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Since 1 April 2015, European dairy milk quotas have been removed resulting in the intensification of dairy production within EU countries. The aim of this study was to evaluate the physical and economic impacts of the initial intensification undertaken within Irish grazing dairy systems. Physical and financial data for 868 seasonal calving dairy farmers with records for each of the years 2013–2017 inclusive were used in this analysis. All analyses were undertaken using a mixed-model framework in PROC MIXED. The overall level of fat plus protein productivity of studied farms increased by 51% during the 5-year period through a combination of increased production per cow, increased operational scale and system intensification. Overall farm net profit was highly variable between years and was greatest in 2017 (€133 836) and least in 2016 (€65 176). When farms were characterized into milk production expansion quartiles, farms in Q1, Q2, Q3 and Q4 increased output by +7, +25, +44 and +86%, respectively. Whereas total farm profit (€/farm) declined for Q1 farms between 2013/2014 and 2016/2017 (€−5257; −7%), the greater expansion undertaken in Q2, Q3 and Q4 resulted in increases of €3046 (+4%), €20 810 (+25%) and €51 604 (+62%), respectively. In all strategies studied, farm profit increased due to a combination of increased revenues, increased pasture utilization and a dilution of per unit production costs. Further investigation of the longer term impacts of expansion is merited, not just in terms of economic indicators, but also in terms of environmental and socio-cultural change.

The importance of financial benchmarking has increased in recent years as European Union milk quota abolition has facilitated rapid change in the dairy sector. This study evaluates the association between usage frequency of a financial benchmarking tool [Profit Monitor (PM)] and farm changes on spring-calving pasture-based dairy farms. To this end, physical and financial data for 5,945 dairy farms, representing 20,132 farm years, for the years 2010 to 2018 were used. Farms were categorized by frequency of annual financial benchmarking over the 9-yr period into frequent PM users (7–9 yr), infrequent PM users (4–6 yr), low PM users (1–3 yr), and nonusers. We use a mixed model framework and econometric models to characterize farms and to explore characteristics and determinants of economic performance and user groups. The most frequent users of the financial benchmarking tool had the greatest increase in intensification (measured by change in farm stocking rate), productivity (measured by change in milk production per hectare), and financial performance (measured by change in farm gross output and net profit per hectare) across the study period. Infrequent and low PM users of the benchmarking tool were intermediate for all variables measured, whereas nonusers had the least change. Empirical results indicated that economic performance was positively associated with dairy specialization and pasture utilization for all groups. Despite considerable fluctuations over the observation period, the overall change in total farm net profit between 2010 and 2018 was greatest for the frequent PM users (an increase of 70%, or €37,639), followed by farms in the infrequent PM user category (a 71% increase corresponding to an increase of €28,008 in net profit); meanwhile, low PM user and nonuser categories showed increases of 69% (€26,270) and 42% (€10,977), respectively. The results of this study also clearly indicated the existence of a strong positive association between frequency of financial benchmarking and greater technical and financial efficiency. The econometric analysis revealed that financial benchmarking users are more likely than nonusers to have larger herds, and that regional differences exist in usage rates. Finally, the study concludes by suggesting that the development of simplified financial benchmarking technologies and their support are required to increase benchmarking frequency, which may also help to facilitate a more sustainable and resource efficient dairy industry.

peer-reviewed Because not all animal factors influencing profitability can be included in total merit breeding indices for profitability, the association between animal total merit index and true profitability, taking cognisance of all factors associated with costs and revenues, is generally not known. One method to estimate such associations is at the herd level, associating herd average genetic merit with herd profitability. The objective of this study was to primarily relate herd average genetic merit for a range of traits, including the Irish total merit index, with indicators of performance, including profitability, using correlation and multiple regression analyses. Physical, genetic and financial performance data from 1131 Irish seasonal calving pasture-based dairy farms were available following edits; data on some herds were available for more than 1 year of the 3-year study period (2007 to 2009). Herd average economic breeding index (EBI) was associated with reduced herd average phenotypic milk yield but with greater milk composition, resulting in higher milk prices. Moderate positive correlations (0.26 to 0.61) existed between genetic merit for an individual trait and average herd performance for that trait (e.g. genetic merit for milk yield and average per cow milk yield). Following adjustment for year, stocking rate, herd size and quantity of purchased feed in the multiple regression analysis, average herd EBI was positively and linearly associated with net margin per cow and per litre as well as gross revenue output per cow and per litre. The change in net margin per cow per unit change in the total merit index was h1.94 (s.e.50.42), which was not different from the expectation of h2. This study, based on a large data set of commercial herds with accurate information on profitability and genetic merit, confirms that, after accounting for confounding factors, the change in herd profitability per unit change in herd genetic merit for the total merit index is within expectations.

peer-reviewed As land becomes a limiting resource for pasture-based dairy farming, the inclusion of purchased supplementary feeds to increase milk production per cow (through greater dry matter intake) and per hectare (through increased stocking rate) is often proposed as a strategy to increase profitability. Although a plausible proposition, virtually no analysis has been done on the effect of such intensification on the profitability of commercial pasture-based dairy farm businesses. The objective of this study was to characterize the average physical and financial performance of dairy systems differing in the proportion of the cow’s diet coming from grazed pasture versus purchased supplementary feeds over 4 yr, while accounting for any interaction with geographic region. Physical, genetic, and financial performance data from 1,561 seasonal-calving, pasture-based dairy farms in Ireland were available between the years 2008 and 2011; data from some herds were available for more than 1 yr of the 4-yr study period, providing data from 2,759 dairy farm-years. The data set was divided into geographic regions, based on latitude, rainfall, and soil characteristics that relate to drainage; these factors influence the length of the pasture growth season and the timing of turnout to pasture in spring and rehousing in autumn. Farms were also categorized by the quantity of feed purchased; farms in which cows received 30% of their annual feed requirements from purchased feed were considered to be categories representative of increasing levels of system intensification. Geographic region was associated with differences in grazing days, pasture harvested per hectare, milk production per cow and per hectare, and farm profitability. Farms in regions with longer grazing seasons harvested a greater amount of pasture [an additional 19 kg of dry matter (DM)/ha per grazing day per hectare], and greater pasture harvested was associated with increased milk component yield per hectare (58.4 kg of fat and 51.4 kg of protein more per tonne of DM pasture harvested/ha) and net profit per hectare (€268/ha more per tonne of DM harvested). Milk yield and yield of milk components per cow and per hectare increased linearly with increased use of purchased feed (additional 30.6 kg of milk fat and 26.7 kg of milk protein per tonne of DM purchased feed per hectare), but, on average, pasture harvested/hectare and net profit/hectare declined (−0.60 t of DM/ha and −€78.2/ha, respectively) with every tonne of DM supplementary feed purchased per hectare. The results indicate an effect of purchased feeds not usually accounted for in marginal economic analyses (e.g., milk to feed price ratio): the decline in pasture harvested/hectare, with the costs of producing the unutilized pasture in addition to the cost of feed resulting in a lower profit. In conclusion, greater milk component yields per cow were associated with increased profit per hectare, and a greater use of purchased feeds was associated with an increase in the yield of milk components. However, on average, increasing yield of milk components through the supply of purchased feeds to pasture-based cows was associated with a decline in pasture harvested per hectare and profitability. The decline in pasture harvested per hectare with increased use of purchased supplements per cow is probably the primary reason for the low milk production response and the failure to capitalize on the potential benefits of purchased supplements, with the associated costs of growing the unutilized pasture, in conjunction with increased nonfeed variable and fixed costs outweighing the increased milk production and revenue from supplementation. Farmers considering intensification through use of purchased supplements to increase the stock-carrying capacity of the farm (i.e., stocking rate) must ensure that they focus on management of pasture and total cost control to capture the potential benefits of supplementary feed use.