by
Mark Macintosh
AgFirst
Introduction
 An analysis was carried out to assess the profitability of
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
irrigation on a range of soils ie dry (high priority), medium
(medium priority), and moist (low priority).
Pasture growth was assumed for the three soil types
based on past experience.
This was converted to milk production using assumed
conversion factors from dry matter to milksolids.
Variable costs such as: feed, fertiliser, power, and
pasture renovation were assumed for each option
A fixed charge per hectare for the Community Irrigation
scheme was included - $540/ha.
For each soil type the change in profit and a return on
investment was calculated.
Pasture Growth Assumptions
Pasture Growth
For Various Soils
Dry Year Without Irrigation
70
Dry soils
Pasture growth kgDM/ha
60
Medium soils
50
Moist soils
40
30
12,805
10,889
8.973
20
10
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Note: Pasture growth = Pasture Utilised, not Total Grown
Feb
Mar
Apr
May
Pasture Growth Assumptions
Pasture Growth
For Various Soils
Average Year Without Irrigation
70
Dry soils
60
Pasture growth kgDM/ha
Medium soils
50
Moist soils
40
30
13,414
11,619
9,733
20
10
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Note: Pasture growth = Pasture Utilised, not Total Grown
Feb
Mar
Apr
May
Pasture Growth Assumptions
Pasture Growth
For Various Soils
With Irrigation
Pasture growth kgDM/ha
70
Dry soils
60
Medium soils
50
Moist soils
40
30
14,083
13,323
12,775
20
10
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Note: Pasture growth = Pasture Utilised, not Total Grown
Feb
Mar
Apr
May
Other Assumptions
Other Assumptions
Units
Area Irrigated
Irrigation Capital on farm
Milksolids payout
Fonterra Share value
Supplement
Nitrogen applied
Feed conversion
Milksolids
Cows milked
MS/cow
MS/ha
Irrigation applied
Period of Irrigation
Power for irrigation
Scheme charge
ha
$/ha
$/kgMS
$/kgMS
kgDM/ha
kgN/ha
gMS/kgDM
kg/yr
No.
kg/cow
kg/ha
mm
days
$/ha/day
$/ha
DRY YEAR ‐ NO IRRIGATION DRY YEAR WITH IRRIGATION High Priority Med Priority Low Priority High Priority Med Priority Low Priority
Dry soils Med soils Moist soils Dry soils
Med soils Moist soils
100
100
100
100
100
100
$0
$0
$0
$4,000
$4,000
$4,000
$6.5
$6.5
$6.5
$6.5
$6.5
$6.5
$6.5
$6.5
$6.5
$6.5
$6.5
$6.5
5000
4000
3000
2500
2500
2500
50
75
100
150
150
150
72
74
76
78
78
78
95,947
106,530
116,619
121,818
125,367
129,626
300
300
300
300
300
300
320
355
389
406
418
432
959
1065
1166
1218
1254
1296
0
0
0
625
500
375
0
0
0
125
100
75
$0.00
$0.00
$0.00
$2.80
$2.80
$2.80
$0
$0
$0
$540
$540
$540
Financial Result
Partial Budget
DRY YEAR ‐ NO IRRIGATION DRY YEAR WITH IRRIGATION High Priority Med Priority Low Priority High Priority Med Priority Low Priority
Med soils Moist soils
Dry soils
Med soils Moist soils Dry soils
$791,816
$814,884
$842,566
$623,657
$692,448
$758,027
Income
Milksolids Income
Total Milk Income
$/ha
Variable expenses
Electricity ‐ irrigation
Supplement
Nitrogen
Fertiliser
Reparation of pastures Community scheme water charge
Total Variable Expenses
0.35
1800
0.75
$/ha
Net Cash Profit
$/ha
$623,657
$6,237
$0
$175,000
$9,000
$39,578
$30,000
$0
$253,578
$2,536
$370,079
$3,701
$758,027
$7,580
$791,816
$7,918
$814,884
$8,149
$842,566
$8,426
$0
$0
$140,000
$105,000
$13,500
$18,000
$43,944
$48,106
$10,000
$5,000
$0
$0
$207,444
$176,106
$2,074
$1,761
$485,004
$581,921
$4,850
$5,819
Net Cash Profit Increase
per ha
$35,000
$87,500
$27,000
$50,250
$0
$54,000
$253,750
$2,537
$538,066
$5,381
$167,987
$1,680
$28,000
$87,500
$27,000
$51,714
$0
$54,000
$248,214
$2,482
$566,670
$5,667
$81,667
$817
$21,000
$87,500
$27,000
$53,471
$0
$54,000
$242,971
$2,430
$599,596
$5,996
$17,675
$177
$692,448
$6,924
$ Cash Profit/ha ($6.50 payout)
For Dry soils
$7,000
$6,000
$5,000
Dry yr No Irr
Av yr No Irr
Irrigation
$4,000
$3,000
$2,000
$3,701
$4,422
$1,000
$0
Dry soils
$5,381
$ Cash Profit/ha ($6.50 payout)
For Medium Soils
$7,000
$6,000
$5,000
Dry yr No Irr
Av Yr No Irr
Irrigation
$4,000
$3,000
$2,000
$4,850
$5,426
$1,000
$0
Med soils
$5,667
$ Cash Profit/ha ($6.50 payout)
For Moist Soils
$7,000
Dry Yr No Irr
$6,000
Av yr No Irr
$5,000
Irrigation
$4,000
$3,000
$5,819
$6,332
$2,000
$1,000
$0
Moist soils
$5,996
Return on Investment before Interest
Expected Return on Investment with Irrigation 35%
30%
25%
20%
Dry soils
Medium Soils
Moist Soils
15%
10%
5%
0%
‐5%
‐10%
0/5
1/5
2/5
3/5
Frequency of Dry years in 5
4/5
5/5
Summary
 Based on a $6.50/kgMS payout it is profitable to
irrigate from a community based irrigation scheme if
farming relatively dry free draining soils (ie high
priority)
 The return on investment is marginal for medium
priority soils and non-existent for low priority moist
soils, assuming a frequency of 2 to 3 dry years in 5.
 On a community scheme there is potential to irrigate
smaller dry areas within the farm at reasonable cost.
 The profit is particularly sensitive to the frequency of
dry years and to a lesser extent milk payout.
Points to Consider
 The cost of accessing water will vary widely between
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farms. The community scheme is designed for those
without ready access to a water resource.
There is a need to have a good understanding of
your soils and drainage before considering irrigation.
Good drainage is essential to reduce the risk of soil
saturation with heavy rainfall in the autumn period.
Need to consider extra labour costs depending on
the type of irrigation employed.
Farms need to be assessed individually as to their
suitability for irrigation.
The information in this presentation is to be used as
a guide only.