Blog.

Feb 2021

Is Pasture worth the Investment?

Lets talk about your pasture investment. How does it actually stack up?

 

Well… as you know – Contention can arise over the cost to grow a kg of pasture DM.

Some analysts reach dizzying heights of 40c/kg DM, and some as low as 5c / kg DM.

(See Bryan Hockings “The cost of producing pasture dry matter” Farmers Weekly, 24 Feb 2016 versus Tony Waugh “What is the real cost of pasture growth” Farmers Weekly 4th December 2015).

Both have great points to make and the debate could rage for a long time.

 

OUR OPINION

The calculation is simple – What is the cost / profit difference between:

  1. 100% Total Mixed Ration cost of production
  2. 100% pasture based production system

Aside of the fact of increasing capital values connected with land, I think you will come back to pasture every time with one massive proviso – that you produce a minimum of 14 tonne DM every year!

 

Low cost pasture production has been long thought to be NZ’s biggest advantage over the rest of the world to be able to produce high quality, low cost milk produce.

If we raise costs of production, we simply lose that advantage and therefore our competitive advantage in the international market place.

 

OPINIONS ASIDE

One factor is paramount, the more DM we grow / Ha – be it pasture or supplementary feed, the lower the cost per kg DM, or more importantly the lower the cost to produce each kg of milk solids.

 

For that reason alone, we view pasture renewal as a major foundational investment you make in your milk production venture.

The next investment you make is equally important, and that is how you protect your initial investment.

After all, you don’t deliberately run your 1 year old new car up beside the fence – you’ll scratch it.

So, you don’t need to be an accountant to see that the more it produces, and the longer it lasts, the lower your costs of production, or the higher your return on investment.

 

THE OPTIONS?

When investing in your new pastures, you have two options:

1. You can view your new pasture expenditure as a cost.

  • Purchase the cheapest seed you can get, plant it the easiest and cheapest way possible, and don’t worry about any weed challenges.
  • On top of that, drive it hard with N, graze it early, hard and often.
  • Expect plant pulling and pasture thinning.

 2. You can view your new pasture expenditure as an investment.

  • Invest time and seek advice to ensure you have chosen the best pasture varieties for your enterprise.
  • Invest time and seek advice on your planting and grazing management.
  • You make this investment because you know it is your breadwinner – the longer and stronger it grows, the higher the return on their investment.

Thanks for your time, all the best,

The Smart Team

References

“The cost of producing pasture dry matter” Farmers Weekly, 24 Feb 2016  – Bryan Hocking

“What is the real cost of pasture growth” Farmers Weekly 4th December 2015 – Tony Waugh