NZ drivers for dairy farmer investment in composting shelters - Perrin Ag

Environment, animal welfare and labour challenges drive dairy farmer investment in composting shelters

A new study has found that dairy farmer investment in composting shelters is being driven largely by a desire to tackle environmental challenges, improve animal welfare, provide labour efficiencies and better working conditions for staff.

The project Whole systems impact of composting shelters in New Zealand, was led by Perrin Ag consultant Rachel Durie. She had support and input from Keith Woodford of AgriFood Systems Ltd, and contribution from a Māori-owned agribusiness who provided their farm as the case study. It was funded through the Our Land and Water National Science Challenge under the Rural Professionals Fund 2021.

The study reports on the knowledge and experience of six farmers (Waikato, Canterbury, Hawke’s Bay, Otago and Southland) already using composting shelters within New Zealand. It also quantifies potential impacts to farm systems on the Māori-owned case study dairy farm in the South Waikato.

Perrin Ag consultant Rachel Durie says while widespread in the Northern Hemisphere, composting shelters are a relatively new concept in New Zealand.

“Composting structures are already in operation in New Zealand on some early-adopter farms. In most cases, the shelters are incorporated into the system year-round in a hybrid indoor-outdoor grazing system. In this system, cows will spend a portion of the day in the shelter and a portion outdoors on pasture.

“The proportion of time cows spend in the shelter will vary depending on the individual farm system and the desired outcomes. However, there is a general trend of utilising the shelter at nights during the cooler autumn and winter months and using the shelter during the day in the warmer months.

“There are some farms using the shelter solely as an alternative wintering system to grazed crops. This is particularly the case in the South Island where winters can pose considerable environmental and animal welfare challenges.”

Intangible benefits a big drawcard

While all farmers interviewed as part of the study reported improved financial performance, it was the intangible benefits of composting shelters they weighted most highly.

“Labour shortages, environmental performance and animal welfare considerations are all significant challenges that dairy farmers are grappling with on a daily basis.

“The farmers we interviewed saw increased cow comfort and welfare, better staff working conditions, a lift in labour efficiency, improved environmental performance, and reduced pasture damage as real drivers for their investment,” she says.

“They noted benefits to animal welfare through the provision of a comfortable environment that protected cows from both the heat in summer and cold, wet conditions in winter.

“For staff, the shelters mean they can work out of the weather, which is particularly beneficial during calving. Where the shelters replaced winter grazing, there was a significant workload reduction. The ability to manage over-grazing and pugging damage also reduced farmer stress.”

Other farmers noted a reduction in calf mortality and a pleasurable experience for staff and animals over the calving period. One farm has even installed cameras to allow staff to complete night calving checks remotely.

In addition to these intangible benefits, the farmers reported a significant reduction in their winter feed requirements compared to a 24/7 outdoor system, due both to reduced maintenance requirements and feed wastage. One farm noted a 50% drop in the winter feed allocation relative to their previous winter cropping system.

Case Study Farm Key Findings

Modelling of composting shelters on the South Waikato case study farm demonstrated several key financial benefits for the business:

  • 45% reduction in nitrogen leaching loss
  • 33% increase in per hectare cash operating surplus
  • 14% increase in milk production – due to improved feed conversion efficiency, improved pasture growth and mitigation of cow heat stress over summer.
  • 5 – 12.7% pre-tax internal rate of return (IRR) on the investment (marginal return) over 50 years depending on the level of capital costs. At the whole business level, this provided returns of 6.8% – 7.4%, compared with 6.3% for the status quo. Returns at 25 years were similar.
  • Key drivers of returns included capital cost, bedding expense, milk price and production.

“Our desktop modelling indicated that incorporating a composting shelter on the case study farm could provide an environment in which the land, animals, people and business could thrive,” says Rachel.

“It is clear from our study that composting shelters have diverse benefits to the human environment, the biophysical environment and to animal welfare, and contribute towards enhancing te Taiao – land, water, climate and living communities.

“However, farmers considering composting shelters need to carry out sufficient personal research before committing to the project, to make sure the design is fit for their farm’s specific location and purpose.

“While there is still a lot more we need to learn, our findings have demonstrated that composting shelters have the potential to become a transformational technology for the New Zealand dairy industry.”

To read the full report and analysis, or summary report click here. A video summary of the study’s findings is also available via this link.



Lee Matheson

Managing Director
Principal Consultant

B.Appl.Sc (Hons), FNZIPIM (Reg)

Lee came to agribusiness consultancy via the unlikely pathway of a suburban Wellington upbringing, an Honours degree in plant science and a six-year career in the financial markets. In his role as the firm’s MD, Lee doesn’t get out on-farm as much as he used to but makes the most of it when he does. While having swapped the paddock for the boardroom, Lee continues to provide advice in the areas of farm business strategy, farm system innovation, corporate governance, investment analysis and economic research.

Outside of Perrin Ag, Lee loves to spend his time coaching rugby, watching his three kids play sport and gardening with his wife Haidee.

“I love the challenge of empowering people in our primary sectors and the excitement of seeing clients achieving their aspirations. If we can encourage farmers to engage with their consumers, take a more active involvement in their supply chains and view their businesses through a wider lens, then I think our industries have a great future.”

Abbey Dowd

Consultant

B.Ag.Sc (Hons), MNZIPIM

Abbey joined Perrin Ag in February 2023 as part of the firm’s graduate recruitment programme, Empower.

Abbey grew up surrounded by dairy farms in a close-knit community in South Waikato. She saw first-hand how local farmers supported her community, which is what inspired her to study at Lincoln University.

Growing up in a rural community Abbey has always been impressed by how much local farmers contribute to the community. She wanted to help give back to the industry and play a part in helping our primary sector continue to produce quality food in a sustainable way.

In 2022, Abbey spent the summer as an intern on one of New Zealand’s first commercial deer milking operations. Her Honours project was researching deer milk alongside other more traditional milking operations and assessing the deer milking industry’s future production possibilities.

“Growing up I didn’t live on a farm, but I always knew I wanted to work in the farming sector. I wanted a role where there was a balance between working on and off farm and where I could support farmers to get the best out of their businesses.”

Sam Gray

Consultant

Sam grew up on a dairy farm in the Far North. After graduating from the University of Otago in 2005 with an Honours degree in molecular biotechnology, he spent several years working in medical research in New Zealand and Scotland. Upon returning to New Zealand in 2012, he spent four seasons dairy farming in Northland before purchasing a 56 ha block in Taupо̄, where he was first exposed to farming under a nitrogen cap. Sam joined Perrin Ag in 2023 and brings his strong analytical skills that are grounded by a pragmatic approach to problem solving. Outside of farming and consultancy, you’ll likely find him fly fishing, hunting or snowboarding.

“A lot of farmers feel overwhelmed in the face of a rapidly changing regulatory landscape. I strive to help farmers understand what these environmental regulations mean for their business, and offer practical solutions that allow them to keep doing what they do best, whilst remaining compliant”.

Danni Armstrong

Finance administrator

Danni grew up on a life style block in Atiamuri and spent five seasons as a relief milker in the area. During this time, her full time roles were in various fields including the rental car, health care and marine industries. Danni has had a focus on administrative and accounting duties, but is also proficient in looking after customers especially well, social media and website operation, running a rental car fleet and the associated tasks like training, rosters, H&S and organising repairs! Danni joined Perrin Ag in May 2021, to be part of a business in an industry she is passionate about.

During her spare time Danni can be found reading a book with her cats or out enjoying the walks in Rotorua’s Redwoods.

“What motivates me each day is knowing that I will be challenged with a range of problem solving tasks. I love to see all the figures adding up and knowing that my role makes a difference to the team.”

Duncan Walker

Director
Principal Consultant

B.Appl.Sc, MNZIPIM (Reg)

Coming from a drystock and dairy farming background, Duncan has always been passionate about growing primary sector businesses. Whether it’s pastoral farming, forestry, horticulture or investments outside the farm gate, sustainably optimising business performance is Duncan’s passion. After graduating from Massey University with a Bachelor of Applied Science in Agribusiness, Duncan’s first opportunity to optimise a farm business was by undertaking a dairy conversion. Duncan project managed the conversion and continued to run the dairy farm for a further three years.

Since joining Perrin Ag in 2011 Duncan works with a wide range of clients including those ‘outside the farm gate’. With his strong background in investment analysis, business strategy and project management, Duncan is increasingly working with clients to analyse and integrate horticulture and forestry investments into their farm businesses.

“I enjoy helping clients navigate through the complexities of today’s operational, financial and environmental challenges. Seeing clients achieve their goals is very rewarding”

Lee Matheson

Managing Director
Principal Consultant

B.Appl.Sc (Hons), FNZIPIM (Reg)

Lee came to agribusiness consultancy via the unlikely pathway of a suburban Wellington upbringing, an Honours degree in plant science and a six-year career in the financial markets. In his role as the firm’s MD, Lee doesn’t get out on-farm as much as he used to but makes the most of it when he does. While having swapped the paddock for the boardroom, Lee continues to provide advice in the areas of farm business strategy, farm system innovation, corporate governance, investment analysis and economic research.

Outside of Perrin Ag, Lee loves to spend his time coaching rugby, watching his three kids play sport and gardening with his wife Haidee.

“I love the challenge of empowering people in our primary sectors and the excitement of seeing clients achieving their aspirations.  If we can encourage farmers to engage with their consumers, take a more active involvement in their supply chains and view their businesses through a wider lens, then I think our industries have a great future.”