Potential improvement in the performance of dairy farms in South Africa

Over 2003–2021, the pasture harvested on South African pasture-based dairy farms increased markedly. This increased production and consumption of pasture has helped to reduce the cost of producing milk in South Africa relative to dairying in other countries and delivered comparatively high levels of profit. National milk production has grown steadily. Over this same time, pasture as a proportion of the total diet of dairy herds has decreased significantly: supplements make up the major share of the diet. This change to dairy herd diets puts upward pressure on the average cost of feeding the herd and on the cost of production. The focus of this paper is on whether dairy farmers would be better off if they significantly increased the proportion of pasture in the total diet of their herds and relied less on supplementary feed. It is shown that progressively increasing the pasture component and proportion in the diet of dairy herds, from an industry average of 41% to 57%, could increase profit. Results were a 26% increase in profit (return on capital), a 59% increase in profit margin per litre, and a 7% decrease in cost of production per litre. If this change in production system to increased use of pasture and less use of supplementary feeds was replicated across the entire South African pasture-based dairy industry, farmers in the industry would be significantly more profitable and their businesses would be more resilient than under the current feeding regimes that are used.