The Effect of Heat Stress on Milk Production and the Profitability of Investing in a Permanent Shade Structure

This paper details an economic analysis of investment in a permanent shade structure to minimise milk production losses as a result of heat stress. Using data over a seven year period from a northern Victorian dairy farm, the analysis found that annual milk production loss, due to heat stress, varied from 240 litres to 415 litres per cow per year. This variation was due to the number and severity of days that exceeded the Temperature Humidity Index threshold. Three future climate scenarios were developed for the next 20 years and these generated differing milk production losses. Net present values from different scenarios over the 20 year period showed that the level of profitability of investing in a shade structure was determined by the severity of temperatures experienced, with more extreme heat events increasing the profitability of the investment. The milk price received by the farmer also determined the time it took for the investment to become profitable. The minimum price required after 20 years to return a NPV of $0, ranged from of 35.7 to 24.6 cents per litre over the three climate scenarios.