Selwyn Te Waihora
Nutrient
Performance and
Financial Analysis
Prepared for: Irrigation NZ and ECan
Prepared by: The AgriBusiness Group
December 2012
Contents
Selwyn Te Waihora Nutrient Benchmarking
EXECUTIVE SUMMARY
2
1 BACKGROUND
5
1.1
1.2
5
5
2
2.1
3
SCOPE
MODELLING
RESULTS FOR SAMPLE FARMS
RESULTS
8
8
MITIGATION OPTIONS
11
BACKGROUND
MITIGATION TECHNIQUES
FINANCIAL IMPLICATIONS
11
11
1
4
APPENDIX ONE – SCOPE
6
5
APPENDIX TWO – STATUS QUO BUDGETS.
8
6
APPENDIX THREE – MITIGATION OPTIONS FINANCIAL CHANGES
3.1
3.2
3.3
15
Please Read
The information in this report is accurate to the best of the knowledge and belief of the
consultants acting on behalf of the Irrigation NZ and ECan. While the consultant has
exercised all reasonable skill and care in the preparation of information in this report neither
the consultant nor the Irrigation NZ and ECan accept any liability in contract, tort or otherwise
for any loss, damage, injury or expense, whether direct, indirect or consequential, arising out
of the provision of information in this report.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
1
Executive Summary
Background
The authors were tasked with carrying out OVERSEER analysis of 18 farms which
represented the major land uses in the catchment area of Selwyn - Te Waihora to calculate
the amount of N leaching and P runoff analysis. The results were then run through a
financial model to calculate the impacts on the farming business from carrying out a range of
mitigation strategies.
Results for Sample Farms
The OVERSEER model has been set up to report the results on a predictive basis in an
average year.
The results of the OVERSEER analysis vary considerably even within the categories as a
result of the soil mix on farm, the intensity of the farming operation and the timing of events
on farm. Activities that influence the potential for discharges reporting such as intensity of
operation, stocking rate, irrigation rate, nitrogen inputs and timing, supplementary feeding
policies etc vary significantly between the farms.
Executive Summary Table 1: OVERSEER results for farming types.
Farm Type
Irrigated Dairy – pasture based
light soil type ( 3 farms)
Irrigated Dairy – pasture based
heavy soil type ( 3 farms)
Irrigated Dairy – High input light
soil type ( 1 farm)
Irrigated Dairy – High Input
heavy soil type ( 2 farms)
Irrigated Mixed Cropping – light
soil type ( 1 farm)
Irrigated Mixed Cropping – heavy
soil type ( 2 farms)
Irrigated Dairy support light soil
type ( 2 farms)
Dryland Flatland arable and
sheep. ( 2 farms)
Dryland Foothills sheep and beef
( 2 farms)
N leaching
Kg n / ha/
year
Range
Of N
leaching
P runoff
Kg P / ha
/year
65 -80
N
conversion
efficiency
range
27 – 41
69
22
15 - 31
27 – 34
1.0 – 1.3
75
27
1.0
45
36
1.3
23
36
0.7
0.8 – 0.9
3
2-4
20 – 32
0.1
45
40 - 52
36
0.3 – 0.5
28
13 - 45
41 – 48
0.2
17
17 - 19
18 - 31
1.3 – 1.9
N leaching Results
All of the irrigated dairy farming on the light soils have high results for N leaching. For the
irrigated dairy farming on heavy soils the results are low.
The arable farms on the heavy soils are very low for N leaching. The arable farming on
lighter soils is also relatively low compared to all other farms modelled.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
2
Irrigated dairy support on light land is relatively high in N leaching.
Dryland flatland arable and sheep is relatively low in N leaching.
Dryland foothills sheep and beef are relatively low in N leaching performance.
P run off.
As the majority of farms are flatland the P run off results are relatively low. The higher results
(> 1) are predominantly on steeper hill country.
Mitigation Results
The long term mitigation options shown here are each designed to address one of the
causes of high nutrient leaching. They address each option with a degree of restraint on the
main cause of N leaching from that activity. In many of the cases the mitigation could be
adopted with a lesser or greater degree of restraint on the activity according to the
requirements of the property. Therefore these should be considered as examples of the
degree with which a mitigation activity will address the issue. It should be noted that the
intention in this analysis is not to change the farming system.
The following table reports the average results of the OVERSEER analysis and the impacts
of carrying out the mitigation strategies on farm on the Net Cash Position and on the Total
Equity position.
Executive Summary Table 2: OVERSEER and Farm Financial Measures
Dairy
DCD Use
Reduced Autumn N
Improved Cow Efficiency
15% Less Cows
Active Water Management
(low cost)
On / Off grazing
Winter Housing
Top 5% Pastoral
Irrigated Dairy Support
DCD Use
Active Water management
(low cost)
Dryland Sheep and Beef
DCD Use
15% Less Stock
N
Leaching
Reduction
Net Cash Position
Total Equity
Med
Med
Low
High
High
+ Med
- Low
+ High
+ Med
- Low
+ Med
- Low
+ Med
- High
- Low
Med
Low
High
- High
- High
+ High
- Med
- High
+ High
Low
High
- Low
- Med
+ Low
- Med
Low
Low
- High
- Low
- Low
- Med
The mitigation strategies are reported as High, Medium or Low in terms of the amount of
reduction that occurs on the N leaching result. The Net Cash Position and Total Equity
results are reported as + in terms of their impact having an improving effect on that measure
or – in terms of them having a deteriorating impact on that measure. As can be seen the two
do not work in tandem with some being positive for some and negative for the other.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
3
The choice of options or the mix of options for a farm may be much more complicated than
as displayed here. However these results indicate that given time a significant reduction in N
leaching results can be achieved at the same time as a positive change in the Net Cash
Surplus and Asset Value can be achieved on Irrigated Dairy farms on light soils. However for
the other farms reported here the results are far more subdued and do not indicate positive
changes in the farm financial measures.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
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1 Background
1.1 Scope
This is a collaborative project between Irrigation NZ, Canterbury Regional Council and MPI
which has been partly funded through the Sustainable Farming Fund (SFF). The project
involves carrying out analyses on farms in the Selwyn Waihora catchment to support
community discussions in the local catchment limit setting process.
The authors were tasked with carrying out analysis of 18 farms which represented the major
land uses in the catchment area of Selwyn - Te Waihora. These farms were then put through
OVERSEER analysis to calculate the amount of N leaching and P runoff. Once this was
carried out the results were then run through a financial model to calculate the impacts on
the farming business from carrying out a range of mitigation strategies.
1.2 Modelling
There are two stages of modelling reported here. The first is the use of OVERSEER to
model and report nutrient discharges and the second is the financial modelling that was
carried out.
1.2.1 OVERSEER
OVERSEER 6.0 has been used in this analysis. This is the latest version of the model which
has upgrades to how it handles irrigation and fertiliser on a monthly basis, amongst others.
The most significant upgrade is the change of the nutrient discharge model to one of
modelling the drainage of the soil rather than the input of moisture through rainfall and
irrigation to the soil. This change to the way that it calculates the discharge of nutrients has
meant that there has been a considerable change to the performance of different classes of
soil in terms of total discharges.
The results have been subject to a peer review which indicates that they do represent a fair
result in terms of use of the model.
Protocol
There are quite a number of settings available in OVERSEER all of which can greatly affect
the amount of nutrients leached that it reports, especially N. Many of these settings have a
default which estimates leaching performance. The accuracy of the information can be
greatly enhanced if additional figures are supplied. As changes to these functions impact on
nutrient loss a protocol must be developed for the use of OVERSEER1.
The OVERSEER model has been set up to report the results on a predictive basis in an
average year. As yet there is no official protocol for use the authors have adopted the
following:
 Climate data (rainfall, PET and average temperature) have been taken from the
nearest of two climate stations Darfield and Lincoln.
1
This protocol should include guidance on interpretation and use of soil information for use in the
model
Selwyn Te Waihora Nutrient Performance and Financial Analysis
5
 The average water holding capacity to 60 cm has been matched with that published
in the SMap data sheets for the soil type on the farm. This has taken some juggling
of soil description in order to make the soil water holding capacity used in the model
fairly reflect that reported in the data sheets.
 The rest of the data has been taken from the farms; irrigation practice, n fertiliser
applications etc.
The adoption of this protocol on a predictive basis creates some issues with matching water
demand (as driven by evapotranspiration) and water supply (as driven by rainfall and
irrigation) on a monthly basis. Rainfall is entered as a total figure for the year and is then
distributed on a monthly basis by OVERSEER. How this is distributed is not able to be
checked. However irrigation is entered on a monthly basis. In order to follow a logical
protocol on the monthly distribution of irrigation water a figure for the net soil moisture deficit
was calculated by deducting evapotranspiration from rainfall. This was then converted to a
percentage figure by comparison with the total annual deficit. The monthly amount of
irrigation for each farm was then allocated on the basis of multiplying the total annual
irrigation by the monthly percentage.
Data
Much of the information that is required for OVERSEER in order to calculate the nutrient
leaching of a property must be collected from the farmer. Where the model is used
retrospectively to estimate the leaching losses from the previous year, the actual farm
management information will be used. For this modelling exercise, the model was used
predictively, and for an average season. In our experience it is quite difficult for farmers to
estimate what level of activity would occur in an average season.
A particular problem was encountered with accurately predicting annual irrigation. Water
metering is now in place and it will enable farmers to more accurately determine the
efficiency of their systems. In the majority of cases the farmers did not know the amount of
water that they used at present and were forced to estimate it on the technical capacity of
their system to deliver water. Past experience with this would indicate that the actual
performance of irrigation systems in terms of delivery of water is a long way from the
theoretical performance.
Data collection should be included in any protocol developed.
OVERSEER modelling issues
The use of OVERSEER 6 has been problematic and continues to cause problems in terms
of delivery of results. Ongoing instability of the model causes it to fail when required to carry
out particular sorts of modelling operations.
The new version of OVERSEER is able to model arable properties. Although this is a
significant advancement there are still many technical features that have to be fudged or
worked around for it to work in specific instances. . For the wide range of crops and crop
rotations to be fully modelled further development within OVERSEER is needed.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
6
An improvement from previous models is the ability of OVERSEER 6 to more accurately
model irrigation activities by the type of irrigation used (reflecting irrigation efficiency), the
volume of water applied and the monthly variability of the application. There is still no ability
to affect the efficiency of application of water. All systems have a set amount of efficiency
applied to each irrigation method set into the model which cannot be changed. Testing of
this feature found that there were very little apparent differences in N leaching between
centre pivot and a big gun irrigator. Further development of OVERSEER is required to
incorporate a means of fairly reflecting a range of efficiencies of application of water into the
model across an irrigation method.
1.2.2 Financial Models
The financial models used are based on the MAF Farm Monitoring model of 2011 /12. The
models used were Canterbury Dairy, Canterbury Sheep and Beef Finishing and the Dairy
Support model has been created from the previous two. These report an average farm
operation and therefore variation from farm to farm should be expected and individuals will
differ considerably from the average both in their likely response in terms of mitigation
response and the likely financial impacts.
Revenue has been adjusted to allow for a long term average expectation of product prices.
This is taken from the MAF report Situation and Outlook for New Zealand Agriculture and
Forestry (2012) and averages the actual product prices for the previous four years and
MAF’s estimate of the likely prices for the next four years. The figures used are as displayed
in Table 1.
Table 1 : Price Series
Item
Milksolids Price ($/ kg milksolids)
Lamb Price ($/kg)
Wool Price ($/kg)
Beef Price ($/kg)
Dairy Support ( $ / kg DM)
Price
6.38
5.91
5.10
4.12
0.23
The farm expenditure is taken from the farm monitoring model and adjusted according to the
changes in activities required for each mitigation option.
The asset values used in the analysis are taken from the asset values used in the MAF Farm
Monitoring reports. The value per hectare used in those reports is multiplied by the area of
each farm to give the total asset value. Similarly the debt structures adopted are the same
as those used in the Farm Monitoring reports. If the productivity of the farm is altered by any
of the mitigations used then the asset value of the farm is changed accordingly. If there is
the necessity to enter into more debt as a result of the adoption of a mitigation then the debt
is altered accordingly.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
7
2 Results for Sample Farms
The authors were tasked with carrying out analysis of 18 farms which represented the major
land uses in the catchment area of Selwyn - Te Waihora. The basic data was collected from
the farms. OVERSEER analysis was used to calculate the amount of N leaching, N
conversion efficiency and P runoff. The selection of the farms may have meant that they
were better than the average in terms of management practices for each farm type. However
the range of activities and results indicate that they are a good mix which represents the
district within the confines of a sample of this size.
N leaching and P runoff results are given as kg / ha /yr and N conversion efficiency is given
as a percentage. The definition of N conversion efficiency is the percentage of N in products
of output (crops, milk, wool and meat) compared to the amount of N in inputs in fertilisers,
supplements introduced and atmospheric inputs.
2.1 Results
In reviewing the results of the OVERSEER analysis on the 18 farms shown in Table 2 there
are a number of important points to note.
Apart from the two heavy soil type arable farms and one of the dryland light soil type arable
and sheep farms all farms had some connection with dairying in the form of dairy support
operations. The amount and type of dairy support activity varied considerably from grazing
small numbers of replacement stock to the wintering of large numbers of dairy cows. This
integration of the dairy industry into other farming operations is quite significant. It also
means that the results reported here are not for the type as described but incorporates a mix
of farming types.
Where there are a number of different farms reported for each type of farming operation
there is still a considerable difference in the makeup of the farming operation. Activities that
influence the potential for discharges reporting such as intensity of operation, stocking rate,
irrigation rate, nitrogen inputs and timing, supplementary feeding policies etc vary
significantly between the farms. Therefore different suites of mitigations will be appropriate
for different farms.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
8
Table 2: OVERSEER results for farming types.
Farm Type
N leaching
Kg n / ha/
year
Irrigated Dairy – pasture
based light soil type ( 3 farms)
Irrigated Dairy – pasture
based heavy soil type ( 3
farms)
Irrigated Dairy – High input
light soil type ( 1 farm)
Irrigated Dairy – High Input
heavy soil type ( 2 farms)
Irrigated Mixed Cropping –
light soil type ( 1 farm)
Irrigated Mixed Cropping –
heavy soil type ( 2 farms)
Irrigated Dairy support light
soil type ( 2 farms)
Dryland Flatland arable and
sheep. ( 2 farms)
Dryland Foothills sheep and
beef ( 2 farms)
Range
Of N
leaching
69
65 -80
N
conversion
efficiency
range
27 – 41
P runoff
Kg P / ha
/year
22
15 - 31
27 – 34
1.0 – 1.3
75
27
1.0
45
36
1.3
23
36
0.7
0.8 – 0.9
3
2-4
20 – 32
0.1
45
40 - 52
36
0.3 – 0.5
28
13 - 45
41 – 48
0.2
17
17 - 19
18 - 31
1.3 – 1.9
Some interpretation of the results shown in Table 2 can be made based on the comments
below.
N leaching
All of the irrigated dairy farming on the light soils have high results for N leaching. For the
irrigated dairy farming on heavy soils the results are very low apart from one farm which is at
a particularly high level of output and another which has a very high stocking rate and brings
in a large amount of supplementary feed to support this high stocking rate.
The arable farms on the heavy soils are very low for N leaching apart from one farm which
has a significant amount of winter grazing on it. The arable farming on lighter soils is also
relatively low considering that it has a high proportion of dairy support operations built into its
rotation.
Irrigated dairy support on light land is relatively high in N leaching.
Dryland flatland arable and sheep is relatively low in N leaching apart from one farm which
has a high proportion of winter grazing of cows.
Dryland foothills sheep and beef are relatively low in N leaching.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
9
N Conversion efficiency.
N conversion efficiency i.e. the % of N in products (milk and meat) relative to N inputs in
fertiliser, brought in feeds and atmospheric N inputs. The latter includes an estimate of N in
rainfall (typically 2 kg N/ha/yr) and legume N2 fixation. Legume N2 fixation is a calculated
parameter while all other parameters are farm inputs or simple calculations from farm inputs
(e.g. using average NZ concentrations of N in feed or products). Therefore the results are
very dependent on the range of activities carried out on farm.
P run off.
This is the sum of P runoff and P output from farm dairy effluent (FDE) ponds to waterways
(for farms where FDE pond systems are used). P runoff is calculated in OVERSEER as a
product of site, soil and management factors (McDowell et al. 2005), while P loss from ponds
is a product of the level of P estimated to enter ponds as excreta. The results as shown are
highly dependent on the mix of activities carried out but it appears that the higher levels are
associated with the hill country farms.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
10
3 Mitigation Options
3.1 Background
N leaching occurs at times when there is an excess of N built up in the soil and when the soil
water holding capacity of the soil is exceeded causing it to be washed through.
In terms of a build up of excess N in the soil we know that this occurs when animal urine is
deposited with its high concentration of N, excess N fertiliser is applied and not taken up by
the plant, when pasture is cultivated and when it is left fallow over the winter months.
In terms of N leaching we know that excess amounts of N are leached through the soil
profile at times when the soil water holding capacity is exceeded. This occurs at times of
high rainfall events and / or times when irrigation applications exceed the holding capacity of
the soil.
Therefore the majority of N leaching occurs as a result of N built up in the soil profile in the
autumn months which is leached out during the high rainfall winter period.
The mitigation options explored here are those that are designed to address the nature and
timing of N leaching.
The results to date indicate that the majority of the incidences of high N leaching in the
subject farms are caused by:
 Operating on the lighter soils with low soil water holding capacities with irrigation.
 Not adopting DCD technologies.
 Applying more irrigation water than is required.
 Applying extra N to requirements through the autumn period.
 Having high concentrations of cows being fed additional feeds imported from off
farm.
 Wintering cows on intensive feeding systems (crops).
The first point to note is that there are very low levels of N leaching on the heavier soils for
both Dairy and Arable. This is due to the relatively deep nature of the soils resulting in the
high water holding capacity of these soils therefore there is less opportunity for them to
leach.
The second is the very low, levels of N leaching from arable farm systems. This is due to the
heavy soils that they are predominantly carried out on, the continuous nature of the cropping
rotation, the adoption of minimum tillage techniques, the application of N and irrigation
during the growing season (spring) of the crop, the application of N and irrigation at rates
that meet the growing demands of the crop, the use of cover crops during the winter and the
relative lack of animals on the property.
3.2 Mitigation Techniques
Mitigation techniques were modelled for each of the farm systems as detailed in Table 3.
They are modelled to represent the range of options open to farmers to address each of the
problem areas.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
11
3.2.1 Good Management Practices for reducing nutrient losses
A suite of good management practices have been assumed in the Selwyn Te Waihora
catchment modelling for limit setting. These were:
 Compliant effluent systems
 Fertiliser applied according to the industry Code of Practice.
 Stock exclusion from water ways.
 Irrigation efficiency 80 %
 Fertiliser recommendations generated from a budgeting tool.
Compliant effluent systems
The upgrading of effluent management storage and application systems is well underway to
the point that the N leaching calculated from the N disposal area is less than that from the
remainder of the block in all of the farms modelled. This will continue to contribute to
reducing N leaching through the recent adoption of storage pond facilities to allow the
effluent to be held and applied to pasture at times of low soil moisture.
Fertiliser applied according to the industry Code of Practice.
This practice is widely adopted with all of the fertiliser spreaders being fully code compliant.
Stock exclusion from water ways.
In the dairy industry there has been almost complete uptake of stream fencing and putting in
bridges over water ways to exclude animals from water ways as part of complying with the
clean streams accord. In the sheep and beef and arable sector the adoption of this Good
Management Practice is variable.
Irrigation efficiency 80 %
It is difficult to comment on irrigation efficiency at present because of lack of hard data on
water use in most of the systems although the 80% measure is seen to be relatively easy to
achieve in most systems.
Fertiliser recommendations generated from a budgeting tool.
Knowledge of the amount of market penetration of fertiliser representatives who carry out the
exercise would suggest that compliance is relatively high.
3.2.2 Advanced Mitigation Techniques
Arable Cropping Techniques
The arable sector has been very good at adopting advanced management practices over the
last ten or so years. Activities like minimum tillage, deep N testing and a sound knowledge of
the N requirements of crops has led to them only putting on what the crop is going to utilise
are now almost universally used within the arable industry. This has been assisted by the
availability and use of N calculators for many of their crops.
In this exercise the arable farmers chosen were at the top end of production and were
utilising all of the advanced techniques like minimum tillage, deep N testing of soils and the
utilisation of irrigation at strategic times.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
12
DCD Use
DCDs use entails the spraying of pasture with a chemical which inhibits the release of the N.
The technology has been established and is still undergoing research. In Canterbury trial
results show that the N in the pasture which is inhibited from being leached is able to be
used by the plants and can accelerate growth by up to 12% based on a wide range of
research. Despite this only one of the farms used in this exercise used DCDs. The cost of
two applications is a barrier for widespread use across all enterprises.
More accurate use of N
One area that the pastoral sector is lacking is a means of predicting when N is low in the soil
and should therefore be applied. Most dairy farms tend to have a more blanket application of
N with regular applications occurring whether it is needed or not. Part of this is a reliance on
N for feed production rather than clover which has a more variable output of N in terms of
timing. More accurate use of the N through the autumn period is an area that requires further
research.
Accurate use of water.
Scheduling irrigation applications to more accurately match plant requirement and
evapotranspiration losses minimises runoff and drainage and therefore nutrient loss. At
present much of the irrigation capability is determined by the allocation regime set by the
technology that is in use. Aspects such as return period, application rate and depth set the
capability of irrigation systems at present. The adoption of modern technology enables
irrigation management which is more precise to the plant needs.
The recent adoption of soil moisture monitoring and the recent requirement for water use
monitoring will make the adoption of this technology much more relevant than it has been up
until now.
Reducing access to pasture.
Reducing livestock’s access to pasture either as a long term reduction in stocking rate or
during times when they contribute to N leaching are possible through a range of techniques
including housing and spreading the effluent over a larger area at a lower rate.
Improving efficiency.
There are also a large number of improvements in the efficiency of the operation that
farmers could adopt that would each result in an improvement in the nutrient leaching of the
property. Individually they would not alter the leaching figures by much but collectively they
could make a significant difference to the leaching of the property.
3.2.3 Efficacy of mitigation options for sectors.
The mitigation options shown here are each designed to address one of the causes of high
nutrient leaching. They address each option with a degree of restraint on the main cause of
N leaching from that activity. In many of the cases the mitigation could be adopted with a
lesser or greater degree of restraint on the activity according to the requirements of the
property. Therefore these should be considered as examples of the degree with which a
mitigation activity will address the issue. It should be noted that the intention in this analysis
is not to change the farming system.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
13
Brief Description of Mitigation Techniques Used.
 Status Quo – which is the current operation of the farm.
 DCD use – which is the application of DCD in May and August.
 Reduced Autumn N – reduce N application to half the normal rates from January with
complete reduction of the April application.
 Improved cow efficiency – doing the same production having all cows producing at
their genetic capability which reduces the number of cows.
 15% Fewer Stock – reducing stock by 15% with a resultant decrease in the amount
of feed purchased and N used.
 Active Water Management – applying irrigation water to meet the plant demand. This
includes a medium and high cost item of achieving this through changes to the
irrigation system.
 On / off Autumn Grazing – which restricts the herds access to pasture during the
Autumn period with urine being collected and spread through the farms effluent
system.
 Housing – houses the herd for the winter dry grazing period on farm utilising the
farms effluent disposal system when they would normally be grazed off the farm.
 Top 5% of Pastoral Only Farms – adopting a best practice system of no
supplementation of the farm operating at performance levels (grass and milksolids
production) in the top 5% of farms using the latest technology in irrigation application
but using relatively high rates of N application.
The actual practices involved in each mitigation are shown in the appendix.
In Table 3 the various mitigation options chosen by farm type are displayed.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
14
Table 3: Mitigation options chosen by farm type.
Irrigated Dairy Pasture
Irrigated Dairy High Input
Irrigated Mixed Cropping Light soil
Irrigated Mixed Cropping Heavy
Irrigated Dairy Support
Dryland Flatland arable and sheep.
Dryland Foothills sheep and beef.
Base
DCD use
Reduced
Autumn N
Improved Cow
Efficiency
15% less
stock
AWM
On/Off Grazing
Winter
housing
Top 5%
Production
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
Selwyn Te Waihora Nutrient Performance and Financial Analysis
It should be noted that the range of options to reduce N leaching are very limited on non
irrigated properties other than the use of DCD’s and reducing stocking rate.
3.3 Financial Implications
The financial implications of each option are shown in the following tables. The financial
results are reported as two different measures. The first is the impact on the Cash Operating
Position of the farm the second is the impact on the Asset Value of the farm.
The impact on the Cash Operating Position is reported as Revenue minus Expenditure
which gives the Cash Operating Surplus which indicates the operation of the farm. From this
we then subtract Interest, Taxation, Drawings, Capital Purchases, Development and
Principal Repayments in order to establish the Net Cash Position.
The impact on the Asset Value of the farm reports Total Farm Assets which includes Land
and Buildings, Livestock, Plant and Machinery and any farm related share holdings. From
this we deduct Total Liabilities to report the net Asset Value of the property.
Examples of the status quo budgets are shown in Appendix 1.
Details of the financial adjustments made to the models for each of the mitigation options are
found in Appendix 2.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
1
Results are all reported against the status quo position. Although some activities can be carried out concurrently the end result will not necessarily be
the sum of the two activities as some things have proportional impacts that diminish as the impact reduces.
Table 4: Financial Impacts and OVERSEER results for Dairy Farming on Pastoral Systems
Status
DCD
Reduced
Improved
15% Less
Quo
Use
Autumn N
Cow
Cows
Efficiency
Revenue ($m)
1.988
2.087
1.921
1.988
1.689
Active Water
Management
On Off
grazing in
Autumn
Winter
Housed at
Home
Top 5%
Pastoral
1.988
0.000
1.988
1.988
2.349
0.987
1.302
0.000
1.419
1.503
1.251
0.851
0.702
0.686
0.000
0.568
0.484
1.099
- 25,198
142,404
23,115
- 21,342
- 34,992
- 162,963
- 266,900
278,961
Expenditure($m)
1.301
1.343
1.264
1.137
Operating Surplus
0.687
0.744
0.657
Net Cash Position
($)
- 1,443
44,459
Total Farm Assets $m
12.037
12.638
11.634
12.037
10.231
12.037
12.037
12.037
12.037
14.227
Total Liabilities $m
5.456
5.456
5.456
5.218
5.228
5.824
6.086
6.740
7.452
6.402
Total Equity $m
6.581
7.182
6.178
6.819
5.003
6.213
5.951
5.296
4.585
7.825
Results for Light Soils
N leaching kg / ha
69
Change from Status
Quo (%)
Results for Heavy Soils
N leaching kg / ha
Change from Status
Quo (%)
29
59
56
64
30
43
14
19
7
57
38
38
54
71
43
15
+2
38
23
22
27
21
21
22
30
31
21%
24%
7%
28%
28%
24%
+3%
+7%
Selwyn Te Waihora Nutrient Performance and Financial Analysis
Table 5: Financial Impacts and OVERSEER results for Dairy Farming in High Input Systems
Status
DCD
Reduced
Improved
15% Less
Active
Quo
Use
Autumn N
Cow
Cows
Water
Efficiency
Manage
ment
Revenue ($m)
2.44
2.56
2.44
2.44
2.07
2.44
On Off
grazing in
Autumn
Winter
Housed at
Home
Operating Surplus
1.73
0.71
1.77
0.79
1.68
0.76
1.53
0.91
1.32
0.76
1.71
0.73
2.44
1.85
0.60
Net Cash Position
($)
0.02
0.08
0.06
0.19
0.07
0.01
-0.14
-0.26
14.78
5.46
9.33
15.52
5.46
10.07
14.78
5.46
9.33
14.78
5.17
9.61
12.57
5.23
7.34
14.78
5.82
8.96
12.04
6.74
5.30
14.78
7.91
6.87
92
77
54
84
65
63
76
96
16%
41%
9%
29%
32%
17%
+4%
32
30
37
29
30
32
42
22%
27%
10%
29%
27%
22%
+2%
Expenditure($m)
Total Farm Assets $m
Total Liabilities $m
Total Equity $m
2.44
1.91
0.53
Results for Light Soils
N leaching kg / ha
Change from Status
Quo (%)
Results for Heavy Soils
N leaching kg / ha
Change from Status
Quo (%)
41
Selwyn Te Waihora Nutrient Performance and Financial Analysis
Table 6: Financial Impacts and OVERSEER results for Irrigated Mixed Cropping ($)
Status Quo
DCD Use
15% Less
Stock
Revenue
776,330
776,330
778,881
Expenditure
Operating Surplus
Net Cash Position
Total Farm Assets
Total Liabilities
Total Equity
N leaching kg / ha
516,040
260,290
15,782
538,040
238,290
-1,818
516,040
262,841
17,822
6,650,000
1,662,500
4,987,500
6,650,000
1,662,500
4,987,500
6,650,000
1,662,500
4,987,500
23
23
20
-
3%
Change from Status
Quo (%)
Table 7: Financial Impacts and OVERSEER results for Irrigated Dairy Support ($)
Status Quo
DCD Use
Active Water
Management
Revenue
690,000
724,500
690,000
Expenditure
Operating Surplus
Net Cash Position
Total Farm Assets
Total Liabilities
Total Equity
N leaching kg / ha
Change from Status
Quo (%)
333,800
356,200
90,560
373,800
350,700
86,160
330,944
359,056
74,645
61,645
3,511,800
1,700,000
1,811,800
3,511,800
1,700,000
1,811,800
3511800
2050000
1461800
3,511,800
2,300,000
1,211,800
40
39
24
3
40
Selwyn Te Waihora Nutrient Performance and Financial Analysis
4
Table 8: Financial Impacts and OVERSEER results for Dryland Flatland Arable and Sheep ($)
Status Quo
DCD Use
15% less Stock
Revenue
Expenditure
Operating Surplus
Net Cash Position
Total Farm Assets
Total Liabilities
Total Equity
N leaching kg / ha
1,432,072
880,374
551,698
231,358
1,432,072
977,282
454,790
153,832
1,344,681
851,611
493,071
184,457
12,480,000
2,000,000
10,480,000
12,480,000
2,000,000
10,480,000
10,608,000
2,000,000
8,608,000
17
16
16
6%
6%
Change from Status
Quo (%)
Table 9: Financial Impacts and OVERSEER results for Dryland Foothills Sheep and Beef ($)
Status Quo
DCD Use
15% less Stock
Revenue
Expenditure
Operating Surplus
Net Cash Position
Total Farm Assets
Total Liabilities
Total Equity
N leaching kg / ha
Change from Status
Quo (%)
1,432,072
880,374
551,698
231,358
1,432,072
977,282
454,790
153,832
1,344,681
851,611
493,071
184,457
12,480,000
2,000,000
10,480,000
12,480,000
2,000,000
10,480,000
10,608,000
2,000,000
8,608,000
17
16
16
6%
6%
Selwyn Te Waihora Nutrient Performance and Financial Analysis
5
4 Appendix One – Scope
The tasks were set out as:
1. To work with ECan and SFF project team to select an appropriate range of
representative farms for analysis.
The farms should represent a range of management practice and should as far as is
practicable fit into the following farm types:











Irrigated (spray) Dairy – pasture based, system 3 (light soil type) (x2)
Irrigated (spray) Dairy – pasture based, system 3 (heavy soil type) (x2)
Irrigated (spray) Dairy – high input, system 5 (light soil type) (x2)
Irrigated (spray) Dairy – high input, system 5 (heavy soil type) (x2)
Irrigated Mixed Cropping – winter cows (light soil type) (x2)
Irrigated Mixed Cropping – winter sheep (heavy soil type)
Intensive Cropping – (heavy soil type)
Dryland Flatland – arable and sheep (x2)
Dryland Foothills – sheep/beef, and winter cows
Dryland Banks Peninsula – sheep & beef
Irrigated Dairy support (x2)
2. Visit 18 farms to collect data to run OVERSEER and a financial model. Include a
discussion with the farmers on how the information will be used in the limit setting
process.
3. Calculate for each farm (including likely range and certainty) for current practice,
good practice and maximum possible mitigation:
 N loss – OVERSEER
 N conversion efficiency – OVERSEER
 P loss and risk – OVERSEER
 Farm production and financials (Farmax or appropriate model)
4. For two limit setting scenarios, Environment Canterbury will provide Nitrogen
discharge allowances for the farms. Run OVERSEER and farm financial models to
understand how those limits could be met and the financial implications of those
limits.
5. Support Environment Canterbury staff to undertake a sensitivity analysis of nutrient
losses to different land use combinations, specifically providing advice on the range
of land use combinations.
6. Revisit each farm or convene a farm meeting to report back findings and get
comments.
7. Support Environment Canterbury staff to populate a matrix on reduction of nutrient
losses from good practice to maximum possible mitigation for the farm types.
8. Draft report that documents:
The methodology including farm selection, modelling etc
Key findings from current, good practice and maximum possible mitigations for each
farm type including:
 The likely costs for the catchment to achieve good practice
Selwyn Te Waihora Nutrient Performance and Financial Analysis
6
 The likely costs for the catchment to achieve maximum possible mitigation
 The overall impacts of meeting farm nutrient discharge allowances for 2
scenarios including the likely farm management practices and costs to meet
scenario nutrient discharge allowances.
9. Discuss draft report with Environment Canterbury and Irrigation NZ SFF project team
and finalise contents.
As the project continued through its process some of the tasks were abbreviated or changed
slightly from what was originally envisaged. A lot of the changes resulted around the delay in
getting results from OVERSEER which meant that there was not time to allow for an analysis
of the final decision making of the group. This has meant that the core results are around the
reduction of nutrient losses from good practice to maximum possible mitigation.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
7
5 Appendix Two – Status Quo Budgets.
Irrigated Dairy Farm – Pasture Based System
Selwyn Te Waihora Nutrient Performance and Financial Analysis
8
Irrigated Dairy High Input System
Revenue
Milksolids
Cattle
Other
$/ Kg
$/ Kg
$/ Kg
6.39
0.37
0.02
2,300,687.55
133,216.65
7,201
Total Farm Revenue
2,441,105
Expenditure
Labour
Animal Health
Breeding
Dairy Shed Expenses
Electricity
Feed (hay and Silages)
Feed (Grain etc)
Feed (Grazing)
Feed (other)
Fertiliser and Lime
Freight
Regrassing Costs
Weed and Pest
Fuel
Vehicle Costs
Repairs and Maintenance
Communication
Accountancy
Legal and Consultancy
Administration
Rates
Insurance
Other
$ / cow
$ / ha
315
97
48
21
98
200
0
170
210
206
16
61
34
109
116
449
20
31
32
56
74
98
59
297,675
91,665
45,360
19,845
92,610
189,000
147,000
160,650
198,450
231,210
15,120
12,873
7,148
22,880
24,310
94,380
4,103
6,449
6,741
11,726
15,538
20,521
12,312
Farm Working Expenses
1,727,567
Cash Operating Surplus
Interest
Taxation
Drawings
Capital Purchases
Development
Principal Repayment
713,538
6.5%
20%
Net Cash Position
Total Farm Assets
Total Liabilties
Total Equity
354,640
71,780
82,000
60,000
100,000
25,000
20,118
37%
Selwyn Te Waihora Nutrient Performance and Financial Analysis
14,783,195.67
5,456,000
9,327,196
9
Irrigated Mixed Cropping
STATUS QUO
Total
REVENUE
Grain
Ewe Breeding
Beef Finishing
Dairy Grazing
GROSS FARM REVENUE
0
0
FARM WORKING EXPENSES
13.74 SU/Ha
Livestock Purchases
Wages
Animal Health
Breeding
Shed Expenses
Electricity
Feed
Fertiliser
Freight
Seeds
Shearing
Weed and Pest
Fuel
Vehicle
Repairs & Maint
Rates
Communication
Insurance
Acct, Legal,Cons
Administration
Other
Irrigation Off Farm
On Farm
129.21
per SU
168.00
3.73
99.00
51.00
395.00
75.00
112.00
317.00
122.00
93.00
123.00
40.00
14.00
32.00
16.00
28.00
80.00
175.00
277,500
498,830
776,330
44,688
26,334
13,566
105,070
19,950
29,792
84,322
32,452
24,738
32,718
10,640
3,724
8,512
4,256
7,448
21,280
46,550
CASH FARM EXPENDITURE
516,040
CASH FARM SURPLUS
260,290
Interest
Taxation
Drawings
Capital Purchases
Development
Principal Repayment
6.5%
20%
Net Cash Position
1250 Total Farm Assets
243 Total Liabilties
Total Equity
-
-
260,290
108,063
30,446
60,000
21,000
5,000
20,000
15,782
25000
6250
18750
25%
6,650,000
1,662,500
4,987,500
Selwyn Te Waihora Nutrient Performance and Financial Analysis
10
Irrigated Dairy Support
Irrigated Dairy Support
REVENUE
Price
0.23 15000.00
TOTAL REVENUE
3,450
3,450
690,000
CASH FARM EXPENDITURE
1,669
333,800
CASH FARM SURPLUS
1,781
356,200
FARM WORKING EXPENSES
Livestock Purchases
Wages
Animal Health
Breeding
Shed Expenses
Electricity
Feed
Fertiliser
Freight
Seeds
Shearing
Weed and Pest
Fuel
Vehicle
Repairs & Maint
Rates
Communication
Insurance
Acct, Legal,Cons
Administration
Other
Irrigation Off Farm
On Farm
50
45
42
400
450
13
150
84
45
38
100
20
8
25
13
7
4
0.00
175.00
Interest
Taxation
Drawings
Capital Purchases
Development
Principal Repayment
6.5%
20%
Net Cash Position
Total Farm Assets
Total Liabilties
Total Equity
110,500
49,140
60,000
21,000
5,000
20,000
90,560
17559
8500
48%
3,511,800
1,700,000
1,811,800
Selwyn Te Waihora Nutrient Performance and Financial Analysis
11
Irrigated Arable
STATUS QUO
SHEEP FINISHING
REVENUE
Grain
Ewe Breeding
0
129.21
Beef Finishing
0
Sheep Grazing
GROSS FARM REVENUE
FARM WORKING EXPENSES
0.00 SU/Ha
Livestock Purchases
Wages
Animal Health
Breeding
Shed Expenses
Electricity
Feed
Fertiliser
Freight
Seeds
Shearing
Weed and Pest
Fuel
Vehicle
Repairs & Maint
Rates
Communication
Insurance
Acct, Legal,Cons
Administration
Other
Irrigation Off Farm
On Farm
per SU
168.00
3.73
99.00
51.00
395.00
75.00
112.00
317.00
122.00
93.00
123.00
40.00
14.00
32.00
16.00
28.00
80.00
175.00
Total
805,250
60,000
865,250
42,000
933
24,750
12,750
98,750
18,750
28,000
79,250
30,500
23,250
30,750
10,000
3,500
8,000
4,000
7,000
20,000
43,750
CASH FARM EXPENDITURE
485,933
CASH FARM SURPLUS
379,318
Interest
Taxation
Drawings
Capital Purchases
Development
Principal Repayment
6.5%
20%
Net Cash Position
1250 Total Farm Assets
243 Total Liabilties
Total Equity
-
-
379,318
101,563
55,551
60,000
38,000
50,000
20,000
54,204
30000
6250
23750
21%
7,500,000
1,562,500
5,937,500
Selwyn Te Waihora Nutrient Performance and Financial Analysis
12
Dry Flatland Arable and Sheep
STATUS QUO
SHEEP FINISHING
REVENUE
Grain
Ewe Breeding
4960
117.46
Beef Finishing
0
Dairy Grazing
GROSS FARM REVENUE
FARM WORKING EXPENSES
6.36 SU/Ha
Livestock Purchases
Wages
Animal Health
Breeding
Shed Expenses
Electricity
Feed
Fertiliser
Freight
Seeds
Shearing
Weed and Pest
Fuel
Vehicle
Repairs & Maint
Rates
Communication
Insurance
Acct, Legal,Cons
Administration
Other
Irrigation Off Farm
On Farm
per SU
6.79
3.73
1.66
3.50
11.36
2.19
3.49
1.50
3.31
3.55
2.37
2.00
20.00
8.00
25.00
13.00
7.00
4.00
Total
849,470
582,602
1,432,072
180,000
18,501
8,234
17,360
56,346
10,862
17,310
7,440
464,978
17,608
11,755
9,920
15,600
6,240
19,500
10,140
5,460
3,120
-
CASH FARM EXPENDITURE
880,374
CASH FARM SURPLUS
551,698
Interest
Taxation
Drawings
Capital Purchases
Development
Principal Repayment
6.5%
20%
Net Cash Position
1250 Total Farm Assets
243 Total Liabilties
Total Equity
-
-
551,698
130,000
84,340
60,000
21,000
5,000
20,000
231,358
16000
6250
9750
16%
12,480,000
2,000,000
10,480,000
Selwyn Te Waihora Nutrient Performance and Financial Analysis
13
Dryland Foothills Sheep and Beef
SHEEP FINISHING
REVENUE
Lamb Finishing
Ewe Breeding
Beef Finishing
0.00
11.78
35.29
5.91
92.31
4.12
GROSS FARM REVENUE
FARM WORKING EXPENSES
13.09 SU/Ha
Livestock Purchases
Wages
Animal Health
Breeding
Shed Expenses
Electricity
Feed
Fertiliser
Freight
Seeds
Shearing
Weed and Pest
Fuel
Vehicle
Repairs & Maint
Rates
Communication
Insurance
Acct, Legal,Cons
Administration
Other
Irrigation Off Farm
On Farm
$ / Ha
Total
1,088
145
1,233
per SU
6.79
3.73
1.66
1.00
11.36
2.19
3.49
1.50
3.31
3.55
2.37
2.00
20.00
8.00
25.00
13.00
7.00
4.00
431,557
89
49
22
13
149
29
46
20
43
46
31
26
20
8
25
13
7
4
-
CASH FARM EXPENDITURE
639
223,739
CASH FARM SURPLUS
594
207,818
6.5%
20%
102,375
21,089
60,000
21,000
5,000
20,000
Interest
Taxation
Drawings
Capital Purchases
Development
Principal Repayment
Net Cash Position
-
21,646
Selwyn Te Waihora Nutrient Performance and Financial Analysis
14
6 Appendix Three – Mitigation Options Financial Changes
6.1 Dairy Farm
DCD Use
DCD applied twice in May and in August.
Cost / ha / annum = $200
Increased production by 5%
Reduced Autumn N
No April N input and the rate from January to March was halved from 70 to 35 kg.
N use reduced by 175 kg /ha total cost saving $36,750.
Decreased production based on an average response rate of 1:10 and 15 kg DM / kg
milksolids = 9,800 kg milksolids.
Improve cow efficiency
Same total production from cows operating at 95% of body weight.
Less cows = 119.
Inputs stay the same.
15% Less cows
Less cows = 114
15% less production.
Less silage = 300 T
Less barley = 147 T
Less N = 70 kg / ha
Active Water management
This is achieved by setting the irrigation settings to this option in OVERSEER. This then
calculates the amount of water applied if the irrigation system is responsive to what the plant
needs (or soil moisture deficit). In this mode it reduced annual water applied from 575 mm to
380 mm a saving of 195 mm.
This then assumes that the irrigator has a system that can apply the water in this way.
Cost of water probes = $20,000
Cost of new system is taken at two costs $1,750 and $3,000 / ha. Effectively the costs will
vary from nil for existing Centre Pivot irrigators up to a full system upgrade.
Saving in pumping costs of 33% of electricity costs.
On / Off Autumn Grazing
100% of the herd is housed on a stand off pad for the months of March, April and May.They
are fed on pasture for 6 hrs grazing during the day from which they harvest 2/3 of their diet.
The remainder is fed as silage and fed on the pad which requires an additional 361.4 tonnes
of silage to be made on the property.
The cost of the stand off pad is taken as $1,670 / cow.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
15
Winter Housed at Home
This option is in response to reducing the impact of dairy winter grazing on dairy support
properties by housing all of the cows at home in a housed facility. The effluent from the
facility is collected in a storage dam and is applied later in the season. Current performance
is maintained and all the feed for the wintering is brought in .
Additional feed purchased = 15 kg / hd / day as kg dm;
 Straw 79.8 T
 Grass silage 239.4 T
 Maize silage 239.4 T
 Barley 239.4 T
Cost of feed = $271,000
Saved winter grazing cost = $153,800
Capital cost of barn = $2,595 / cow = $1,995,555
Ongoing Repairs and Maintenance = $84,590
Top 5 % of Pastoral only farms.
Cows stocked at 4.2 cows / ha.
DCD costs at $200 / ha.
No importing of supplementary feeds.
6.2 Irrigated Dairy Support
DCD Use
DCD applied twice in May and in August.
Cost / ha = $200
Increased production by 5%
Active Water management
This is achieved by setting the irrigation settings to this option in OVERSEER. This then
calculates the amount of water applied if the irrigation system is responsive to what the soil
needs. In this mode it reduced annual water applied from 575 mm to 380 mm a saving of
195 mm.
This then assumes that the irrigator has a system that can apply the water in this way. The
only system that can apply the water in this manner is a centre pivot system which is
operated off the results from soil probes.
Cost of water probes = $20,000
Cost of new system is taken at two costs $1,750 and $3,000 / ha. Effectively the costs will
vary from nil for existing Centre Pivot irrigators up to a full system upgrade.
Saving in pumping costs of 33% of electricity costs.
6.3 Sheep and Beef
DCD Use
DCD applied twice in May and in August.
Cost / ha = $200
Selwyn Te Waihora Nutrient Performance and Financial Analysis
16
Increased production by 5%.
15% less stock.
Reduced stock by 15 % along with output and expenses related to livestock.
Selwyn Te Waihora Nutrient Performance and Financial Analysis
17