Why renew, A dairy farm example
Renewing under-performing or weedy paddocks with high quality cultivars can give significant financial gains. In this example it has an internal rate of return of 160%, one few other investments can match!
Typical costs of renewal
1 Estimated retail prices, July 2026.
2 Average price for North and South Island-based contractors, July 2026.
Typical benefit of renewal over 4 years
The benefit of renewal is in the table below, based on these assumptions:
- 3 t DM/ha DM yield per year increase from new pasture
- +0.6 MJ/kg DM higher ME (science says 0.6 - 0.9 ME increases are typical)
- 5% greater utilisation from better ME & palatability (assumed +5%).
Returns renewal vs do nothing (leave underperforming pasture) over 4 years:
3 3 t DM/ha/year extra yield, utilisation 80%, conversion of 130 MJ ME/kg MS.
4 Go from 11 to 14 t DM/ha/year yield, 80% utilised, and an 0.6 MJ ME/kgDM increase, conversion 80 MJ ME/kg MS.
5 Increase 5% pasture utilisation of 14 t DM/ha/year yield.
6 Based on farmgate milk price estimate (fonterra.com/nz/en/investors/farmgate-milk-price)
7 Variable cost increase of extra MS (While most costs are fixed (e.g. land, labour, rates), a portion of farm costs increase (e.g. vat refrigeration, extra cows). This varies between farms.