With a milk price of around NZ60 cents a litre, Brazilian dairy farmers feel their market is developing relatively well. These farmers are mainly dependent on the domestic economy. However, discussion about climate change hardly plays a role in the South American country. Dutch journalist Sjoerd Hofstee reports.
Much of Brazil’s 35 billion kilograms of milksolids is produced by small farmers with a few cows. About 8 billion litres, almost a quarter of the total, counts as “informal milk” and is sold directly on the street in smaller cities.
This helps explain the very low average milk production in Brazil, which according to statistics, is about 2000kg MS per cow per year. However, 30 to 40% of the more than 17 million registered dairy cattle are kept at very small-scale farms milking only a few litres per cow per day, with some kept for meat production.
Brazil also has regions where Holsteins are farmed professionally and on a large scale, producing an average of 30 litres and more per day. However, the largest group of farmers, around 50% of the total, work with cows of the Girolando breed, a crossbreed between the Holstein-Friesian and the Indian Gyr. This crossbreed appears to be very resistant to Brazil’s sub-tropical climate with high temperatures and high humidity.
MANY DAIRY PROCESSORS
Brazil has 6000 milk processors. About 4000 are small, local operations, while about 2000 have been accredited to market their products nationwide. Nestlé is the largest processor with more than 1.7 billion kg MS annually.
Brazil is a net importer of milk, with 3% imported, mostly dried semi-finished products from Argentina and Uruguay. Last year’s exports were less than 0.5%. From 1997 to 2014, milk production in Brazil grew year on year but in recent years, the country has faced major economic problems and production has stabilised. Confidence in the market has now returned with milk production growing again.
High unemployment makes staff easy to secure. In Parana State, where many large dairy farms operate, the unemployment rate is 12%. A monthly salary for dairy workers is about NZ$1000, or up to NZ$1700/month when accommodation and other conditions are provided, as is common.
HOPE THROUGH NEW POLITICAL WINDS
Infrastructure is a major stumbling block with not enough effective railways to efficiently transport all the soybeans and corn from vast inland cropping areas. Main roads in the richer states are reasonably good, but many in rural areas are in poor condition, making transport of feed and milk expensive and sometimes difficult. Many soy traders commonly count on a loss of more than 10% in transportation; by bouncing off the trucks, literally many soybeans are spilled and accidents occur regularly.
A years-long-discussed comprehensive new rail connection from the interior to the ports is the hope of the large trade houses for the next 10 years, meaning a huge boost for agriculture. The new president Bolsonaro seems supportive, making him in favour with farmers despite his other controversial policies, meaning the rest of the world are more critical of him.
The domestic economy, infrastructure woes and the worries about continuing to grow good feed in the difficult climate are issues for Brazilian dairy farmers.
Climate change and laws on use of manure or chemical fertiliser do not concern them. Dairy farmers, large and small, often grow most of their cattle feed – including grain maize and wheat in addition to grass and maize silage.
High levels of fertiliser are used without limits. Only phosphate has been measured in recent years to limit the excess nutrient in soils and groundwater.
MILKING ROBOTS ON THE WAY
Armando Rabbers is a dairy farmer in the state of Paraná, near the city of Castro, delivering his milk to the Castrolanda co-operative. In 2012 he was the first in Brazil to install milking robots after investigating the technology in Europe during a time of strong returns in Brazil while finding labour was difficult. Now almost 100 milking robots are running throughout the country with the number set to double this year. DeLaval are the market leader with more than 50 units.
When Rabbers rebuilt his barn and installed two robots for more than NZ$1million in total (about $8000/cow) he budgeted on a eight to 10-year payback period. For the investment he took out a loan with a Brazilian bank for six years at 7% interest, which is relatively low for the country; 8-10% is more common. Longer loan periods than 10 years are also rare; partly due to fluctuating and often high inflation, (currently almost 4%) banks find longer loans too risky.
Meanwhile, Armando Rabbers’ 140 cows produce an average of more than 40 litres/day with a total daily production of almost 5800 litres. Rabbers receives a milk price of almost NZ61c per litre. His cost of production is NZ31c.
“The biggest challenge in this country is that the economy does not fall. With our milk price we are completely dependent on the domestic market,” Rabbers says.
