Performance of pasture-based dairy systems subject to economic, climatic and regulatory uncertainty

• Published in: Agricultural systems Vol. 174; pp. 95 - 104
• Main Authors: Beukes, Pierre C., Romera, Alvaro J., Neal, Mark, Mashlan, Kim
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.08.2019
• Subjects: business enterprises; climate; cows; ecological footprint; finance; Greenhouse gases; Milk price; milk prices; Modelling; Nitrogen leaching; Profitability; Resilience; risk; stocking rate; uncertainty; weather; Milk price; Modelling; Profitability; Greenhouse gases; Resilience; Nitrogen leaching
• ISSN: 0308-521X; 1873-2267
• DOI: 10.1016/j.agsy.2019.05.002

Viable pasture-based dairy businesses need to cope with increasing variability in milk price, extremes in weather, and an uncertain regulatory environment that may impose disruptive mitigations. This modelling study was designed to assess system performance in response to price and climate variability of three pasture-only systems, 12-month, 6-month and 3-month, each with a range of stocking rates. We used a combination of six metrics to assess the systems. Higher stocking rate systems were more exposed to climate and economic risk, but performed better in terms of production, profit and equity growth. The lower stocking rate systems showed lower environmental footprint and variability of operating profit, but also lower production, profit and equity growth. Intermediate systems, with average performance in all six metrics, were somewhere between 2.7 and 3.2 cows/ha for the dairy region explored here, irrespective of pasture-only regime. System choice will depend on the operator's perception of sources of uncertainty, and how they intend to cope with these uncertainties. With greater environmental pressure, systems will have to lean towards lower stocking rates and input, while pressure for financial performance will drive the system in the opposite direction. It is clear that there is no system that “has it all”. •Variability of operating profit was more influenced by milk price than by climate.•Stocking rate was a stronger driver of farm performance than the number of months a system plans to be pasture-only.•Lower stocking rate systems were stronger in the environmental metrics and had the lowest variability in operating profit.•Higher stocking rate systems came out stronger in measures of milk production, average operating profit and equity growth.•System choice will depend on the operator's perception of sources of uncertainty, and how they intend to cope with these.