Dairy activity, as the vast majority may know, is extremely important in the country’s economy and the basis of livelihood for approximately 1.2 million producers across the country. It has a very strong economic strength, despite this, practically every year we see in the news that the sector is in crisis, the price paid to producers is very low and production costs are very high. This generally happens when national production increases (summer in the South and during the rainy season in the center of the country), the law of supply and demand. The supply of products on the market increases and the price drops. In recent years, in addition, the favorable exchange rate situation has allowed the purchase of powdered milk on the foreign market, bringing a cheaper product to the market than ours, reducing prices.

Among producers, many people complain, post comments on social media, protest and demonstrate the absurdity of this type of market move to control the price of milk and penalize producers, and that we should have a minimum price policy, right? I have to say to you: welcome to the globalized world! We may have some changes in import and export transactions post-pandemic, but this is only likely to increase.

So, does this mean that the dairy industry is doomed to failure, especially with the rise in concentrate prices? Absolutely not! Dairy activity is an EXCELLENT BUSINESS and we can say this with a lot of experience in the subject, as today SIA serves more than 15 thousand lactating cows, with a daily production of more than 29 thousand liters of milk per day, in properties of the most diverse sizes , productions and production systems (confined and pasture). What many people forget when analyzing the milk business is that success in the activity depends on management. That we must treat the activity as a company, like any other in the city, and that we must monitor and control production costs. We worry about what we can control, which are the things that happen inside the gate.

Among all the properties we work with, one of the things that most impacts production costs is food costs. The big secret to being competitive in this activity is to produce quality food at a low cost. And this rule applies to all production systems, both confined (free stall or compost barn) and pasture systems. Okay, so far no big news. You might be wondering, how do I do this?

 

CONFINED SYSTEMS

In confined systems, we see a great concern in controlling the actions that take place inside the installation, with a great focus on the animals, on the lactating cows (adjustment of diet, reproduction, health), but much of the surroundings are forgotten, which are the areas for the production of food, basically bulky, silage. In the vast majority, we see systems that are not very diversified, with a lot of monoculture. Corn on top of corn, harvest and off-season, without a crop rotation plan… this impoverishes the soil, reducing the production of dry matter per hectare or requiring much more investment in fertilizer to produce the same thing, that is, high cost of food production. Confined systems require a much higher level of management, in addition to being a good nutritionist, you need to be a good farmer, with conservation practices to have a lively soil and plants to respond in production.

 

PASTURE SYSTEMS

When we talk about pasture systems, many people don’t really believe that it is possible to be competitive in this model and in the vast majority of cases it is associated with the use of low technology. This is not true! What happens is that most people compare different things, they take a confined system with high investment and compare it with a pasture system with low investment.

I ask you: which system tends to give the most results? For me, the answer is obvious! To be successful in a pasture system, you must follow the three rules below:

  • Have high standard pastures, with lots of high quality leaves (investment in fertilization);
  • Harvest the pastures produced well, where the cows only eat the leaf tips (at SIA we use Rotational Grazing, see more at this link: www.youtube.com/watch?v=2IBhJJ318bc).
  • Have a well-balanced production of these leaves throughout the year, with at least three different species (forage planning)

 

The basis of food in these systems must come from pasture and the complement and adjustment of this diet is done in the trough. Many people say that they make good pastures, but the cows don’t eat much, that cows don’t like to graze. What happens is that in the vast majority of cases, cows access pastures at the hottest times of the day and with their bellies full of silage and concentrate. There is no miracle recipe that will make them eat the grass, no matter how good it is.

By managing to put the three points mentioned into practice, we have food production in large quantities throughout the year (or most of it, when we talk about Central Brazil) of food rich in protein, at an extremely low cost. We have a very strong economic strength, which makes dairy farming very competitive, as the most expensive nutrient in traditional diets based on silage and feed, protein, a large part of which comes from pasture. The challenge in these systems becomes adjusting the energy, which is much cheaper, and with more alternative sources, in addition to corn grain and wet grain, we have sorghum, soybean hulls, wheat bran, oats, etc.

 

“RACHAR TO MAKE MONEY”

We have countless cases of properties (small, medium and large herds) that managed to implement these three rules of the pasture system, which work with cows eating 60 to 70% of their diet from pasture, providing 10 kg of silage in the trough plus 3 to 4 kg of concentrate with 14% protein. A total production cost (fixed and variable, with employee payroll + pro-labore; current prices as of June 2020), close to R$1.00/liter. In other words, in bad periods, a property like this makes money and in good periods, it fails to make money. Thus, we call it setting up “a money-making machine”.

 

Of course, putting these techniques into practice, both in confined systems and in more pasture-based systems, is not at all simple. It doesn’t happen overnight and worst of all: there is no ready-made recipe. However, with well-planned planning, good management of indicators, technical support that goes beyond the rough and tumble, hard and daily work (we will never escape from this in any area), it is quite possible to be competitive, lower the costs of production, give less importance to the price of milk and build your own money-making machine.

Text: Armindo Barth Neto – SIA technical consultant

Images: SIA Archive