Fundamentals overview

Success in pasture-based dairy farming

Pasture-based dairy farming is a balance between managing the pasture and the cows to maximise sustainable profit.

Pasture, without any input other than basic fertiliser, drives more than 85 percent profit for most farms at a $7.00 per kg MS milk price, and 98 percent at a $4.00 milk price.

By putting pasture first farmers can reap the rewards.

Good habits for pasture management

We’ve identified 7 common habits followed by farmers with excellent pasture management.

1. Consistently meet residual targets by always going into the correctly targeted pre-graze pasture cover.
2. Take regular farm walks (every week, or rotation length/3, e.g., 30 days = every 10 days), and use data to drive good feed management decisions.
3. Do feed budgets at key times of the year to know target APC at dry off, start of winter and PSC.
4. Maintain APC in the target range (between 2000 and 2400 kg DM/ha) from balance date to start of autumn.
5. Consider pasture to be a complete feed source.
6. Use supplements to maintain rotation length to optimise pasture growth.
7. Identify a pasture surplus and deal with it early.

Grazing intensity and cover affects pasture quality and production - and quality affects pasture intake.

To achieve the best results, grazing management should focus on maximizing future pasture production and quality while supporting ongoing cow performance and milk production.

Successful pasture management starts with these essential habits:

• Control the area grazed each day (or rotation length) to manipulate pasture eaten to meet average pasture cover targets for the farm.
• Estimate the area and pre-grazing cover required for the cows based on the target grazing residual and adjust after observing when/if the cows achieve a 'consistent, even, grazing height'.
• Make management decisions to maximise per cow production for the season, not at any one grazing, the 'main course principle - no dessert'.
• Treat pasture as a crop - remove pasture grown since last grazing and prevent post-grazing height from increasing over the season.
• Have pasture cover distributed between paddocks in a feed wedge to ensure that high-quality pasture is offered on all paddocks.
• Keep average pasture cover above 1800kg DM/ha1/ in early spring and between 2000-2400kg DM/ha1/ for the season to maximise pasture growth rates.
• Over the season the height of post-grazing residuals (cover) does not change but the dry matter mass does increase. This is the value of using 'clicks' on the Rising Plate Meter (RPM) or one formula for the RPM for the season.

The 5 Production Systems

The Five Production Systems are a way to group farm production systems by allocation of imported feed.

As New Zealand pastoral farming is about profitably balancing feed supply and demand, five production systems have been described by DairyNZ firstly on the basis of when imported feed is fed to dry or lactating cows during the season, and secondly by the amount of imported feed and/or off-farm grazing. The definitions do not include grazing or feed for young stock.

These definitions are intended to help your understanding and description of feed resources used on farms in relation to common performance indicators, such as milksolids per ha. They are not intended as a ranking system, or any indication of DairyNZ’s preferences.

System 1 - All grass self-contained, 100% home-grown feed with all adult stock on the dairy platform

No feed is imported.  No supplement is fed to the herd except supplement harvested off the effective milking area and dry cows are not grazed off the effective milking area.

System 2 - 90-99% of total feed is home-grown feed

1-10% of feed is imported either as supplement or grazing off for wintering dry cows.

System 3 - 80-89% of total feed is home-grown feed

11-20% of total feed is imported to extend lactation (typically autumn feed) and for wintering dry cows.

System 4 - 70-79% of total feed is home-grown feed

Approx 21-30% of feed imported and used at both ends of lactation and for wintering dry cows.

System 5 - 50-69% of total feed is home-grown feed

More than 31% of feed imported and used throughout lactation. Feed imported could be greater than 50%

*Note: Farms feeding 1-2kg of meal or grain per cow per day for most of the season will best fit in System 3.

Steps for changing your farm system

If you are considering changing your farm system this page will help step you through the process and ensure you can proceed with confidence.

Due to economic and environmental challenges, many dairy farmers are having to reassess their farming operations and significantly adapt their farm systems.

The five steps for successful farm systems change process has been developed by interviewing dairy farmers nationwide and learning from their experiences.

Step 1: Assess the current farm system.

Farmers suggested that before embarking on a significant change, understand the current farm situation.

Start this assessment by answering the following questions:

• What is the farm’s financial position? To get an overall view of the farm’s financial position, consider:
  • Equity growth over time, the ultimate financial key performance indicator (KPI)
  • Calculate your break-even milk price
  • Know your cashflow
  • Operating profit, to know the farms operating efficiency
  • Operating profit margin, the gap between operating expenses and gross farm revenue, the wider the better
  • Debt to asset ratio
• How is the farm performing across all other areas and can it be improved?
• What are the team’s current skills and abilities?

"We had goals on the way through, we had a goal to buy cows, we had a goal to buy a farm.  You get to these goals and now you’ve got to reset your goals, and that’s actually the hard thing isn't it, it’s resetting." (Southland farmer - System 4)

Step 2: Determine your goals and the drivers for change

The farmers we talked to also said they needed to know why they were changing, what is the problem that significantly changing the farm system will fix?

Often the actual problem is not the first that comes to mind. Continuing to ask, ‘why is this a problem’ until you get to the root cause, can be helpful. Also consider undergoing a farm assessment and planning process.

• What is driving the need to change? Examples provided by farmers included: farm improvement, financial, environmental, succession, and boredom with the current system.
• Do you need to change or can you improve your existing system to solve the problem?
• Once you know what your existing situation is and what area of change you want to make, farmer advice is to write it down. If it’s not written down then it’s not going to happen. Visit the 'purpose, vision and values' section of our website for help with this process (link below).

"I think the most important thing when you’re making changes is to really understand the reasons why the changes are being made." (Waikato farmer – System 3)

Step 3: Assess the potential impacts of change

Before making a change, it is important to think through the potential implications as best you can.

• Are you the right person to assess this change, do you have enough knowledge? If not, who can you talk to?
  • Can you assess people skills, do you have the right skills on farm to manage the change?
  • How will you need to adjust your life after this change?
  • How will this affect existing goals, for example succession planning?
• What will a good future system look like, what are the key performance indicators for the business and farm under this new system?
• How risky will the change be? Would the change make the problems better or worse?
• Will the change meet regulatory implications? Is there a Plan B if things go wrong?

"I've learned so much over the last couple of years making all these big changes.  It's not just about the dollar, it's about the personal values too, and the personal values of the farm owners and then how I want to be seen by others as well." (Canterbury farmer – System 3)

"With an $8.00 payout, the original system I was on was brilliant, because I was stocked to the hilt … you can throw in as much supplement as you want and it still made money. And then we hit the dive and I said "No, this is not how I want to farm. My risk needs to be low, I need low exposure because I'm quite highly geared in my debt.”(Canterbury farmer – System 3)

Step 4: Manage the change

Once they decided to change, the farmers questioned if they had the right skills to make the change.

They suggested asking yourself:

• Do you have the project management skills necessary?
• How much investment is needed and how long will the change process take?
• Have you managed change of this scale before?
• What are the financial and time implications?
  • Do you need to hire someone to lead the change?
  • Do you have enough time off the farm to manage the change?

If you are looking for techniques to help you manage the change, a range of tools and templates are available via the 'goals and actions' link below.

"The essential takeaways are you’ve got to find somebody that you will listen to, you’ve got to be willing to listen to them and you’ve got to want to change." (Canterbury farmer - System 4)

"I had quite a cumbersome business, it was slow to respond and I hadn't really geared myself up around risk management. It was just the first year [of change] and I was just getting hammered through it. Then suddenly the payout just dropped like a stone, and that's when I needed to sharpen up my business skills." (Canterbury farmer – System 3)

"I did the Mark and Measure course and it got me thinking a lot about my growth and my business and stuff like that, and the fact that I do believe so much it's a team effort, it's not just me." (Canterbury farmer – System 3)

Step 5: Assess success of the change

In the study, farmers wanted to know how to estimate if they were successful or not.

They suggested the following guiding questions:

• Are you prepared for potential negative peer/public response to a system change?
• Do you need to change how you monitor your business systems, if so to what?
• Get the whole farm team together and critically analyse whether objectives have been meet by the change
• Create a process for continuous improvement that includes regular analysis of KPIs and comparisons with industry benchmarks - keep reassessing current performance under the new model.