The new climate for the dairy sector

PROJECTIONS

Using three farms in Victoria’s Gippsland region, South Australia’s Fleurieu Peninsula and north-west Tasmania researchers applied climate, biophysical and economic models to develop projections for each farm system.

Researchers Dr Brendan Cullen and Dr Margaret Ayre from the University of Melbourne worked alongside scientists from the Tasmanian Institute of Agriculture, economists, farm consultants and farmers from the three regions to develop a comprehensive picture of how each farm might perform.

“The modelling allowed us to predict some critical indicators of farm performance, covering everything from future climatic conditions, to pasture growth, milk production and farm profits,” Dr Cullen said.

“Most significantly, we’ll see a shift in the pasture growing season. Growth rates will be higher in winter and early spring but lower for the rest of the year.

“Overall, this means less pasture production and that will create a real feed challenge. Farmers will need to adapt. They might buy in more feed, or alter stocking rates and calving times.”

The climate change scenarios for 2040 were based on the climate projections used in the IPCC 5th Assessment report. The team also used a biophysical dairy modelling tool co-developed at the University of Melbourne (‘DairyMod’) to assess the impacts of the future climates on dairy production systems.

Dr Cullen says the 2040 timeframe was chosen because it provided projections which were tangible for farmers involved in the project.

“The farmers we were working with wanted to know what their system would look like one generation into the future,” he said.

“They felt there was too much uncertainty beyond 2040 about how farm systems would change, particularly through genetic and technological advances, along with uncertainty about climate change projections.”

Three regional working groups, each made up of five or six farmers and farm consultants, helped the research team identify a representative farm in each region on which to base the projections.

While every farm is different, Dr Cullen says this approach enabled them to test a diverse range of production systems in detail and apply some of the lessons across the regions.

The working groups were involved in the project from inception to completion, playing a vital role in both ensuring the research questions were locally relevant and ‘ground-truthing’ the results, he explained.

DEVELOPMENT OPTIONS

Dr Cullen and the team looked at a range of different business development options to explore how farmers might adapt their farms to manage challenges such as this. The options broadly represented a trajectory from ‘less intensified’ to ‘more intensified’ dairy production.

One critical finding was climate change had a negative effect on the profitability of each farm regardless of the development option, largely because higher temperatures and longer dry spells reduced pasture utilisation.

Across the three case study farms, the research identified a loss of operating profit of between 10 per cent and 30 per cent due to climate change in 2040 if farmers did not adapt to the warmer and drier climates.

But each development option offered opportunities and trade-offs, depending on the region and farmers’ attitudes to risk. For example, large profits could be made in the more intensified systems when milk prices are high and feed is relatively cheap, but large losses are likely if milk price is low and feed is expensive.

The least-intensified options generally had the lowest average profit, but also had the least year-to-year variability in profit and were generally less impacted by climate change.

Importantly though the price of milk is expected to affect profitability more than climate change, with the current milk price crisis serving to highlight the importance of milk price variability in dairy businesses.

According to Dr Cullen, if the milk price variation observed over the last decade were to continue, it will have a greater influence on farm profit than the direct impacts of climate.

The Australian dairy industry has been on a long term trend of intensification, but Dr Cullen says the simpler, less intensified systems tested are realistic alternatives under future climates.

“For dryland dairy farms, we found a less-intensified system had similar average levels of profitability but were less risky compared to more intensive systems,” he said.

“That might mean a shift to smaller herds, less grain feeding, more off-farm agistment or lower stocking rate – the reverse of what we’ve seen in past decades.

“Dairy farming can certainly continue to be viable into the future, but the project has clearly identified there is a need for the industry and farmers to continue to adapt to changing climatic conditions in order to remain profitable.”

For project leader Gillian Hayman, a dairy extension consultant at Dairy Australia and farmer from southern Gippsland, the project’s findings have confirmed the challenges she sees ahead for the dairy industry.

“Many of the farmers involved in the research had observed and managed through variable climatic seasons in the past. Floods, bush fires, heat waves, extremely wet winters and extended dry periods have all been a part of the last 15 years for farmers,” she says.

“Dairy farmers already need to be at the top of their game, adapt to conditions and continually review their game plan from season to season. Climate change is yet another pressure on farmers along with milk price variability.”

GOOD MANAGEMENT

Good management and skill development has been critical in the past and will continue to be crucial, to ensure dairy farmers can manage profitable businesses into the future, Hayman said.

Dr Ayre led the social science component of the project, interviewing farmers and farm consultants to gauge the level of preparedness for climate change.

“We found dairy farmers have a good awareness of what climate change will mean for their system, and they’re generally confident they can adapt to incremental changes – for example, by adjusting feeding regimes and calving patterns,’’ she said.

“One area we’re concerned farmers aren’t prepared for is the more extreme changes from climate averages. Recent heat waves have been a challenge for many.”

Dr Ayre and the team said one of the strengths of the industry was the opportunity for professional development through discussion workshops, much like those conducted through their project.

Farmers reported learning from peers was vital when adopting new management practices.

The project suggests the dairy industry can support adaptation by farmers by providing specific professional development in business risk management including financial risks (seasonal and annual budgeting), biophysical risks (farm water planning) and social risks (farm workforce planning).

A strong advisory sector is also critical to supporting adaptation and the dairy industry can support this through playing a role in coordination and linking private advisors, industry and government extension services with farmers and their networks.

Positively, the research team found dairy farmers are already adapting to the changing climate conditions.

Farmers reported they were increasing the amount of shade and shelter available for stock during extreme weather events, increasing farm water storage and carrying larger fodder reserves from year to year.

The study’s predictions on what future climates will mean for pasture production and farm profitability highlight the critical need for the industry to foster continued and more widespread adaptation in a warming and drying climate.

Lauren Hull is a Communications Coordinator at the University of Melbourne

This story was originally published by the University of Melbourne.

This project was funded by the Australian Government and Dairy Australia. The research was undertaken by the Tasmanian Institute of Agriculture, the University of Melbourne and D-Arm Consulting.