Challenging the Norm: Future Dairy Systems

Challenging the Norm: Future Dairy Systems

Western House Hotel, 66 Craigie Road, Ayr, KA8 0HA

Challenging the Norm: Future Dairy Systems

Welcome from our Chairs SAC Consulting is delighted to host this ‘Challenging the Norm: Future Dairy Systems’ conference in South-West Scotland, kindly supported by the University Innovation Fund from the Scottish Funding Council. This event will provide dairy farmers with a unique opportunity to hear from a range of industry leading experts on a range of topics affecting the future sustainability of their businesses.

Demands from milk buyers, consumers and the Government mean that the way the Scottish dairy industry operates will look very different in 20 years’ time. The very fact that you are taking time away from your business to be with us today is a pretty strong indicator that you are committed to being part of that future industry.

The sustainability of any business starts with cash – the industry needs a stable milk market, paying a sustainable milk price to ensure businesses can continue to invest and adapt to remain resilient in the future. Farmers also have a responsibility to manage and understand their business and its finances in a way which allows them to be resilient to the peaks and troughs of the modern agricultural industry.

Carbon and Net Zero are terms we hear on a daily basis in various contexts, but what does it all really mean and how can we be prepared to meet future Government and consumer demands? Also, will there be a role for emerging carbon markets to support farming operations? Understanding and meeting the biodiversity challenge is becoming increasingly relevant for the dairy industry and brings its own challenges on highly productive, intensively managed farms. It is becoming increasingly important to measure and manage carbon and biodiversity on farms to allow your business to be acknowledged for the role it plays in the carbon cycle and enhancing biodiversity.

Meeting these challenges will require new technology and changes in the management of dairy cows.

Genetics will play a huge role in fine tuning the dairy cow to make her more compliant with sustainability criteria, whether that be reducing methane emissions, increasing her resistance to disease or improving feed conversion efficiency. New technologies will also play an ever-increasing role in the management of cows and crops, as well as addressing some of the labour shortages across the sector.

It is always easiest to relate to new concepts when we hear about real life examples of them working in practice and that is why we have ensured that our speakers are a mix of research, industry, and farming backgrounds to give the complete picture of new science, along with a view from industry while also relating it back to practical on-farm application.

We hope you enjoy the day and are able to take away some key points which you can relate back to your own farming business in a way which makes you more able to face the challenges of modern dairy farming.

Alison Clark, Senior Agricultural Consultant

2

Lorna MacPherson, Dairy Consultant

Challenging the Norm: Future Dairy Systems

The market outlook: Why resilience matters more than ever!

Chris Walkland (Walkland Partnership Ltd), Dairy Market Analyst and Industry Commentator Chris Walkland is an Agricultural Journalist, Market Analyst and Consultant, specialising in the dairy sector. He has written about the industry for around 25 years on all aspects of the dairy supply chain from primary production on the farm through to economics and politics at processor, retailer and consumer level. He writes the fortnightly Dairy Market Report for The Provision Trade Federation – a trade body that represents many of the UK’s processors; is a commentator in British Dairying magazine, as well as other farming papers, and features every week in the Kite Consulting dairy industry podcast.

Chris will speak on the current state of the global, EU and UK dairy market, highlighting the impact of the recent GDT auctions on market sentiment and milk prices. He will also bring delegates up to date with the latest traded prices for the main commodities after the summer, the latest milk volumes from around the world, and assess some of the new milk price models in the market, such as Müller’s and Arla’s. He will also make a “best guess” assessment of what milk prices might be going forward, to facilitate budgeting for the winter. As ever his talk will be an honest ‘warts ‘n all’ assessment of the state of the market, with his messaging one that farmers need to hear, not what they want to hear. As a commentator on the industry, he will also give an opinion on factors outside of the market, and which may affect the sector – not least about the newly announced milk contract legislation that is coming to the UK. One of his main take home messages will be to advise on how farmers might best take advantage of the new legislation to better understand how their milk price is derived, and how they can judge whether it is a fair and reasonable price given the markets their processor sells into.

4

Current market influences: •

The GDT auction has declined almost 18% from its summer peak of $3500/t, down to $2880/t, due to weak demand for New Zealand WMP, particularly in China. However, the first GDT auction in September increased in price for the first time in four months and another positive result there later this month may start to change sentiment.

•

Global milk volumes have been good, with all of the major exporting nations increasing production compared to last year. However there are signs that volumes may be falling in the EU and the US on the back of falling farmgate milk prices. UK milk production is still very strong, however, and no processors are short of milk.

•

Consumer demand is still weak on the back of high retail prices for dairy products. Prices are now falling, but it is too early to say if and when consumer demand will rise and whether it will make any difference to milk prices.

•

The overall mood of the market is neutral, with sellers trying to push prices up and buyers reluctant to accept them. Milk supplies and stocks are plentiful, and no one is going to go short of dairy products until volumes drop or demand increases.

The power of benchmarking Jim Baird (Nether Affleck), Dairy Farmer

Jim Baird farms at Nether Affleck near Lanark.

The 160 hectares are all in grass and the family partnership runs 240 mainly cross-bred cows on an autumn block calving, forage-based system.

Cows calve in a 12-week period beginning 1st of October are TMR fed during the winter on a mix of blend, brewers grains and silage. Four cuts of silage are made, and cows are rotationally grazed during the summer. Rolling yields are around 8000 litres from around 1500kg of concentrate.

Jim has a BSc in Agriculture from the University of Edinburgh and a Masters in Business Administration from the University of Strathclyde Graduate School of Business. In 2010 he was awarded a Nuffield scholarship to study attributes of successful rural businesses. He has held board positions with AHDB Dairy and First Milk, and he currently chairs the Scottish Regional Advisory Board for NFU Mutual and is a trustee on the board of the Nuffield Farming Scholarship Trust.

Jim has become increasingly involved in the management and facilitation of five dairy benchmarking groups involving more than fifty different businesses. He will talk about how these operate and the key benefits of benchmarking and participation in strong discussion groups.

Most notably: − − − − − −

A focus on profitability A motivation to improve More confidence and resilience Development of improved business skills Greater credibility with business stakeholders More fluid business succession

He will highlight some of the key factors that he sees leading towards successful business performance.

Some key take home messages include: − − − − − −

No system is necessarily better overall Small differences or improvements can accumulate towards significant profit deviations Scale, milk price and milk yield can help but not always Feed efficiency, herd health and fertility are often positive profit indicators A £ saved is generally more profitable than a £ generated People’s desire to go the extra mile makes the most difference

Jim will highlight what he sees as the necessary steps managers might want to take to better place themselves to deal with the industry challenges that lie ahead.

5

Challenging the Norm: Future Dairy Systems

Soil carbon and the supply chain Séamus Murphy (SAC Consulting), Senior Carbon and Sustainability Consultant Séamus Murphy is a Carbon and Sustainability Consultant with SAC Consulting with over five years’ experience supporting agriculture and other land-based industries achieve sustainability goals, particularly focused on moving to a lower carbon future for agriculture. Séamus has supported projects for government, multi-national organisations, and national retailers, along with helping individual farm businesses reduce their environmental impacts.

Most recently Séamus led a Scottish Government funded project mapping carbon stocks stored in soils and above ground biomass across Scottish farms, whilst also completing an MSc in Carbon Management at the University of Edinburgh.

As companies move ever closer to target dates for achieving emissions reductions, the interest in what is known as their scope 3 emissions is rapidly increasing. Scope 3 emissions are those indirect emissions associated with purchased products and services, amongst other things, these emissions usually account for over 75% of a company’s emissions.

For a supermarket, food and drink company or milk processor these emissions will be predominantly associated with agricultural production and as a result these companies are increasingly engaging with farmers in their supply chains to try and reduce and/or inset these emissions. At the heart of this approach is management of agricultural soil for the purpose of increasing soil carbon. Séamus’ presentation will look at what is driving companies towards emissions reduction on farms, the rise of regenerative agriculture within corporate sustainability and the risks and opportunities for farmers, particularly surrounding soil carbon.

6

Key takeaways from Séamus’ talk will include: − − −

−

A clear understanding of what is driving supply chain intervention for carbon reduction An insight into the different methods of removing carbon from the atmosphere and a look at the carbon markets driving these approaches A science-based investigation into the potential of soil carbon as a means of removing carbon from the atmosphere and potential of soil carbon markets Improving your understanding of what is coming down the line in terms of what buyers and retailers are looking for in terms of carbon and biodiversity

Strategic thinking on carbon at Low Ballees David Campbell (Low Ballees), Dairy Farmer

David Campbell, along with Father Tom and family, farm at Low Ballees, West Kilbride in North Ayrshire. The farm extends to 119 hectares running along the valley between the Blackshaw and Glenton Hills. David manages a productive herd of 120 Holstein cows, which are fully housed on a robotic milking system.

The farm consists of the same improved grassland pasture that is a common sight across most dairy farms, with a small arable element. However, where the farm differs is in its approach to carbon and conservation.

In summer 2022 the business took on a new and exciting responsibility, as the AHDB strategic dairy, with sustainable dairy farming at its core.

The Strategic Dairy Farm Programme shares good practice through on-farm and virtual events, giving access to industry experts and the latest research.

In his talk David will discuss the changes the farm has made to improve its environmental credentials and herd efficiency, as well as where he sees the future direction for his business and the industry as a whole.

The farm is focused on the environment, with the mantra “Carbon is Cash” and the business has seen a huge improvement in their carbon performance by addressing the day-to-day issues that will impact many in the sector. Moves to improve herd

genetics, feed efficiency and soil management have resulted in dramatic reductions in the farm’s carbon footprint. Focusing on the fundamentals is hardly groundbreaking but it is a message that the business is happy to platform.

At the beginning of the Strategic Dairy Farm Programme the business had a carbon footprint of 1.21kg CO2e per kg output, placing it above the average carbon footprint for their production system (1.19kg CO2e per kg output), but a year on the business has seen significant improvement to 0.95, an improvement driven by increases in yield and milk quality, coupled at the same time by uptake of precision application of inorganic fertilisers.

David has always had an eye to the future, an early adopter of the Agri-Environment Climate Scheme and Forestry Grant Scheme, both he and Tom see the changing winds of policy as an opportunity for the industry to demonstrate undervalued good practices and promote new thinking.

The next great challenge for the farm is how to manage expansion at an uncertain time for the sector. David has taken the plunge and chosen to invest in his business with a new shed and two new robots. With an increased herd size on the horizon, over the next few years the priority will be controlling what can be and accepting wins where they can be found.

7

Challenging the Norm: Future Dairy Systems

From the ground up

Joanna Lawrence (Arla Foods), Senior Manager in Agriculture Sustainability Jo grew up on her family’s dairy farm in Cumbria, graduating from Durham University in 2012. She started her career as category assistant for dairy in Sainsbury’s commercial division before moving to ABP Food Group as calf rearing manager. She then returned to Sainsbury’s as a member of the agriculture team in 2015, covering both dairy and beef supply chains. Jo joined Arla in 2021 and is now global senior manager in Agriculture Sustainability leading on the development of Regenerative Farming, including participation in cross industry collaborations like One Planet Business for Biodiversity and the Sustainable Agriculture Initiative Platform.

During her session, Jo will explore the five commonly agreed principles of regenerative agriculture. She will also share learnings and insights from some of our Arla farmer owners who have been exploring how these principles work in practice across the UK and in Europe through Arla’s Regenerative Pilot Network.

There are five commonly agreed principles of regenerative farming (cover the soil, minimise soil disturbance, maintain a living root, integrate livestock, and increase diversity). However, there are limited examples of these in practice for European Dairy Systems.

Arla is now in the second year of implementing a pilot farm network for regenerative farming. It includes 24 core farms which are a mix of organic and conventional systems, located across the UK, Netherlands, Germany, Denmark, and Sweden. Each pilot farmer has been supported with training, 1:1 coaching, data collection (baselines and annual measurement) and facilitation of peer-to-peer knowledge exchange.

One pilot farm is sponsored by McDonalds where we are trialling three technologies to measure the impact of regenerative grazing on carbon flow, below-ground biodiversity, and above-ground biodiversity.

Learnings so far include: − − −

Being farmer led is best Challenges of data collection to measure regeneration Farm staff must be included

Focus areas looking forward: − − −

Building farmer confidence Managing data capture at scale Bringing consumers on the journey

m

Inte g y

03

ot e

s it

Co ce

an

s o il d i s

b t ur

far m

e di v

r

grazing liv te e ra

k oc st

is e

i

m

04 P ro

M in

01

8

02

al living r inu o nt

s ot

soil cov the er p e

ed

Ke

Five core principles of regenerative agriculture

05

What does grassland plant species diversity mean for the cow?

John Newbold (SRUC), Professor of Dairy Nutrition After a career in the feed industry, in the UK and abroad, John joined SRUC in 2019 as Professor of Dairy Nutrition. He seeks to work collaboratively across dairy farming, the agricultural supply industries, and academia, to improve the efficiency of conversion of natural capital (grasslands and food co-products) into nutritious, healthy and delicious food (i.e. milk and dairy products).

Recent projects have included evaluation of feed additives for methane mitigation and the optimisation of amino acids in low protein diets. A new project will compare the productivity and environmental impact of ryegrass and multispecies grasslands.

Multispecies swards (or ‘herbal leys’) contain a variety of plant species alongside grass, including legumes such as white and red clover, trefoil and sainfoin, as well as chicory and plantain.

Incorporation of non-grass species may have multiple benefits for soils, the environment, and the productivity of both the sward and – the focus of this talk - the cow.

Milk production

Methane It is suggested that some forage species, such as birdsfoot trefoil and sainfoin which contain high concentrations of tannins, can directly inhibit methane production in the rumen. However, the evidence available for multispecies swards and methane is equivocal, partly because the proportion of non-grass species in the pastures used in reported experiments is often rather low. Differences in methane production between grass and multispecies swards may be due to differences in rates of digestion in, and passage from, the rumen, as well as differences in specific chemical constituents.

Health Anthelmintic effects of multispecies swards have been reported in sheep and goats, with few studies in dairy cows. While the mechanisms for such effects are not clear, a direct effect of tannins has been suggested.

Conclusion While decisions on the use of multispecies swards will be taken holistically, based on many factors, the responses of the cow – her productivity, health, and environmental impact – are of obvious importance.

A recent review (meta-analysis) of all the reported evidence found that cows grazing multispecies pastures produced more milk solids than cows grazing grass-only pastures. Combining grass and non-grass forage species is likely to improve the efficiency of digestion. Continued work on this topic should help identify the content and composition of non-grass species that are optimal for milk production.

9

Challenging the Norm: Future Dairy Systems

Big cows are bad: Future selection direction for the national dairy herd Mike Coffey (SRUC), Leader Animal Breeding and Genomics Team and Head of EGENES Mike Coffey is a Professor of Livestock Informatics at SRUC, and his day-to-day job is running the Animal Breeding and Genomics research team. He is also Head of the Edinburgh Genetic Evaluations Unit (EGENES), which uses the outputs of the research team to calculate genetic and genomic breeding values for UK livestock. Previous interests have been on dairy cow energy balance, but Mike is now focused on efficiency in joint dairy and beef cattle production including cow size, feed intake, methane emissions and meat quality.

Dairy cow improvement has been spectacular over the last 15 years due to the rapid uptake of genomics across the entire industry. Dairy farmers are increasingly selecting bulls based on their genomic predictions and are continuing to use more sexed semen to both increase the female selection pressure within their own herds and to enable the production of more beef calves, so now just over 60% of UK beef originates from the dairy herd.

Recent geopolitical events that led to rapidly rising prices of and reduced availability of inputs (feed, energy, fertiliser) has led to a renewed interest in the size of dairy cows, crossbreeding and grazing systems of production. The high price of energy now means there is a very strong relationship between profitability, cow size and efficiency and greenhouse gas (GHG) emissions. Dairy producers now have the index Feed Advantage to select more feed efficient cows. This has an expected positive effect on reduced methane emissions intensity (CH4/kg product).

Keeping larger cows might be sensible if the resulting higher price of the calf more than offsets the increased feed needed to maintain a bigger cow. Moral and ethical grounds and environmental pressure for reduced GHG emissions from

10

farming means that disposing of waste calves is unacceptable even if it were currently profitable.

The question then becomes: ‘How do we select future dairy cows to be efficient themselves and to produce a beef calf that is also efficient?’

This will involve a complex balance between the individual dairy cow in her environment, the resources available to the farm, the ambitions of the farm and the pressure from the milk buyer. These pressures will manifest themselves in the target yield per cow and her size because higher yields can be used to dilute the impact of larger size but require access to more feed resources. Cow size and conformation will dictate the size of the surplus beef calf and income from that stream. The price of the beef calf and the cost of inputs will vary greatly over short time periods and are predominantly outside the farm’s control. Breeding a cow that is productive, healthy, fertile, long-lived, and easy to care for is a broad objective. She also needs to be as small as possible but big enough to be efficient. This will take years to achieve and is inside the farms’ control. −

Make use of all the available information on your animals. Your Herd Genetic Report is available at https://ahdb.org.uk/knowledge-library/dairyherd-genetic-reports

−

Make sure you have all the required tools to help utilise your resources efficiently https://ahdb.org. uk/tools

−

Brush up on the bulls available to you and what ranking fits your circumstances best https:// ahdb.org.uk/knowledge-library/dairy-breedingand-genetics

By being armed with all the relevant information, you can buy the best semen for your herd rather than having it sold to you.

Drone technologies in dairy farming James Riordan, (University of the West of Scotland), Director of ALMADA Drone Lab and Reader in Robotics & Autonomous Systems Dr. James Riordan leads the ALMADA Drone Lab at University of the West of Scotland, and 12 researchers dedicated to developing airborne artificial intelligence for transport, environmental monitoring, maritime, and agricultural use cases.

He has published over 60 scholarly articles and two patents, as well as having successfully delivered over 20 research and innovation projects worth over £50 million as PI and co-PI. He currently leads the UWS side of the UKRI Digital Dairy Chain project and is Coordinator and Principal Investigator of H2020 project RAPID. He is an independent expert advisor

to EASA (European Union Aviation Safety Agency), a member of the EUROCAE standards steering group (European Organisation for Civil Aviation Equipment), and an advisory board member for Amsterdam Drone Week as well as multiple international initiatives (Labyrinth, Drones4Safety, 5DAeroSpace).

He is the UWS representative on the Scottish Research Partnership in Engineering (Robotics and Autonomous Systems theme).

Dr. Riordan will present a talk on the challenges and opportunities for drones in precision management of grass pastures.

11

Conference funded by the University Innovation Fund from the Scottish Funding Council.

sac.co.uk