GRASS-FED : CHEAP OR PREMIUM?

The following is an extract from AFS’s review of Food Harvest 2020 published on 17/03/2014

The author has been pondering the question of what is meant by the term grass-fed? Although it seems obvious, is it possible that it can actuallymean different things to different people? Below are two interpretations.

  1. Grass is a low-cost source of metabolizable energy for ruminant livestock. Hence, farming systems should be designed to maximise the use of this low-cost feed; preferably tending towards the exclusion of all other feeds.
  2. The use of grass-fed livestock farming systems can provide the raw material, be it milk or meat, for natural, healthy, high-quality, differentiated products that command a premium price in the World’s food markets.

It is very clear with beef and lamb that grass fed is recognised as a premium product. It is seen by some as a more  natural product and by others as a healthier one. In the United States where growth hormones are used in beef production there are consumers who clearly wish to differentiate between grass and cereal-fed beef. There will also be those who have ethical, animal-welfare and GMO questions concerning what happens within beef-lot systems.

The presence of a grass-fed, premium milk market is more debatable. There are, however, occasions where, for example, cheese-makers will specify that no fermented forages are to be used in their milk supplies. The question is, can a case be made for products to be differentiated on the basis of, a) being entirely from grazed grass [maybe possible with some grazing only beef and lamb], b) being derived from grazing and hay and/or silage, or, c) being derived from grazing and hay and/or silage plus a limited use of cereals [possibly derived from a conservation grade type farming scheme and/or a quality-assured scheme]. All may have appeal to certain consumer groups.

Selling beef and lamb from any of the above systems is, location and breed permitting, feasible. It becomes more difficult when considering dairy products as those customers seeking ‘healthy’, grass-fed or predominantly grass-fed, products will be seeking a diverse range of products that includes both fresh and longer-life products. Given the current emphasis on developing highly-seasonal, no-winter-milk production systems in Ireland at present, the farming systems themselves are actually moving further away from providing milk for grass-fed-milk products. A key point here is that the farming systems needed to provide milk for a 12-month supply of grass-fed fresh dairy products have to be organised from the ground up to create the product.

What is evident to someone looking at Irish agriculture from the outside is how different its dairy sector is from others in Europe. It is very highly focused on grass utilisation and the use of supplementary concentrate feeds is very limited. It is also different from others that focus on grass-fed as it appears that Ireland is seeking to move to a system where minimal grass forages are harvested for use in a very short winter feeding where the cows are dry and no milk is produced. The objective being that all milk [or as much as feasibly possible] is produced off grazed grass. The ideal is to very closely match energy-from-grass requirements to seasonally available grass. To achieve this the focus is on tight calving at the start of the growing season to maximise the use of available grass. It is a system that appears to have its origins in the System1 (see footnote below) grass-based dairy-systems of New Zealand.

At this point it is interesting to have a look at what has been and is happening in New Zealand. There has been interesting work in NZ on classifying their different grazing systems (see footnote below). In essence they have devised a 1 to 5 system that describes the relative contributions of grazed grass and other feed. In system 1 the main source of feed is grazed grasses from the milking platform. For successive systems the amount of grazed grass declines.

Bruce Greig fromLincoln University in New Zealand presented a paper a couple of years ago on Changing NZ dairy farming systems that showed to what degree each systems was in use in the NZ dairy industry. The time frame approximated to the first decade of the 21st Century (2000-02 to 2009/10). System 1 declined from 41% to 10%, system 2 was fairly constant (31% to 32%), system 3 rose from to 17% to 36%, system 4 from 11% to 18% and system 5 from to 1% to 4%. Overall there has been a clear trend away from grass-only systems to using systems
that included a far greater proportion of brought in feeds, cereals and proteins.

Clearly there has been a significant change in New Zealand since the turn of the Millennium. Previously the system choice was heavily towards home-produced grass only (system 1) or home-produced grass with low feed ‘imports’ (2). The first two, low-input, grass-based systems accounted for 72% of production. Since then system 1 usage has fallen by three-quarters. System 2 usage has remained static but that is to be expected as many producers probably make progressive changes of systems rather than going direct from system1 to system5. The  figures do, however, show a major shift in emphasis within New Zealand away from System1.

One has read recently in the Irish press that average milk production costs per litre in NZ have been rising. This is not to be entirely unexpected as classical economic theory would expect that if milk production is profitable more resources will be dedicated to milk production. It is unlikely that the additional resources will be as cheap as those already employed. Yes, there are economy of scale options for individual units [NZ has seen continuing herd size expansion] but for an industry resource unit costs will inevitably rise with expansion. The obvious one is land and these are rising and a part of the reason for NZ milk cost rises. Simply, as land prices rise, will extensive grass-based, land-using systems remain the most economic option; especially if lower-land-cost-per-unit sources of metabolizable energy [and proteins] are available and substitutable [imported grains and palm kernel cake in NZ’s case]? How will this issue pan out in Ireland with current [and future] prices for buying and/or otherwise accessing?

A second rather relevant opinion was published on February 2nd 2014 by Keith Woodford, the Professor of Farm  Management and Agribusiness from Lincoln University. It was entitled Reworking our Dairy Systems. To quote: “The New Zealand dairy industry has always prided itself as being different. Whereas most other countries developed their dairy industries based on the housing of cows for much or all of the year, the New Zealand industry has always been pasture-based. The cows harvest the grass themselves, the cost of production has been
low, and the image was of “clean and green”. Prof. Woodford is arguing that, due to managing the environmental issues associated with autumn and winter grazing, cows need to be off-pasture for a significant period be it on “stand-off (non-roofed) pads or partly enclosed sheds”. And “stand-off pads bring their own problems. There needs to be collection of all effluent and, without a roof over the pad, the effluent pond needs to be at least double the normal size. So in most cases, it means that there have to be roofed sheds”… “there are now several hundred farms in New Zealand that already house the cows in winter”… [including] “the 2013 winner of the New Zealand Dairy Business of the Year”. Hence, times in NZ appear to be changing.

The 5 production systems  Source: http://www.dairynz.co.nz

The Five Production Systems are a way to group farm production systems by their usage of imported feed. As New Zealand pastoral farming is about profitably balancing feed supply and demand, five production systems have been described by DairyNZ primarily on the basis of when imported feed is fed to dry or lactating cows during the season and secondly by the
amount of imported feed and/or off farm grazing. The definitions do not include grazing or feed for young stock.

System 1 – All grass self-contained, all stock on the dairy platform. No feed is imported. No supplement fed to the herd except supplement harvested off the effectivemilking area and dry cows are not grazed off the effectivemilking area.

System 2 – Feed imported, either supplement or grazing off, fed to dry cows. Approx. 4 – 14% of total feed is imported.  Large variation in %as in high rainfall areas and cold climates such as Southland,most of the cows are wintered off.

System 3 – Feed imported to extend lactation (typically autumn feed) and for dry cows. Approximately 10-20% of total feed is imported. Westland – feed to extend lactationmay be imported in spring rather than autumn.

System 4 – Feed imported and used at both ends of lactation and for dry cows. Approximately 20 – 30% of total feed is imported onto the farm.

System 5 – Imported feed used all year, throughout lactation and for dry cows. Approximately 25 – 40% (but can be up to  55%) of total feed is imported.

*Note: Farms feeding 1-2kg ofmeal or grain per cow per day for most of the season will best fit in System3

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