The Power of New Pasture: How much more money would I make?
In the case of dairy farming, a lot more money.
This is not difficult to calculate.
Let’s make some conservative assumptions
| Increased production from renewal of a poor paddock: |
| 5 tonnes DM/ha/year [4–6 is typical] |
| Percentage of DM production eaten: |
75% |
| Pasture to milk solids conversion factor: |
15kg DM = 1kg MS |
| Milk payout: |
$5/kg MS |
So...
| Per hectare, the cows eat 3,750 kg DM more pasture per year |
| [75% of 5t] |
So they produce
| 250 kg more MS per hectare [3,750 kg÷15] per year |
= $1,250 more per hectare [250kg x $5] per year
|
|
Total benefit
It is safe to say the improved production of new pasture over the old will be sustained for at least five years, and we’ve factored in a 10% annual decline in the extra production off the new pasture:
| Total benefit |
| Benefit extra MS/ha year 1 |
$1,250/ha |
| Benefit year 2 |
$1,125/ha [$1,250 less 10%] |
| Benefit year 3 |
$1,000/ha [$1,125 less 10%] |
| Benefit year 4 |
$875/ha [$1,000 less 10%] |
| Benefit year 5 |
$750/ha [$875 less 10%] |
| Total benefit over 5 years |
$5,000/ha |
|
Less pasture renewal costs:
As well as the direct costs of sowing new pasture [drilling, seed etc] an allowance is made to buy in 2t DM silage.
This compensates for lost growth while the new pasture is establishing and out of grazing for around nine weeks.
| Add the costs drilling, seed etc [see Appendix 1] |
= $570/ha |
| And purchase 2tDM silage @30c/kgDM |
= $600/ha |
| Total cost |
$1,170/ha |
|
Less cost extra MS production:
Extra milksolids [MS] production has a cost.
However, additional milk costs less to produce than the total farm production costs, as a number of fixed costs have already been met [rates, insurance etc].
| Cost extra MS production |
| This has a huge range, very specific to each property. We have assumed the cost of extra MS production is 40% of additional income. |
| |
|
| Cost extra MS production |
$2,000 |
| |
[40% of $5,000/ha] |
|
Net benefit
While pasture renewal itself is highly profitable, it must be remembered its major benefit is likely to be the gain in capital value of the farm from its extra MS production.
| Extra MS production |
$5,000 |
| Less pasture renewal cost |
$1,170 |
| Less cost extra MS production |
$2,000 |
| Net benefit |
$1,468/ha |
|
Appendix 1.
Pasture renewal cost assumptions
| Direct Costs/ha |
|
$ [ex GST] |
| Glyphosate |
3 litres/ha |
$54 |
| Application cost |
|
$40 |
| Cultivation |
1 pass |
$150 |
| Grass seed |
20kg/ha |
$180 |
| Clover seed |
4 kg/ha |
$60 |
| Fertiliser |
150 kg/ha 15:10:10 |
$206 |
| Roller drilling |
|
$150 |
| MCPB |
4 litres/ha |
$52 |
| Application cost |
|
$40 |
| Total cost |
|
$932 |
|
|
