Is there an environmental silver lining in low milk prices?

Rachael Davidson

No 258664, 2017 Conference (61st), February 7-10, 2017, Brisbane, Australia from Australian Agricultural and Resource Economics Society

Abstract: The global dairy market has been adversely affected by increased milk supply in Europe, the US and the Southern hemisphere. This, amidst a reduction in demand for imported dairy commodities by China and Russia, has seen a global downturn in milk prices. New Zealand dairy farmers have been faced with depressed milk price in the last few seasons, and in response to the financial pressures, have been forced to consider farm system changes to minimise the impact. Many of the system adjustments being implemented to manage the current downturn have led to improved efficiency and are similar to those that will help farmers meet existing and proposed environmental limits being enforced by regional councils. Could the adjustments being made have lasting environmental benefits for farmers and the industry? This study aims to identify the changes in farm systems and their management as a consequence of lower milk prices, and whether these changes have improved environmental outcomes. It also aims to identify whether these outcomes are likely to last once milk price recovers, thus determining whether the current period of low milk price has a silver lining. The key adjustments made to dairy farm systems in response to low milk price were reductions in cow numbers, fertiliser use and supplementary feed use. The methodology used to determine the environmental impacts of these adjustments involved creating typical regional farms and modelling the changes experienced from a drop in milk price in Farmax and Overseer. These adjustments had subsequent impacts on milk production. The changes observed had slight implications for environmental outputs, including nitrogen leaching and greenhouse gas emissions.

Keywords: Environmental Economics and Policy; Farm Management; Livestock Production/Industries (search for similar items in EconPapers)
Pages: 11
Date: 2017-02-07
New Economics Papers: this item is included in nep-agr, nep-cis and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aare17:258664

DOI: 10.22004/ag.econ.258664

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