The economic and environmental implications of incorporating composting barns into New Zealand dairy systems : A dissertation submitted in partial fulfilment of the requirements for the Degree of Bachelor with Honours at Lincoln University

The New Zealand dairy industry is challenged with the task of improving their environmental performance while at the same time maintaining or increasing farm productivity and profitability. Composting barns have been suggested as one potential solution to improve a farm’s environmental and financial performance largely through improved productivity and duration-controlled grazing. This research project used farm systems modelling utilising Overseer® and Excel to identify the economic and environmental implications of incorporating a composting barn system on a Canterbury dairy farm. Preliminary work from this study suggested that composting barns could improve both the economic and environmental performance of a dairy farm, however a large number of assumptions had to be made to obtain these results. Thus, the key findings from this study was not the overall outcome, but rather the identification of the critical components of the system that affected nitrogen (N) leaching, greenhouse gas emissions and farm profitability. The incorporation of composting barns on the dairy farm altered the N leaching profile from one dominated by urinary N leaching to one dominated by N loss from fertiliser and soil organic matter mineralisation. The inability of Overseer® to model effluent and composting processes in the composting barn impacted on the nitrous oxide (N2O) results and were deemed not representative of the system. A small decrease in methane (CH4) emissions were observed with the incorporation of the composting barn on farm and was an indirect result of an improvement in feed conversion efficiency from incorporating supplementary feeding within the composting barn system. Economic profitability appeared to increase with the incorporation of composting barns on farm. The internal rate of return (IRR) before interest and tax increased from 8.45% without the barn to 11.62% with the barn. The marginal return was valued at 27.6%. Milk payout was identified as the key component affecting the economic performance of the composting barn system with every one dollar reduction in the payout reducing the IRR by 2.4%