric Kolver, formerly a principal animal scientist at DairyNZ.

"We have grave concerns that adopting the proposed government calculator will result in a much less efficient, less clean dairy industry, with severe downstream economic effects on NZ society as a whole," Morritt said.