Project: A systems dynamic approach to incorporate environmental indicators into economic outcomes of dairy production systems in SA

ASSET Research has been awarded funding by MilkSA for the following project: A systems dynamic approach to incorporate environmental indicators into economic outcomes of dairy production systems in SA. The project will commence early in 2021.

The livestock sector in general and the dairy industry specifically has recently come under great pressure from climate change activists and scientists alike with respect to the greenhouse gas emissions attributed to the sector.  The pressure has mounted to the level that the collapse of the global livestock sector is predicted (Tubb and Seba 2019).  The matter is so serious that if only a degree of contraction in the sector does occur, the livelihoods of the producer and the workforce supported by the sector will be compromised heavily with all associated economic ramifications.  This will have a detrimental impact on the well-being of all the people and industries involved in the sector and its value chain.  In addition, the cost of animal-based protein will become exorbitant thus having serious and long-lasting impacts on food security, human health and nutrition because of the resultant protein deficiencies.  The sector, and the producer specifically, must be proactive, and urgently so, to ensure continued operation and that by deploying science-based adaptive management practices.  This entails, among others, the need to change production practices based on measurement and rapid feedback to reduce the sector’s environmental footprint and to communicate such effectively to all stakeholders, thus enhancing the sector’s comparative competitiveness to other alternative approaches.  The high and mounting pressure to change land-use and production practices to become sustainable and regenerative is in addition to the invariable and ongoing cost increases and squeeze on profit margins.

Given the context provided above, the industry must thus adapt to changes in client demands and perceptions regarding the industry’s climate footprint to protect and expand its share in the protein market, that while seeking innovative ways to improve its profitability and thus competitiveness with respect to plant- and factory-based alternatives.  The producer is thus in a horseshoe-like pincher of the need to produce dairy products sustainably and in a regenerative manner that does no harm to the environment while managing and reducing cost and be financial viable at the same time.  Dairy enterprises, however, experience difficulties in understanding the impact of production decisions on the environment, and in monitoring such changes in the environment by tracking environmental indicators, while linking such to specific financial and economic indicators as well. This dual pressure necessitates the need for an accessible and science-calibrated tool that could assist producers to take production and land-use decisions that would provide on-farm and real time information with respect to the environmental and financial impacts of management decisions.

The objective of this research is to develop a system dynamics model and supporting web- and phone-based application or tool to assist dairy farmers to calculate and monitor the impact of environmental indicators such as carbon balance, N-use efficiency and water use on the economic outcome of their operations.  The model and the app will combine as a hands-on tool for farmers to pro-actively engage with determining the environmental indicators, with associated financial and economic costs and benefits.  This will enable the farmer to provide inputs to key parameters of his/her operation, followed by real-time estimates of the impacts.  The farmer will thus be able to select an optimum management intervention from a bio-physical and economic vantage point.

This real-time and on-farm, science-based information would enable the producer and the sector alike to engage with its stakeholders in an informed way as to its environmental impact, and the measures taken to improve such.  This communication is essential in maintaining and improving the sector’s market share and the longevity and competitiveness of its producers.