Words by: Wagner Beskow

Brazil is a huge dairy products market with 212 million people consuming the equivalent of 35.2 billion litres of milk per year from a variety of dairy products, 97% of which are supplied domestically and exports seldom reach 1% of national production. So how competitive are these farmers and how do they produce milk?
Approximately 80% of the farms rely on an extent of grazing that can be compared to New Zealand systems 3 to 5, milked twice a day. Concentrate options abound, similar to those found in the USA, ranging from $204 to $526/t. Milk has always been paid for by volume so milk solids content is low, averaging 3.8% fat and 3.2% crude protein, and valued at $0.42/l in the last 12 months – equivalent to $6/kg MS. Some companies do pay a bonus for milk solids content (percentage, not weight) but the main factor determining farm gate price is volume. Thus, larger producers do get higher prices, a politically hot subject justified only by precarious municipal roads and long distances that hugely affect pickup costs.
The other 20% of the farms run on semi-confined and confined systems (free stall and composting barns with cows milked three times a day), where concentrate reliance can be as high as 50% of the cows’ diet on a DM basis. The reasons include heat stress, topography, lameness, mud, wide grass growth variations within and between years, but are given mainly by those who, for cultural reasons, do not master or like grazing.
Typically milk is produced by small family units on 20 to 40 ha of land, rarely above 100 ha. Production ranges from 0.1 to 1.2 million litres per year from machine milking 12 to 40 cows per labour unit, this at 1.5 to 4 per farm. In contrast, the 100 largest farms produce an average of 7.6 million litres, the largest of them reaching 27.4 million litres per year on a free-stall system connected to a rotary shed milking 320 cows/hour. Notwithstanding that, labour efficiency is low even on large farms, requiring one labour unit to only 40-70 cows.
Most milk originates from the Southeast, South and Central regions, in decreasing order of volume. Production is year round with the odd seasonal farms by choice. The South is predominantly subtropical and temperate in places so has no dry season, but the rest of Brazil is tropical and dry between April and September. Annual rainfall ranges from 800 to 2,000mm and temperature from -7°C (South) to 42°C (everywhere except above 700m).
A typical tropical farm milks Girolando cows (Gir x Holstein) yielding 2,400 l/305 day lactation or 3,000 l/ha/year (dry stock land and milking platform included): in the South, cows are typically Holstein (10% Jersey) yielding 3,700 l/305 day lactation and 5,500 l/ha/year. With negative to 3% return on equity, these families barely make a living. Some are adopting changes but many are quitting dairy, so a significant free-market selection is taking place with all the pain and arguments it can bring but is widely accepted as necessary. “Dairy farming is not for everyone”.
In the next article we will address those who changed their management and views and are now producing from 15,000 to 30,000 l/ha/year, reaping benefits such as 10 to 35% return on equity. How is that being achieved, what did they change, and how far can these farmers get?