DairyNZ head of science Nicolas Lyons discusses the costs of feed and labour at the Australian Dairy Conference.
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00:00I separate kind of three terms. One is about being profitable. Obviously, as an industry,
00:04farmers in the sector need to be profitable. The other one is around production, that is total
00:09amount of milk. But productivity is probably what links. It's how much output, like how many
00:15kilograms of milk can you produce with the amount of inputs that you put into. So it's really what
00:20farmers can control and drive because they cannot really control terms of trade. So you cannot
00:26control the costs of your inputs or the price that you get for the milk. What you can really
00:30control is how much milk you get for the units of product that you put into. If you look at
00:35the cost of production, feed is probably around 40% of the cost of production. Labour is around
00:3912%. So together they're around 60% of the cost of producing milk. Those two will always probably
00:44always be kind of key drivers of profitability in the dairy industry. So anything we can do to
00:50continue pushing the boundaries in the amount of feed that we can produce under a changing climate,
00:55under a kind of variability, that will be key to continue growing and pushing that productivity.