Evidence of the economic advantages of working with Trace & Save

Introduction

Before responding to the questions, what needs to be clarified is that farmers do not improve because they make use of the Trace & Save tools. Farmers improve because they manage their farms better – the tools help them to do this.

The tools which Trace & Save uses serves three main functions: 1) they provide an assessment of where the farmer is currently positioned with regards to the sustainability of their production system; 2) they assist in identifying the areas of opportunity for the farmer to improve, which leads to the development of a strategy for improved sustainability; 3) they allow the farmer to monitor their progress and/or regression over time, thereby creating a positive or negative feedback cycle with regards to the practices they are implementing.

There are farmers who have made use of these tools, and the consulting insight which accompanies them, to great success. But there are also farmers that have not adopted any of the recommended strategies, and therefore have not improved. In the end, the onus is completely on the farmer as to whether they make use of the tools or not.

Benefits of increase revenue from farmers using the tool

Land area is the main limiting factor for growth, from a revenue perspective, therefore the main direct benefit of more sustainable production is increased milk production per hectare (l/ha). This needs to be achieved while not increasing inputs/costs, which is addressed through the second question. The focus of sustainable production is increased long-term profitability, which incorporates the necessity for a reduced reliance on external inputs.

Benefit of lower cost

There are multiple benefits associated with reduced costs. These include reduced feed and fertiliser costs relative to production. There is a direct correlation between increased farm profitability and reduced farm environmental impact.

One of the major findings of research carried out by Galloway et al. (2018) was that for farms to become more profitable, and reduce their environmental impact (i.e. reduce carbon footprint and increase nutrient utilisation) they need to increase milk production per hectare, while reducing fertiliser use and increasing feed conversion efficiency. This research was done using data from the Trace & Save database. If farms can reduce their carbon footprint and increase their nutrient utilisation, they are becoming more profitable.

A mineral balance is a farm-gate assessment of nutrients imported versus removed, and a carbon footprint is an assessment of the amount of greenhouse gas emissions that have resulted from the production of milk. Although these two measures were developed s environmental impact indicators, we use them as economic efficiency indicators as well.

Why carbon footprints on farms?

Are you wasting nutrients on your farm?

Three of the measures used by Trace & Save to discuss the influencing factors on the farm carbon footprint and mineral balance are: 1) kilograms of nitrogen fertiliser used to produce a ton of pasture dry matter (kg N/ton DM); 2) grams of concentrate (feed fed to cows in dairy parlour) per litre of milk produced (g/l); 3) milk production of a cow over the duration of a lactation per 100 kilograms of liveweight of the cow (l/100kg liveweight). An improvement of these three indicators is evidence of a farm which has significantly improved the efficiency, and therefore profitability of milk production.

The mineral balance can also be used to calculate an opportunity cost of excess/unutilised nutrients on a farm in a year. Any nutrients which are not utilised are wasted, and either result in pollution or build up in the soil, both of which have significant potential for negative environmental impacts. By subtracting the removed nutrients from the imported nutrients per hectare, an excess per hectare can be calculated, which can then be multiplied by the average cost of a nutrient, providing an opportunity cost. The most significant nutrient, both from a farm productivity and environmental impact perspective, is nitrogen, which is measured by nitrogen use efficiency (NUE). Nitrogen is valued at R11/kg.

Benefit of improved asset or land value

This is a very difficult question to address, because land value has increased drastically over the past seven years that Trace & Save has been in business. The main driver for this is lack of availability of good agricultural land. More specifically in the milk producing areas where we work, because the successful dairy farmers have become more efficient and therefore more profitable per hectare. The improvements in productivity discussed above therefore have a direct effect on how valuable the land is.

Another benefit of improvement to the land, although this does not have a direct financial value associated with it, yet, is improved soil health. A farm with healthy soils is a lot more productive, which means the land is a lot more valuable for agricultural production. Improvement in soil health is best represented by improvement in soil carbon levels.

Case Study: Farm examples

The examples below show the improvement in factors discussed above from when they started with Trace & Save, to their most recent sustainability assessment.

The five farms included below have all showed improvement in sustainability indicators over the years which they have worked with Trace & Save. As described in the document above, these indicators show both a reduction in environmental impact and increase in profitability. It should be noted that there have been significant droughts in the Eastern Cape since 2016, which has made it very challenging for farmers to fully implement the sustainable practices included in the strategies provided by Trace & Save.

It is important to include specific farm examples, rather than use any form of average, because there are so many nuances to each farm’s situation. The reality is that as much as there are farms who have improved, as below, there are also farms which have not. This can be associated both with environmental circumstances (drought) and bad management practices. Not all the farms below have shown perfect improvement, but the fact that we can measure and observe the trends over time provides a powerful tool to help farmers figure out how to adapt and improve towards more sustainable production.