Innovation doubles milk production
A review of pre-farm gate RD&E's contribution 1980–2010
- Milk production in Victoria has more than doubled despite cow numbers remaining the same and a 35 per cent reduction in effective grazing area
- Milk yield per cow has almost doubled and the stocking rate has increased by 50 per cent
- Production per hectare has increased 192 per cent from an estimated 2,878 in litres per hectare in 1980 to 8,419 litres in 2010
- Pasture production and utilisation and better supplementary feeding systems account for a large proportion of production gains
- Genetics and feed conversion efficiency has also lifted cow productivity
- Over the past 30 years, $2 billion in 2010 dollar terms has been spent on RD&E on-farm projects
- RD&E accounts for almost half (46 per cent) of total production gains in Victoria's dairy industry
- The benefit to cost ratio for government and industry investment in RD&E is at least 3.3 to 1.
Innovation throughout the dairy industry has helped it boost production and increase returns to farmers. Dairy has remained as one of Australia's and Victoria's premier primary industries over the last 30 years.
Overall, increases in on-farm production have increased dairy farmers' returns by $10 billion over the past three decades in present value terms.
Australian farmers have been able to double milk production despite challenging financial and climatic conditions. Research, development and extension (RD&E) has been a major contributor, particularly in pasture management, supplementary feeding and cow genetics.
It is estimated that for every dollar of the combined investment by industry and government of $2 billion, there has been a benefit of at least $3.30. Farmer's return on investment for RD&E is therefore many times this amount.
In November 2010, Dairy Australia and the Department of Environment and Primary Industries Victoria (DEPIV), with support from the Gardiner Foundation, agreed to jointly conduct a high level evaluation of the impact of government and industry investment into pre-farm gate RD&E from 1980–2010.
The evaluation was conducted to provide guidance on how to improve future investment in RD&E to enhance the competitiveness, productivity and sustainability of the dairy industry.
The evaluation drew information from three main sources:
- A brief history of the industry (1980–2010)
- A workshop involving key industry players, both past and present
- An economic evaluation of the strategies, programs and major investments by government and industry in Australia (1980–2010).
Factors contributing to growth
The evaluation shows overall dairy industry production would have declined were it not for industry driven (internal) improvements over the past three decades such as better pasture management and supplementary feeding systems. There have been several factors external to the control of the industry that overall have had a negative impact on growth.
External drivers include:
- The fluctuating effect of milk prices and droughts
- Increases in costs such as fertiliser, fuel, electricity, water, transport and chemicals
- Decreasing long term real costs of supplementary feeds
- Increases in wage costs
- Reduction in productivity due to obsolescence of technology over time.
Industry driven changes:
- Better pasture production and utilisation
- Use of supplementary feeding and its contribution to cow nutrition
- Incremental improvements in animal genetics and breeding
- Increased capacity of cows to use higher volumes of feed and convert feed more efficiently to milk
- Close attention to animal health and welfare issues such as mastitis to avoid negative impacts on production
- Economies of scale achieved from bigger farms and better shed infrastructure and management
- Containment of emerging natural resource management issues arising as a result of farm intensification such as farm effluent management and fertiliser runoff
- Better management and business skills
- Adaptation of suitable technology and practices from the United States, Europe and New Zealand to Australian conditions.
These factors were seen as interdependent and that each was required to achieve the whole system of improvements.
Internal improvements in the industry may account for more than a doubling of production over 30 years
Footnote: The unaccounted component is suggested to be a combination of several other factors, such as improved animal health, natural resource management and milk shed systems.
Intensification of the dairy industry
From 1980–2010 a strong intensification of the industry has been a major factor in creating production increases per hectare of land.
Output per cow has nearly doubled and stocking rates per hectare and output per hectare have increased dramatically.
- Production has increased 192 per cent from 2,878 litres per hectare in 1980 to an estimated 8,419 litres per hectare in 2010
- In 1980 production was generated largely from pasture based feed
- Pasture production has increased 47 per cent over the past 30 years
- In 2010 a cow consumed 33 per cent more dry matter than a cow of 1980 mainly through supplementary feeding
- The combined increase in pastures and supplements supports cows that are also 34 per cent more efficient at converting feed to milk
- Earnings before interest and tax are estimated to be $12,518 per hectare higher than would have been the case without industry driven changes over the 30 year period.
Factors driving 192.5 per cent increase in milk production per hectare
Patterns of investment
Over the past 30 years, investment in on-farm RD&E has been $2 billion in 2010 dollar terms. Currently dairy farmers, through the research and development levy, provide 23 per cent of funding on RD&E (with Commonwealth Government contribution).
Other organisations that have contributed investment funding in this period have included the Dairy Research and Development Council (DRDC), Dairy Research Committee, Dairy Research Council, DEPI, state primary industry departments, the Commonwealth Government, universities, dairy companies and industry supported research centres.
Components of farm sector investment
The largest area of investment has taken place around management of the feedbase with one third of investment in pasture/forage improvement and utilisation. A smaller share has focused on feed and nutrition. Considerable investment has also focused on animal breeding and reproduction and natural resource management.
Investments have been a combination of:
- Research that developed a scientific knowledge base for addressing specific issues
- Work to adapt, refine or prove the practical application of research results
- Extension of programs to draw out R&D knowledge and encourage the adaption and adoption of technological advancements.
Estimated investment in national on-farm RD&E by area—30 year period
|Investment area||Total $m (2010 dollars)|
|1||Pasture/forage improvement and utilisation||643|
|2||Feed use and nutrition||126|
|3||Animal breeding and reproduction||374|
|5||Business and human resources||172|
|7||Natural resource management||302|
|8||RD&E capacity building||55|
|Total on-farm investment||1,958|
Contribution of RD&E: Feed
The success of the Australian dairy industry has been dependent on the ability of farmers to produce feed through pastures. RD&E supporting improved pasture management and utilisation and the increased use of feed supplements have been key areas of investment.
Pasture management and utilisation
Widespread adoption in the 1980s of rotational grazing from New Zealand has played a large part in the improvement in pasture management and productivity of Australia's dairy industry. Improvements in pasture species and pasture feeding systems as well as fertiliser and water use have been crucial.
Major extension initiatives have been important in the adoption of rotational grazing practices and R&D was required to adapt the system to Australian conditions. Extension programs have included Target 10, ABC farms project, Project 30/30, Feeding Pastures for Profit and Feeding Systems Programs.
Key outcomes of feed RD&E include:
- An increase in pasture production and utilisation by nearly 50 per cent from 1980 to 2010
- A strong biological understanding of pastures
- Better use of nitrogen fertilisers and use of less phosphorus without adverse impact on dry matter growth
- Advances in rotational grazing management
- Increased planting of alternative forages
- Increased industry competitiveness and long term economic sustainability.
The Target 10 Project was an extensive farmer education program launched by the DEPIV in 1993 with the aim of achieving increased farm profitability through increased pasture consumption. The approach combined peer group discussions, on-farm practical applications and benchmarking. The program was run in two phases:
- Phase one (1993–95): Aimed to improved the skills of farmers in pasture management and develop systems to increase pasture consumption
- Phase two (1996–99): Aimed to encourage the adoption of more efficient and sustainable farm management practices.
The use of feed supplements has increased markedly on Australian dairy farms as farmers moved to new practices in pasture and grazing management during the 1980s and 1990s.
RD&E into supplement use by the dairy industry from the mid-1980s mirrored this change as farmers required guidance on how to use supplements in a profitable way and increase performance from cows that required higher nutrition.
RD&E into supplements fell into two streams:
- The nutrient requirement of cows at lactation
- The production and utilisation of non-pasture feed supplements to cover feed gaps.
Extension programs that focused on feed supplements in Victoria included:
- Operation Milk Yield (1985–87): Focused on the response of established herds to concentrate feeding. The aim was to examine the effect on animal productivity and farm profitability
- Operation Mid Lactation (1990–91): Used 600 farms across northern Victoria to demonstrate the effect of feed and pasture management on post peak lactation milk yields
- Target 10 (Phase two 1996–99): Aimed to improve feed budgeting skills of farmers when supplementary feed inputs were combined with pasture inputs.
Other extension projects have included:
- 'feed.FIBRE.future' a 2007 national response to fodder shortage
- A future grains initiative 2004–07 that led to the Grains2Milk program launch in 2007 (Grains2Milk is an ongoing project that helps farmers adapt to a climate of increased grain feeding and variable pasture and water supplies by providing advice on better managing their feed decisions).
Key outcomes for feed supplement RD&E include:
- Farmers became more adept at managing the use of supplements
- Milk yields increased attributed in part to supplement use.
Contribution of RD&E: Animals
Genetic improvement has been an important contributor to gains in herd performance and has a gradual compounding effect that is permanent. There has been a long standing commitment to animal genetics RD&E as it is well recognised that cow productivity gains from progressive genetic improvement will increase farm profitability.
Milk yields, milk composition and milk quality are some of the areas that can be influenced by genetic improvement and it is a key factor in supporting long term industry competitiveness.
RD&E investments have centered on the ongoing Australian Dairy Herd Improvement Scheme (ADHIS) research into the Australian Breeding Values that were first released in 1983.
While the extent of genetics RD&E to overall dairy industry performance is difficult to assess, gains in herd performance have accumulated over time.
Animal health and fertility
Animal health and fertility has been a strong focus for the Australian dairy industry over the last 30 years improving herd performance, milk quality and production. Mastitis control and herd fertility have been the two focus areas of investment.
Milk quality and mastitis control
In the 1980s and 1990s, the DEPI and DRDC invested in projects aimed at improving animal health and welfare, including capitalising across the industry on milk processor driven incentives to address milk quality. The Countdown Downunder program was specifically launched to address mastitis issues and is still running today.
Countdown Downunder was launched in 1998 to improve milk quality by promoting best practice mastitis control. The strategic rationale for the project was to encourage a cultural change in mastitis management in line with incentives in milk pricing and to help satisfy demand for high quality dairy produce.
- Phase one (1998–99): Development of clear consistent messages around mastitis control for the Australian industry
- Phase two (2000–05): Building capacity in mastitis control within the adviser and farmer community
- Phase three (2006–07): Risk management.
Key outcomes from mastitis RD&E investment include:
- Declining cell counts were recorded until drought conditions in 2003 forced farmers to reduce expenditure on mastitis management
- In 2003 cell counts below 400,000 cells/mL were 94 per cent nationally
- The economic benefits of lower cell counts for farmers have been premium payments for milk that meets specified thresholds, reduced costs and increased production
- Overall the average cost saving from reducing the incidence of clinical mastitis cases has been estimated at $22 per cow per year.
RD&E projects on fertility issues have been a continuing area of investment over the past 30 years. Infertility is the primary reason for culling cows and prolonged delays in getting cows in calf also affects herd performance.
- Reducing the losses from poor fertility could only be addressed if the causes were understood
- Obtaining information through an RD&E focus on management practices was crucial.
The DRDC funded projects with a national focus undertaken by research institutes across Australia and this added to the knowledge base on managing fertility issues.
A project undertaken in the 1990s aimed to establish the influence of breeding selection for production traits on herd fertility. The project used reproductive and herd recording data and focused attention on the role of changes in animal management practices to address herd fertility issues. This project led to the launch of the InCalf program that continues today.
Key outcomes from herd fertility RD&E investment include:
- Improvement in management practices to minimise impacts of low fertility while maintaining milk production.
Dairy Australia has funded InCalf since1996 when it was first established that 70 percent of the variation in reproductive efficiency was due to herd management issues for which there were known effective management strategies. The aim of this national extension project was to provide information on ways to improve herd fertility through changes in management practices. It drew on the available scientific knowledge to develop resources and tools to assist dairy farmers in measuring and improving herd fertility on their farm. InCalf extension advice covered:
- Nutrition management
- Bull management
- Heat detection
- Heifer growth
- Artificial insemination.
Contribution of RD&E: Natural Resource Management
Industry experts agreed that investment in RD&E in natural resource management (NRM) has played a critical role in delivering a platform for industry credibility and a framework to integrate R&D on NRM.
It is recognised that the public perception of unsustainable resource use is both a domestic and international market risk relevant to the future of the dairy industry and could result in regulatory control over the use of land, water and air resulting in reduced access or use.
It is estimated about 15 per cent of total on-farm investment over the past 30 years has been undertaken on NRM issues, mostly over the last two decades.
The major areas of NRM RD&E focus have included:
- Effluent management
- Soil nutrient management
- Irrigation and water use efficiency
- Greenhouse gas measurement and reduction.
The dairy industry has been proactively improving the efficiency in the management of natural resources and integrating of NRM into management plans. An important part of the industry's response has been the Dairy Self Assessment Tool (DairySAT) program.
DairySAT was developed to help dairy farmers assess their NRM. The project is considered to be an industry code of practice and incorporates NMR RD&E from the last 20 years. Benefits of DairySAT include:
- Better effluent and nutrient budgeting leading to a reduction in fertiliser use and increased water savings
- Gains in water quality and biodiversity resulting in land improvement.
Key outcomes from RD&E investment into NRM:
- Environmental self assessment tools are seen as a critical investment ensuring the industry has strong environmental credentials
- The industry has built knowledge about on-farm and off farm nutrient management
- An important base for understanding the impact of fertiliser use on the environment has been created and management tools provided.
In 2000, an evaluation by the Centre for International Economics investigated the potential consequences of failing to deal with rising environmental pressure and what may occur from a contraction of land available to the industry. The potential benefits from avoiding a 10 per cent reduction in land were estimated to be valued at $404 million.