BUSINESS | IRRIGATION
Come hell or high water
Irrigation can revolutionise a sheep and beef farm but it is a major
investment. Farm consultant Bruce McCorkindale looks at how big an
investment can be made before it doesn’t make economic sense.
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then this can be increased to 9800kg
DM/ha/year. If N fertiliser is applied
without irrigation (D+N) annual pasture
production can be increased to 15,700kg
DM/ha/year. This difference in terms
of the magnitude and also “which one
wins” is a surprise to many.
The increase from N highlights that
dryland pastures tend to be very N
deficient. The shape of the growth
pattern shows that basically the N allows
the pasture to grow to its potential
whenever moisture conditions allow it
to. This results in a much bumpier feed
supply curve than the flatter curve with
irrigation. The challenge is for a farmer to
have the enterprises and skills to be able
to farm well to a feed curve that looks
like this.
Putting on both water plus unlimited
N of course can potentially take the
production to another level again.
The additional N applied to the
dryland to achieve the 9400kg DM/
ha/year lift in pasture production was
probably in excess of 450kg N/ha/year
spread over multiple applications to
limit environmental effects. That equates
to about 980kg of urea/ha/year and an
Growth rates (2 year means)
D-N
120
Growth rate (kg/ha/d)
Many sheep and beef farmers in dry areas
of New Zealand have either already added
an area of irrigation to their farms or at
some point will be faced with decisions
about whether to make the investment to
add or expand irrigation.
It’s not an easy decision. The
opportunity to join a scheme may not
be repeated for several decades. It will
involve a significant capital injection and
it will change the way the farm operates.
Usually there will also be options to
consider on the proportion of the farm to
irrigate.
In areas that have experienced severe
droughts, especially ones that extend
over multiple years, there can also be
emotional as well as financial factors that
affect decisions. So what makes sense
when farmers analyse things from an
objective viewpoint?
The farm, with its individual mix of
enterprises and business parameters,
needs to be looked at from three different
perspectives as part of making the
decision. How could this business be
maximised as a dryland unit?
How could we maximise low cost feed
production and match this with the most
profitable animal enterprises that have
the best fitting feed demand?
What is the cost of the extra seasonal
drymatter (DM) produced by introducing
irrigation. Also, what benefits will this
add in years that could be considered
“normal” for pasture growth and with
normal relationships between store prices
and the stock schedules?
What benefit would irrigation provide
in a “distressed season” where growth
is reduced well-below normal, the store
market is depressed and the overall
impact has the potential to have effects
on stock that could flow over into the
subsequent year(s).
So, let’s take a high-level look at these
three perspectives.
At a recent field day on dryland
pasture options in Otago, Professor Derek
Moot from Lincoln University gave the
assembled farmers the option of either
applying additional nitrogen fertiliser (as
much as the plants could use) to their
dryland, or irrigation water – they could
not chose to do both. Which would you
chose at this point?
Graph 1 shows the results from their
two-year trial. The base production of
this dryland block (D-N) is 6300kg DM/
ha/year. If irrigation alone (I-N) is added
21.9t/ha
I-N
D+N
I+N
90
15.7t/ha
60
9.8t/ha
30
6.3t/ha
0
J
A
S
O
N
D
J
Month
F
M
A
M
J
J
Source: Lincoln University
Country-Wide
February 2016
investment of about $900/ha, assuming
at least some of the applications are done
by the farmer. The cost is about 9.6c/kg
DM.
Enterprises likely to be run under this
kind of growth curve include trading
flocks of ewes, buying and selling ewes
with lambs at foot and short-term cattle
finishing. They will produce returns
in the range of 14-22c/kg DM. So at
this point, ignoring other costs that
will increase a little, the option looks
profitable.
Development and operating costs
for irrigation vary enormously so some
generalised assumptions need to be
made. These figures can be changed for
each farmer’s situation.
Let’s assume that the irrigation
installation, including both delivery to
the gate plus onfarm development is
$7500/ha and the annual running costs
for water charges, electricity and system
maintenance is $900/ha. It is assumed
The annual cost is $1775/ha to grow 6000kg
DM or 29.6c/kg DM – historically dairy farming
is about the only enterprise able to cover this.
the increase in annual DM production
is 6000kg/ha and to achieve this an
extra $200/ha of N fertiliser is used. A
finance charge of 9% against the capital
development services both the debt
and pays it off ($675), which funds the
depreciation.
When these numbers are crunched the
annual cost is $1775/ha to grow 6000kg
DM or 29.6c/kg DM. About the only
enterprise that has historically been able
to cover this is dairy farming.
Heading: Loss prevention
On the face of it sheep and beef farmers
look like they are only going to lose
money by investing in irrigation.
This is why we need to consider how
does access to an area of guaranteed feed
supply benefit a sheep and beef farm
during a severe drought event?
Putting too much investment into
irrigation may smooth out seasonal
production but may not be profitable
for most enterprises.
Country-Wide
February 2016
Other
E
A comment was made recently that if dairy farmers aren’t making
any money from milking cows then why don’t they start finishing
lambs?
There are a couple of reasons why this isn’t going to happen.
The first is that few dairy farms would have both the stock
handling and fencing infrastructure – or the desire – to run sheep
of any kind. The second reason is the lamb finishing simply would
not make enough money unless it was in the unlikely scenario
that the lambs could eat feed that would otherwise go to waste.
Assuming a $20/head average margin for a lamb finished,
that the finisher has added about 10-12kg of liveweight/head at
average growth rates and South Island Farmax pricing-summer
finishing of lambs produces a return of about 17-18c/kg DM.
If a dairy cow converts an allocation of 14kg of DM into a
kilogram of milksolids at $5/kg (milk price plus some dividend)
then this has produced a gross return of nearly 36c/kg DM. The
issue for dairy farmers at the moment is what proportion of this
36c is consumed by farm running costs and financing costs.
Unfortunately, dropping a few cows to run lambs would not
make much of a dint in these costs so at this point there is little
likelihood of seeing lambs bouncing through the cowshed.
K
FA
Milk beats meat
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Key messages
Limited irrigation that allows for the protection
of capital stock and reduction in distressed
store sales in severe events is worthwhile.
While we could thrash these numbers around
in many different ways there is a strong
message coming through that won’t change.
It is from the onfarm experiences of sheep
and beef farmers who have adopted irrigation.
These messages are:
• Limited irrigation that allows for the
protection of capital stock and reduction in
distressed store sales in severe events is
worthwhile.
• Maximising the productivity of your dryland
and matching this with the best-fitting
animal enterprises is the most profitable
and highest-priority strategy and has
relatively low capital requirements
• Putting too much investment into irrigation
may smooth out seasonal production but
may not be profitable for most enterprises,
which is why many farmers who have done
this struggle to make headway against
additional debt and running costs they’ve
incurred.
• Personal preferences and attitudes to risk,
plus the existing debt loading of
the business are all factors influencing
the decision about whether to proceed or
how much irrigation to add. Fortunately,
tools like Farmax allow all options to
be analysed to test their economic and
biological viability.
K
FA
Other
The highest priority in these events is
to look after core capital stock and try
as much as possible to limit the effect of
the drought into the year of the drought
– ie: make sure you minimise the impact
on the following years’ production. This
can quite likely mean that the farm will
still sell store lambs – but it will have
some capacity to sell stores in an orderly
manner and minimise the number
of smaller store lambs that are often
heavily discounted.
Moving a heavily discounted 22kg
store lamb to a better 29kg store lamb
will probably add about $25 of value and
use about 85kg DM, a return of 29.4c/
kg DM.
If this feed is used to maintain the
body condition of ewes, either through
direct feeding or by storing away buffer
stocks of silage to use in severe years,
then this can have a significant benefit
to the following year’s income. In this
case the return is about preventing a loss
rather than an increase in current year’s
income.
For example, if feeding the ewes better
prevented a loss of 8kg of bodyweight
(106g/day over two and a half months)
then the following year’s scanning
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E
BUSINESS | OPINION
Climate science isn’t science
Robert McBride
So called “climate science” is not science.
Science is a process typically involving
controlled experiments to isolate a
single variable in an effort to get the best
answer to a specific question.
This is not as straightforward as it
sounds – for example, I was recently coauthor of a paper that criticised the data
and conclusions drawn from a series of
pasture fertility experiments. Our critique
was in turn criticised in a follow-up
paper.
This critique of the critique will no
doubt receive further criticism, and so
it goes in all fields of science – science is
a rigorous and relentless refinement of
knowledge in an effort to determine the
best answer to a question.
Contrast this with “climate science”
that starts with a conclusion and only
seeks evidence that supports that
conclusion. The “Climategate” email
scandal in 2009 revealed that top climate
“scientists” around the world were
collaborating to manipulate data, subvert
the peer review process and control what
information was published.
Since then nothing has changed.
Attacks on anyone who questions
aspects of the alleged “settled science”
of human-caused global warming have
would be about 20% higher and net
lambing 16% higher. The lambs would
probably be about 1kg heavier at
weaning (very dependent on the
following spring growth) and the ewes
would produce about 0.5kg more wool.
Assuming the following season average
lamb price is $88 (a mix of finished and
store) then the additional income per ewe
is about $19.
The additional feed that the irrigated
block needs to supply to prevent the loss
of 106g/day – which provides the ewe
about 17 megajoules/kg of condition – is
about 190g DM/day of medium-quality
feed or good quality silage (ME of 9.5).
Over the two and a half months this
means about 14.5kg of DM “protects”
$19 of next year’s income, which is a
massive return of $1.32/kg DM.
This figure, of course, assumes that the
irrigated block is only supplying enough
feed to prevent the loss of condition
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February 2016
Other
intensified. This is perhaps the most
compelling evidence that “climate
science” is something other than science
– increasingly we are seeing calls to make
criticism a criminal offense. Think about
the implications of making it a crime to
question.
If not science, what is “climate
science”? It is a political ideologymovement that has effectively sold itself
as being a scientific endeavour. Don’t be
and that the balance of the feed is being
supplied from the rest of the farm.
The reality is that close to 100% of
the ewes’ diet may be dependent on the
buffers from the irrigated block for a good
chunk of the two and a half months. If
we assume that this applies to 50 days
then the total DM contribution rises to
about 57kg DM/ewe for the same benefit
so the return declines to a still very
respectable 34c/kg DM.
This reinforces why dryland farmers
stash away feed buffers in the good years
and often keep a silo of grain on hand.
The next step in this analysis would
be to look at the expected frequencies
of wet, average and very dry events to
provide some weighted averages for costs
and benefits.
•
fooled into thinking it is anything other
than political activism.
Again, consider that climate “scientists”
are not seeking the best answer to a
question – they are seeking no questions
to their answer.
• DrRobertMcBridegraduatedwithaPhD
insoilscienceintheUSandnowworksfor
agKnowledgeintheSouthIsland.
Investing in or
expanding irrigation
is not easy for sheep
and beef farmers.
BruceMcCorkindaleisafarm
consultantwithAbacusBio,based
inDunedin.
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