An Economic Evaluation of the FutureDairy Complementary Forage Rotation System - Using Cost Budgeting

Andrew Alford, S.C. Garcia, Santiago Farina and Bill Fulkerson

No 280786, Research Reports from New South Wales Department of Primary Industries Research Economists

Abstract: The complementary forage rotation (CFR) aims to achieve high levels of home-grown forage to complement high performance dairy pastures. Variable cost budgets indicate that total variable costs for CFR are similar to those of a well managed, high input pasture, approximately $110/t dry matter (DM) utilised (range being from $97 to $118 and from $98 to $128/t DM for CFR and Pasture treatments, respectively). The similar costs of forage production indicate that the potential of pasture production and utilisation should be fully exploited before CFR is considered, and CFR has potential to replace more expensive feeds such as concentrates. When concentrate was partially replaced by growing CFR, and including associated infrastructure costs, CFR had to occupy an area of more than 10 per cent of the dairy area of a modelled farm, when CFR occupied 20 per cent of the dairy area there was a 10 per cent reduction in feed costs. Stochastic budgeting was applied to examine fertiliser price risk and yield risk. Under fertiliser price variability the average cost of pasture was $121/t utilised DM and a maximum cost of $149/t DM, and the cost of CFR fodder was $112 and $123/t DM, respectively, due to the 2.3 times higher efficiency of use of nitrogen for the former than for the latter. Including forage yield variability, using minimum (~60 per cent less yield than target), most likely (~25 per cent less yield than target) and maximum (target yield) yield distributions, the CFR had a higher average cost of forage than the high input pasture system, being $139/t DM and $133/t DM respectively. The likelihood of reducing pasture utilisation for a ‘good’ pasture manager would be much lower than the risk of having a yield reduction in one or more of the CFR crops, was and reflected in the pasture system having a minimum yield only 33 per cent less than the target yield of 18 t DM/ha in the simulations undertaken. The risk analysis including both price and yield risk simultaneously, indicate that the average variable cost of CFR forage is similar to well managed, high input pasture.

Keywords: Demand and Price Analysis; Livestock Production/Industries (search for similar items in EconPapers)
Pages: 52
Date: 2009-08
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:nswprr:280786

DOI: 10.22004/ag.econ.280786

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