Search
. .

Supply opportunities

Significant opportunities exist for demand-led support for the future growth in milk production in South Australia’s regions.

Contract feed production

The increasing role of intensive grazing and feedlot-style dairies has seen increased demand for supplementary feeding.

Feed producers are becoming increasingly accustomed to contract feed production for dairy producers.   A recent audit of feed strategies across the national industry illustrates a trend towards greater use of supplementary feeding by dairy farmers. 

This trend is driven by the economic need for dairy enterprise owners to milk for a longer season on a flatter production profile to achieve a better recovery of the fixed overhead and capital costs in their operation.  It is also in response to more prevalent use of seasonal milk price incentives by dairy companies to encourage a better utilization of plant capacity in non-peak production periods.

This has the following advantages:

For the milk producer For the feed producer
  • Reduces the necessary investment in land for own-farm forage production
  • Allows a stronger focus on the core activities of milk production and herd management
  • Offers the ability to closely link quality and feed cost through contract incentives - offering cost/quality control
  • Offer the ability to “lock-in” feed costs
  • Allows access to economic feed sources which are outside the scope of own-farm production due to soil type or land area
  • Allows specialisation in dairy feed production “to specification” to be developed 
  • Offers potential for higher return based upon quality parameters
  • Provides greater stability of markets for field crops - allowing a potential spreading of risks between spot commodity markets and contract production at agreed forward prices


Contract heifer rearing

In recent years the opportunities have increased for producers who wish to specialize in the rearing of heifers for dairy enterprises.  This has advantages as follows: 

For the milk producer For the heifer contractor
  • Reduces the necessary investment in land of suitable quality and forage production potential for quality heifer rearing 
  • May allow for greater productive output from dairying property - eg through greater intensive grazing development
  • Allows lower investment in feeding facilities
  • Allows a stronger focus on the core activities of milk production and milking herd management, rather than balancing priorities between existing and future herd qualities
  • Provides a business opportunity for specialist heifer managers
  • Provides an opportunity for incentive income based on quality performance of the herd
  • Provides opportunity for better stability of income compared with other options for use of grazing lands 

There are various approaches that can be taken to the heifer rearing contract - based on the risks that the parties agree to share in terms of the ownership of the cattle through the period of rearing.  These may allow the heifer rearing contractor to take ownership and a “market position” in terms of their value, or to simply offer a “growing out” rearing service. 


<previous      next>      

Author:  Root Account
Last Updated:  October 31, 2007, 12:14 pm
URL:  http://www.dairyindustrysa.com.au/opportunities_for_investment/supply_opportunities  
.