Pāmu's Organic Dairy Farm Achieves Over $4000 per Hectare Profitability in Eight-Year Conversion
Pāmu, a state-owned enterprise, currently operates 11 organic dairy farms in the North Island, located in Wairākei north of Taupō and Moutoa in the lower North Island. The conversion process began in 2016, focusing on achieving certification over a three-year period.
Cleo Te Kiri, Pāmu's dairy business manager for organics, highlighted the challenges and successes at a recent open day at Earnslaw, one of their farms. Earnslaw is a 675-hectare dairy farm and support block, employing five full-time staff and milking 780 cows. The farm also manages 342 heifers and 190 heifer calves.
Te Kiri noted that the primary goal was to create a profitable farming system with a lower environmental footprint, despite initial reservations about animal health, pasture management, and financial performance. An independent review by Baker Ag in 2019 confirmed that the conversion to organics was the right choice, showing increased profitability and a lower environmental footprint compared to conventional farms.
Pāmu's organic farms have faced significant challenges, particularly around feed and animal health. The conversion process required eliminating synthetic fertilizers, antibiotics, and other conventional treatments, which presented a steep learning curve. Despite these challenges, the organic farms have shown resilience, with a comparable or lower death rate than conventional farms.
Earnslaw has consistently been Pāmu's top-performing farm within its organic cluster, earning over $4000 per hectare. Across all 11 organic farms, EBIT is 30% higher than on conventional farms. The organic farms also benefit from a $1.88/kg MS premium over the past eight seasons, providing greater financial stability and allowing for better planning.
Looking ahead, Te Kiri acknowledged that the stocking rate on organic farms has decreased, and the cost of production has increased. However, the focus remains on producing a niche product that commands a higher price, ensuring continued profitability and sustainability.
Pāmu’s success in organic farming demonstrates a viable model for sustainable and profitable dairy farming, driven by a commitment to environmental stewardship and innovative farming practices.
