U. Geary

Development and application of a processing model for the Irish dairy industry

A processing-sector model was developed that simulates (i) milk collection, (ii) standardization, and (iii) product manufacture. The model estimates the product yield, net milk value, and component values of milk based on milk quantity, composition, product portfolio, and product values. Product specifications of cheese, butter, skim and whole milk powders, liquid milk, and casein are met through milk separation followed by reconstitution in appropriate proportions. Excess cream or skim milk are used in other product manufacture. Volume-related costs, including milk collection, standardization, and processing costs, and product-related costs, including processing costs per tonne, packaging, storage, distribution, and marketing, are quantified. Operating costs, incurred irrespective of milk received and processing activities, are included in the model on a fixed-rate basis. The net milk value is estimated as sale value less total costs. The component values of fat and protein were estimated from net milk value using the marginal rate of technical substitution. Two product portfolio scenarios were examined: scenario 1 was representative of the Irish product mix in 2000, in which 27, 39, 13, and 21% of the milk pool was processed into cheese (€ 3,291.33/t), butter (€ 2,766.33/t), whole milk powder (€ 2,453.33/t), and skim milk powder (€ 2,017.00/t), respectively, and scenario 2 was representative of the 2008 product mix, in which 43, 30, 14, and 13% was processed into cheese, butter, whole milk powder, and skim milk powder, respectively, and sold at the same market prices. Within both scenarios 3 milk compositions were considered, which were representative of (i) typical Irish Holstein-Friesian, (ii) Jersey, and (iii) the New Zealand strain of Holstein-Friesian, each of which had differing milk constituents. The effect each milk composition had on product yield, processing costs, total revenue, component values of milk, and the net value of milk was examined. The value per liter of milk in scenario 1 was 24.8, 30.8, and 27.4 cents for Irish Holstein-Friesian, Jersey, and New Zealand strain of Holstein-Friesian milk, respectively. In scenario 2 the value per liter of milk was 26.1, 32.6, and 28.9 cents for Irish Holstein-Friesian, Jersey, and New Zealand strain of Holstein-Friesian milk, respectively.

An analysis of the implications of a change to the seasonal milk supply profile in the Irish dairy industry utilizing a seasonal processing sector model

A seasonal processing sector model was developed to simulate dairy product manufacture in Ireland. Outputs include the quantity of product manufactured, net returns and component values of milk (protein and fat) per month of year. Two milk supply profiles representative of mean calving dates of mid-February and mid-March were evaluated across three milk processing plants with differing capacities for cheese and casein. The analysis was carried out based on average Dutch National quotations over the period 2008–10. The mid-February mean calving date resulted in a lower peak supply with proportionately more milk produced in the months of January–March and October–December, which resulted in higher net returns across the three capacities analysed. Increasing the cheese and casein processing capacity resulted in higher net returns being generated.

The associations of management and demographic factors with technical, allocative and economic efficiency of Irish dairy farms

The phasing out of the European Union (EU) milk quota will create opportunities for producers to expand without the constraint of quota which has limited expansion since 1984. Therefore, it will be necessary for Irish dairy producers to become more competitive by increasing performance using the least amount of inputs per unit of output and maximizing the level of technical and economic efficiency. The objectives of the current study were to measure technical, allocative and economic efficiency, and to investigate the associations of key management, qualitative and demographic characteristics on efficiency. Efficiency scores were calculated using the non-parametric methodology data envelopment analysis (DEA). The DEA results showed that on average the sample of Irish dairy producers were not fully efficient in 2008 with technical, allocative and economic efficiency results under variable returns to scale (VRS) of 0·771, 0·740 and 0·571, respectively. In a second stage analysis, Tobit regressions were used to determine the associations of key variables with the technical, allocative and economic efficiency scores. The efficiency scores were included as dependent variables and the key independent variables were a variety of management and demographic variables. Mean calving date, number of grazing days, breeding season length, milk quality, discussion group membership and soil quality were all associated with technical and economic efficiency. Milk recording, use of artificial insemination (AI) and level of dairy specialization were associated with allocative and economic efficiency only. Age and age squared were the only significant demographic associations with the efficiency scores.

Spring calving versus split calving: effects on farm, processor and industry profitability for the Irish dairy industry

A combined farm systems and processing sector model was used to determine the effect on industry profitability of changing from the current seasonal milk supply profile to a less seasonal milk supply profile. Differences in investment costs, product portfolio, product storage and financing costs at processor level were included in the analysis. It was found, based on the underlying model assumptions, that a less seasonal supply profile allowed better capacity utilization, enabled higher volumes of high-value products to be produced and generated higher net returns (€1540·7 million) for the processing sector than the seasonal milk supply profile (€1474·9 million); it therefore warranted paying a higher milk price to farmers. In contrast, at farm level the seasonal milk supply profile resulted in lower costs and higher net farm profit, with net margin per litre being 1·6 cents per litre higher relative to the less seasonal milk supply profile. Higher concentrate, labour, silage, machinery hire and heifer replacement costs in the less seasonal supply profile relative to the seasonal milk supply profile were the main factors that contributed to the lower farm profitability. From a national perspective, including processor and farm sector interests, the seasonal milk supply profile was more profitable by an estimated €83 million; the difference in costs at farm level outweighed the increased milk price at processor level found in the less seasonal milk supply profile.

Dairy product production and lactose demand in New Zealand and Ireland under different simulated milk product-processing portfolios

Abstract Maximising dairy industry profitability involves maximising product returns for a specific set of costs or minimising costs for a certain level of output. A strategy currently utilised by the New Zealand dairy industry to optimise the value of exports is to incorporate imported lactose along with local milk to maximise the production of whole milk powder (WMP) while complying with the Codex Alimentarius (Codex) standards, in addition to increasing the exported product for every litre of milk. This study investigated the impact of different product portfolio strategies on lactose requirements for the Irish and New Zealand dairy industries for current and predicted 2020 milk output projections. A mass balance processing sector model that accounts for all inputs, outputs and losses involved in dairy processing was used to simulate the processing of milk into WMP, skim milk powder (SMP), cheese, butter and fluid milk of different proportions. All scenarios investigated projected an increase in production and revenue from 2012 to 2020. Higher cheese production reduced industry lactose demand through whey processing, while scenarios reliant on an increase in the proportion of WMP were associated with increased lactose deficits.

Responses in lactose yield, lactose percentage and protein-to-protein-plus-lactose ratio from index selection in New Zealand dairy cattle

ABSTRACT The breeding goal of the New Zealand dairy industry is to improve the genetic capability of cows to convert pasture-based feed into farmer profit. The New Zealand dairy industry exports over 95% of milk produced and the most significant product by export volume is whole milk powder (WMP). The current selection objective, breeding worth (BW), will increase yields of protein and fat, potentially shifting milk composition further from the ideal composition for making WMP. This study aimed to investigate the correlated responses in lactose yield (LY), lactose percentage (LP) and protein-to-protein-plus-lactose ratio (P:P + L) from selection for BW, BW plus LY, BW plus LP and BW plus P:P + L. Selection for BW is predicted to have per-cow responses of 54.92 kg milk/year, 2.22 kg fat/year, 1.78 kg protein/year and 2.84 kg lactose/year. When lactose was included in the selection objective in the form of LY, LP or P:P + L, genetic responses ranged from −59.98 kg to 61.08 kg milk/year and from −2.67 kg to 3.70 kg lactose/year. The industry could reduce imported lactose requirements per tonne of WMP by 6%–11% by including lactose into the selection objective, compared with selection on BW alone.

Predicted dairy product yields and deficits of lactose for manufacturing under differing selection and manufacturing scenarios in New Zealand

The New Zealand dairy industry is pasture-based and more than 90% of milk products are exported. The breeding goal of the breeding programme of New Zealand dairy cattle is to improve the capability of the cow to convert feed into farmer profit. The breeding objective rewards yields of protein and fat but penalises milk volume and ignores lactose, despite it being an important component of milk powders. With the industry currently in deficit for lactose, this study investigated the expected response to selection over the next 10 years and its impact on the annual industry production of milk, its components and yields of dairy products based on expected cow performance, number of cows and a fixed area for dairying. After 10 years of selection (with no increase in herbage production), there was a 5% increase in milk production per hectare. Total milk exports increased by 5.9% and the lactose deficit increased by 14% when 60% of milk was processed into whole milk powder.