An analysis of environmental and economic implications of nil and restricted grazing systems designed to reduce nitrate leaching from New Zealand dairy farms. II. Pasture production and cost/benefit analysis

Nitrate leaching from animal urine is perceived to be a serious consequence of dairy farming. Previous results suggested that nil and restricted grazing systems could reduce nitrate leaching by up to 50%. It is likely that such systems may also increase pasture production. However, potential disadvantages include reduction in the clover content of pastures and increase in capital and/or operating costs. This paper examines the economic implications of nil and restricted grazing systems based on data from an average New Zealand dairy farm and from a long‐term farmlet study. The analyses suggested that pasture production increased by about 20% and 2–8%, respectively, compared with a conventional grazing system. Based on the average New Zealand dairy farm, the costs/benefit analysis of the nil grazing system suggested a negative return on capital of about ‐10%. For the restricted grazing system, the average return on capital was about 9% (range: ‐4 to 25%) and depended largely on the efficiency of animal excreta use. On farms where an effluent application system is already in place, the average return on capital was 17% (range: 2 to 50%). Based on the farmlet study, the cost/benefit analysis of both grazing systems suggested a small negative return on capital, except when the costs of an effluent application system were excluded. It is concluded that a restricted grazing system for the average New Zealand dairy farm is likely to be economically viable, on farms where an effluent application system or a feed pad is already in place.