Co-op Programme Manager (Environment) Louise Cook shares industry research into the connection between lower emissions and profitability.
It has almost been two years since the Co-op introduced our emissions reduction targets for 2030 and an ambition to be net zero by 2050. It’s a collective aim and one that all facets of the business are working towards – from grass to glass.
We know that making incremental changes on-farm can have cumulative reductions in emissions. However, as increasing costs continue to bite into profits, farmers are concerned about the financial impact of making changes on-farm.
We recently undertook a comprehensive study with DairyNZ and LIC looking at the link between physical farm performance measures and profitability. In a first for the dairy sector, the Emissions and Profitability Project joined the three industry datasets across 8,000 farms to identify what distinguishes high-profit farms with lower emissions intensity and what the opportunities are for farmers (over four years).
In a nutshell, what did we find?
- High profit can be generated in systems with either low or high emissions intensity.
- The key to high profit and low emission intensity is using low-footprint feed to achieve good, but not exceptional, milk production per kilogram liveweight.
- Low-footprint feed is homegrown, using nitrogen efficiently, and supplements with lower embedded CO2 emissions.
- Aiming for low emissions intensity through increasing production per cow, without focusing on the footprint of the feed, is likely to have undesirable consequences on other key outputs, e.g. profitability, total emissions, and purchased nitrogen surplus (PNS - the lower the PNS number, the more efficient nitrogen use is on-farm).
- High-profit farms with low emissions intensity can be found anywhere within each region.
- All farms have opportunities to lower emission intensity, without compromising other outputs.
In more detail
Farms that had high profits and low emissions intensity were using resources efficiently. It didn’t matter about the size of the farm or what tools and technology were available. These farms followed key drivers of farm efficiency – creating more with less.
Each farm operated completely differently, and there was a huge range within each data set (across regions and farm types). Some farms used zero nitrogen fertiliser, others had 150-plus kilograms per hectare.
What was really striking looking at the data, however, is that the farms with the high profits had fewer inputs going into the system in general, but were able to extract significantly more out of the system. The gap between the inputs and the outputs was driving the lower emissions footprint, lower purchased nitrogen surplus, which, in turn, is a good thing from a profit point of view.
Of note, there was also no intra-regional bias for high-profit, low-emission farms.
These farms were scattered throughout each region, a trend replicated nationwide. This was a pleasant surprise for the researchers as it proves there is a pathway where reduced emissions intensity can support high profitability on-farm regardless of the farm’s location. Homegrown feed was a key component of high-profit and low emissions intensity farms. The more homegrown feed eaten per hectare made a huge impact. High-profit, low-emissions farms were able to convert the homegrown feed really effectively to milk and drive the same outputs.
These farms also used fewer supplements and those with lower footprints. From a price point, some supplements can be more affordable, but they come with a high emissions footprint. Low footprint feeds include pasture silage and other farm-grown forages. In contrast, imported feeds may be relatively cost effective but have a higher emissions footprint as they come from overseas and may have deforestation or peat soils within the supply chain.
How to be a high profit, low emission farm
Every farm is unique, and the pathway to reduce emissions will differ depending on size, system, location, and more. To discuss the best opportunities for your farm, we recommend booking an On-Farm Efficiency Service with your local Sustainable Dairying Advisor.
