As I sat on the boundary line a few of weeks ago, light beer in hand, I lamented (with other old has-beens) that some footballers had virtually played their entire senior careers with nary a mud heap or a set of long screw-in stops in sight. Not since the winters of '96 & '97 (or was it '95 & '96) has there been an extended cold and wet period coming out of winter into spring. So it the poses the question - what effect has the run of mild winters had on the increase in winter milk production across southeast Australia? Has this been the primary driver of winter milk production or has it been the price incentives that the milk processors have continue to push into the winter months?
Historically milk factories have always paid premiums to encourage farmers to produce milk when pastures aren't at their easiest to grow. The domestic market has ensured a demand for milk during the winter months and the processors have paid premiums through these months to ensure supply. We're also told that over time more of our export markets require flatter milk supply curves to meet there needs for quality 'fresh' products. The result has been a rise in the farm gate milk price in the autumn/winter months.
Then there is the issue of cow infertility and persistence of lactation. In what is truly a dual edged sword, there is no doubt that maintaining a 12 month calving interval is becoming increasingly difficult. On the flip side this type of cow generally has no problem producing well for an extended lactation (18 month calving interval) and this has definitely pushed more cows to be milked through winter. Those lower fertility/high producing cows are 'just too good to cull'. So instead of farmers taking a breather (mentally and/or physically) when the cows were dried off in winter there is a definite need to manage the farm to grow more grass to feed the milkers.
While the run of milder winters has had a significant impact on winter growth, as farmers need to have more grass in winter they have got better at growing it - or because they got better at growing grass in winter did they decide to milk more cows through this period?? The drier winters have been accompanied by longer and drier periods from late spring through to late autumn. In the northern irrigation region, farmers have adapted to low water rights and milder winters by using their limited water either side of winter (supposedly a wet period) to grow more feed. As a 'population' the dairy industry has chased the grass and calving patterns have drifted away from the more traditional spring seasonal calving pattern to some form of autumn/ early winter or split calving system. There is no doubt that the winters have been more conducive to growing grass but farmers have also got better at producing it via:
- More nitrogen used better (timing)
- Managing the rotation to build pasture cover into winter and holding it through winter
- Pastures are not being overgrazed
- More winter active grass species are being sowed
The question being asked now by many through the industry is - how committed are we to the current winter milk production if there is a return to pre 2000 weather conditions?
Dr Hauser is concerned that trend towards flatter year round supply curves is imbedding higher costs of production in an industry that has low cost of production as its core strength. With regards to maintaining a low cost of production Dr Hauser and I are in raging agreement. So Dr Hauser, is producing more milk through milking more cows in winter bad for farm economics? Well, it depends. In very general terms if you are able to put a minimum of 12-15 kgDM/cow of good quality pasture down your cows throats without delaying spring by pugging the farm, or skinning out pasture cover, then it probably does. But is this any different to milking cows at any other time of the year? The key is stocking rate. Too many cows through winter and it doesn't matter how good at managing pastures you are, you'll struggle to put enough grass in front of the cows.
Just a note of disclaimer - I'm not advocating that all farms should run more milkers through winter. There are a host of reasons that make up a full farm systems/lifestyle discussion as to whether this is the right decision. What I would say is, unless you can put some significant grass in front of a cow during winter, I would not recommend milking that cow.
Over the past 10 years or so we've been growing pastures at approx 20 kgDM/cow/day through winter. So, if this comes back to 12-15 kgDM/cow 1.3-1.6 cows/Ha is plenty. If the milking area is 100 Ha that equates to 130-160 cows which will be made up of autumn calvers, empty cows (those ones that are just too good to cull) and late calvers. This assumes there is minimal non milking stock on the milking pasture area. This year is a good reminder that despite all the gains we've made in winter pasture production, if the rain keeps falling and the sun doesn't shine, then only the very best pasture managers will be growing rgass at anywhere near this level. All of a sudden the higher stocking rates through winter start to be exposed.
If the industry starts to grow again where will milk production grow? How much high value product can be sold that is made with expensive winter milk? If the industry continues to produce more milk in the winter then the premiums for winter milk will diminish. If this current winter and start to spring is a return to more normal weather patterns, will there be the same commitment to producing milk from mud?
With regard to milk production in northern Victoria, I actually disagree with my esteemed colleague - or perhaps we are disagreeing about time lines. Dr Hauser thinks that water will get too expensive due to competing uses - ie. towns, horticulture and the environment. At the crux of his argument is that supply of water is finite but demand (and price) continues to rise outside of dairying. While I agree in principle, I'm going to argue that if we return to more normal rainfall patterns then it will take a reasonably long time to alter the dynamics of water prices sufficiently to take effect. A 10 year window would be long enough to make an investment in a dairy farm.
In 2000/2001 northern Victoria produced 3 billion litres of milk. It was the major milk producing region in Australia for good reason - low cost and reliable pasture production systems year in year out. We're already seeing the spot price for water drop to $40 per MGL and this water can be purchased now and carried over into future seasons. If the water comes back for any period of time then I'll argue that milk production will grow - maybe not back to 3 billion from the low of 1.6 billion but 2.5 billion litres is believable. What is not clear, as Dr Hauser points out, is what sort of 'suitable' processing capacity exists now in Northern Victoria. If milk production grows back beyond 2 billion litres, will the processors have enough long term confidence to invest the sums of money required to process this milk? In making these investment decisions they will have in mind the recent experiences of the extended drought and the impact of government policies (ie Murray Darling Basin draft plan).
So bearing all this in mind here is my scenario for northern Victoria. It will keep raining (easy for me to say as eastern Australia is in the middle of another downpour as I write) and memories of low water allocations fade. Milk production grows on the back of well priced readily available water. While this milk growth will be predominantly peak/seasonal milk (given the return to wet cold winters), there will naturally be also more produced in the winter. Now northern Victoria is well placed to supply the ever growing eastern seaboard domestic market. However if there is more flat milk produced than is needed then the farm gate value of this milk will fall. The fall could be greater if processing capacity starts to be exceeded.
The take home message? Despite some changes in the Australian market one thing remains unchanged regardless of milk supply patterns - maintaining a low cost of production is crucial for a sustainable dairy farm business. If you can produce higher valued milk from predominantly grazed pastures there is strong likelihood that it can improve farm profitability. But be warned - imbed high costs of production at your peril!!