Dynamic interactions between pasture production, milk yields and economic viability of Australian dairy farms

The Australian dairy industry is currently under review by both state and federal governments with the proposed aim of reducing government intervention at all levels of fluid milk supply. With this proposed deregulation comes the potential loss of price premiums that some producers have enjoyed as part of various marketing and supply programs. The removal of the price premium causes some producers to believe that they will not be able to remain in the industry due to costs of production exceeding returns. In this study an examination of whether producers can remain in the dairy industry after deregulation, by adopting low-input dairying as a production method, is made.;A study of mathematical lactation functions was undertaken to determine an appropriate function for inclusion in a model of an Australian dairy farm system. Of the four functions tested the simplest function, the incomplete gamma, performed better statistically and predicted the data more accurately than the other functions. This study also demonstrated that the lactation curves of Australian dairy cows are much different to those of cows from the Northern Hemisphere.;A novel milk production function is also developed. This milk production function summarizes all the biological processes of the dairy system, and shows that milk production is the difference in energy supplied and energy demanded for non-lactation purposes weighted by the energy content of the milk produced. This production function is incorporated into a discrete-time optimal control model of the dairy system, which is used to analyze the management and economic implications of low-input dairying.;The results of the management analysis indicate that low-input dairy production is a viable method of production. However, the system is sensitive to changes in the productivity of both cows and pastures. The responsiveness of the system to changes in the productivity of the biological components is constrained by von Leibig's Law of the Minimum.;An examination of policy alternatives suggests that low-input dairying is an economically viable providing the price of milk received by producers is above the current manufacturing milk price. The results also show that low-input dairying is more profitable as the farmer introduces flexibility into the feed management strategy of the dairy. This flexibility comes about as the biological constraints are less restrictive when the farmer undertakes hay making and supplementary feeding.