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The Milk SA guide to dairy farming in South AfricaB. Dairy industry value chainMilk production in South Africa is dominated by two types of producers: large-scalecommercial producers, and small to medium-sized commercial producers.INPUTSPRODUCER (DAIRY FARMER)DIRECT INPUTSSeedFertiliserWaterFeedElectricityAnimal health productsFarming/dairy equipmentINFRASTRUCTURE/CAPITAL INVESTMENTDairy cattleMilking parlourMilking machinesCooling facilitiesSilage bunkersHousing/shedsFencingIrrigation systemWorkersSUPPORT INPUTSFinanceAnimal health, production andreproduction info and technologyTrainingConsumer16AA- PG013-038 CHAPTER 1.indd 162014/06/06 3:26 PM

Chapter 1 The South African dairy farming environmentLarge-scale commercial producers sell milk to dairy processors. Small and medium-sizedproducers sell most of their milk directly to consumers and/or to processors. Dairy processorsbuy milk from producers to produce dairy products for distribution to retailers, exports and forfurther processing.MILK BUYERPROCESSINGTransport, infrastructure,bulk tanking equipmentFluid products: pasteurised milk, yoghurt,buttermilk, amazi, etc.Concentrated products: cheese, milkpowder, condensed milk, etc.RETAILAND sConsumer17AA- PG013-038 CHAPTER 1.indd 172014/06/06 3:26 PM

The Milk SA guide to dairy farming in South AfricaC. Opportunities and risks indairy farmingIt is generally accepted that success in thedairy market depends onvarious factors, including: quality products sound management transparent industry informationSince deregulation (1997) the number of smaller milk producers havedeclined, mainly because marketing/control boards no longer offered a supporting role to milk producers,and production and marketingbecame more competitive. Dueto economies of scale, processors have amended their procurement patterns after deregulation and startedbuying less from smaller milk producers.Some consumers like to buy fresh milk directly from producers, because the source of themilk, its quality and safety is known. Producers can also sell directly to small cafés andstreet vendors. In this way, some transaction costs can be cut and it will lead to higherprofits. A sound relationship needs to be in place between the sellers and the buyers.The high demand for value-added products, such as sour milk, yoghurt and cheese, isanother market to be explored. However, to go this route would require high investment,market knowledge and the necessary training.Within the dairy farming industry, there are many sources of uncertainty and risk.These include: Uncertain weather conditions that have an influence on the herd and the production ofsufficient volumes of feed. Uncertain product prices or uncertain interest rates. Uncertainty with respect to market availability for products. Uncertainty about possible changes in regulations of governing production practices. Uncertainty about government policy to allow more imports, which can drive down localprices. Sudden outbreaks of contagious diseases.However, a successful farmer can reduce the risks by proper planning and good management.18AA- PG013-038 CHAPTER 1.indd 182014/06/06 3:26 PM

Chapter 1 The South African dairy farming environmentD. Buying a dairy farmBuying a dairy farm is not a decision you should make without talking to many expertsand considering various factors, because it involves investing a huge amount of money.Not only do you need enough money to buy the farm, you will also need money tomaintain the dairy farming activities and furthermore to develop the farm in future.People such as the neighbours, the veterinarian, the extension officer and the agriculturalexpert from your bank can give valuable information and advice. Ask for written records toprove claims about the positive features of the farm.You should find out more about the following important factors: Availability of dependable electricity. Existing milk facilities and equipment. Distance of the farm to the nearest town. Existing milk route of milk-buying companies. Condition of the roads to the farm. Existing contract with a company that buys milk. Availability of sufficient water. Possibility of producing enough roughage. Existing pastures and types of soil.19AA- PG013-038 CHAPTER 1.indd 192014/06/06 3:26 PM

The Milk SA guide to dairy farming in South Africa1.2Economy of dairy farmingA. Prepare a budgetYou can draw up a monthly budget in five simple steps. If you have a personal incomeand an income from your farm, rather draw up a separate budget for each.Step 1: Income“Net income” means the amount of money that you take home after you have paid taxes andlevies. Work out your net income by adding up all of your and your family’s sources of income.Step 2: Fixed paymentsFixed payments are payments that you make every month. This may be an instalment onfurniture, feed for your cow or school fees, and includes other things such as teat dip orvaccinations for your cows. Money set aside for savings is also a fixed payment.Step 3: Day-to-day expensesDay-to-day expenses are often not planned for and include money spent on veterinary services,phone calls, cooldrinks and groceries.Step 4: Luxury paymentsThis is also known as non-essential payments. These are the things that you DO NOT have tospend any money on, for example beer and sweets. List these things, especially those thingsthat you like to buy but cannot really afford.Step 5: Personal budgetUse a blank page and put your total income right at the top. List your fixed payments, dayto-day expenses and luxury items. Add these three totals together to give you a total forexpenses. Subtract your total expenses from your total income. The difference is what youhave left every month. If the difference is a minus, you will have to look at reducing the amountthat you spend or increasing your income. If you have money left, consider saving up a biggeramount for something that you really want to do, such as expanding your dairy.Borrowing money Never borrow money if you do not have to. Borrow only for necessities. Pay the borrowed money back in instalments and do not miss a payment.20AA- PG013-038 CHAPTER 1.indd 202014/06/06 3:26 PM

Chapter 1 The South African dairy farming environment Net income is all your andyour family's sources ofincome. Fixed payments arethe things you have topay for every month. Day-to-day expenses are notalways planned for. Luxury payments are spenton things that you don’t reallyneed. Do your budget on paper. Work out how much money youhave left by subtracting all yourexpenses from your income.21AA- PG013-038 CHAPTER 1.indd 212014/06/06 3:26 PM

The Milk SA guide to dairy farming in South AfricaB. Understand the dairy marketBefore you can sell your milk, it is necessary that you understand some basic marketprinciples. Once you understand these principles, you will be able to expand yourmilk sales with confidence.The production of milk follows a process that basically consists of four steps: Rearing animals (feeding, breeding and caring for them). Producing (milking your cows). Collecting, chilling and bulking (transporting your milk to the collection centre or to yourcustomers or collection of milk on your farm). Marketing (the sale of your milk, directly to the public or to a buyer or cooperative).Milk priceThe price that you receive for your milk is known as the producer price. The price increases asit goes from the producer to the processor, collection centre or cooperative, wholesaler andultimately, the consumer.ProfitProfit is the money that you make from your milk. Profit is the difference between the cost ofproducing and transporting your milk, i.e. feed cost, animal health care, labour, etc, and themoney from the milk sales.CompetitorsThese are the other milk producers who also sell their milk in your region, and often to thesame customers. Too many producers (competitors) in the market can put pressure on the milkprice. Therefore it is good to become a member of a producer group or to join a cooperative.MarketingMarketing is a process that you follow to make people aware of your milk. You can market yourmilk by advertising. Ensure that your milk is of good quality. Creating a good reputation for yourproduct will help ensure that your milk is always sold.22AA- PG013-038 CHAPTER 1.indd 222014/06/06 3:26 PM

Chapter 1 The South African dairy farming environment Rearing: Feed and care for your animals. Marketing: Sell your milk to a buyer,cooperative or shop. Production: Milk your cow. Transportation: Milk collection anddelivery play a very important role inmaintaining the cold chain. Competition is good. Join a group to protect your interests. Profit is the money that you make from your milk.23AA- PG013-038 CHAPTER 1.indd 232014/06/06 3:26 PM

The Milk SA guide to dairy farming in South AfricaC. Sell your milkSelling your milk means that you can earn extra income for your farm, but before youstart selling, there are some important things that you have to consider. Make sure that there is a cooperative, shop, school, processor or even clinic that will buy yourmilk. In other words – list your possible customers. Find out what kind of packaging your customer would prefer. Some might wish for milk to bedelivered in plastic bottles, while others may have their own containers and will only requiredelivery in a can. Be sure that you are equipped to deliver the milk. The shop or collection centre should not betoo far from your farm. Be sure that you are able to deliver cool milk. Your customer will not want warm milk that willgo sour quickly. If a buyer or processor collects milk from your farm, make sure that your access roads aregood and your reception area is up to standard.TestingOnce you start selling your milk to a collection centre, you will have to agree to the testingof your milk. A centre will not buy milk if they are not sure that the milk is hygienic. If you areselling to a shop or to the community, it is your duty to supply safe, clean, fresh and hygienicmilk.Your own abilities Do your own market research. Determine who your clients are. Can you deliver the milk? Can you cool the milk?24AA- PG013-038 CHAPTER 1.indd 242014/06/06 3:26 PM

Chapter 1 The South African dairy farming environmentQuality Find out what type of packaging yourclients prefer. Sanitise and clean all the bottles andcontainers that you use.Marketing Advertising isthe best way tomarket your milk.Records Keep good record of your finances.25AA- PG013-038 CHAPTER 1.indd 252014/06/06 3:26 PM

The Milk SA guide to dairy farming in South Africa1.3Buying cattle for dairyfarmingA. Various breeds of cattleIn South Africa at least seven breeds of cattle are recognised as being "dairy breeds".These breeds are known for higher milk production and are suited to intensive milkproduction systems, such as parlour equipment, cow housing and concentratefeeding. These are Holstein-Friesian, Jersey, Guernsey, Ayrshire, SA Dairy-Swiss,Brown Swiss and Dairy Shorthorn. Other breeds, such as Simmenthaler, Flechviehand South Devon, are occasionally seen in the milking parlour.Choosing a dairy breed can be a difficult decision. However, if you know which breed suits yourneeds, you will be able to choose and buy the right breed.HolsteinThe Holstein is the most popular dairy breed across the world and in South Africa. It is whiteand black in colour and is a big animal (large-framed). These animals are exceptionally highmilk producers and can be culled and marketed as meat. The Holstein sometimes has difficultycalving and is not suited for walking long distances. Its milk has a low butterfat content.Holsteins are not as heat-resistant as some other dairy breeds.JerseyJerseys are smaller than other dairy breeds and are very popular in South Africa. They are lightbrown in colour and are known for their good udders and calving ease. Their milk has a highbutterfat and protein content. Jerseys adapt well to warmer areas. Because of their smallersize, they eat less and are good grazers.AyrshireThe Ayrshire is slightly smaller than the Holstein and can also be culled for meat. It is white andred-brown, and produces milk that has a high butterfat content. Its milk is especially suited asdrinking milk. Ayrshires can function in cold and warm climates. It is known for its good udder.GuernseyThe Guernsey is light red-brown and white. It calves with ease and its milk also has a high26AA- PG013-038 CHAPTER 1.indd 262014/06/06 3:26 PM

Chapter 1 The South African dairy farming environmentbutterfat content. The Guernsey is slightly larger than a Jersey, but smaller than a Holstein. TheGuernsey adapts well to almost any climate and is known for its good temperament and wellattached udder.Dairy SwissThe Dairy Swiss can adapt to different climates and is known forits good fertility and high life expectancy. It also calves easily andproduces milk with a high protein content. Its milk is especiallysuited for cheese production. The Dairy Swiss is a large animal andits coat has various shades of brown, with a white muzzle and ears.JerseyHolsteinAyrshireGuernseyDairy Swiss27AA- PG013-038 CHAPTER 1.indd 272014/06/06 3:26 PM

The Milk SA guide to dairy farming in South AfricaSwedish RedThe Swedish Red is red-brown with white markings. It is a medium-sized, high-producing animaland its milk has a high fat and protein content. The Swedish Red adapts well to both hotand cold climates. It is known for its high production figures, low somatic cell counts andprofitability.Swedish RedDual-purpose breedsThe dual-purpose breeds look like the beef breeds in shape – heavy, short-legged and fairlywide – but produce more milk with a higher butterfat content than typical beef cattle.The common breeds of dual-purpose cattle in South Africa are the following: Devon, DairyShorthorn, Brown-Swiss and Simmenthaler.Dual-purpose breeds are good for milk and meat production. Milk production is lower than withthe specialised dairy breeds. Feeding and management requirements for dual-purpose breedsare lower.Cross-breedsA cross-breed usually refers to an animal with pure-bred parents of two different breeds.In certain pasture-based production systems, farmers prefer smaller cows with lower feedrequirements. For this purpose they use Jersey-Holstein cross-breed cows.28AA- PG013-038 CHAPTER 1.indd 282014/06/06 3:26 PM

Chapter 1 The South African dairy farming rsey-Holstein cross-breed29AA- PG013-038 CHAPTER 1.indd 292014/06/06 3:26 PM

The Milk SA guide to dairy farming in South AfricaB. Factors to consider whenbuying cattleWhen you decide to buy cattle for your dairy farm, you have to choose the rightbreed to farm with. There are many dairy breeds available, but choosing one willdepend on your needs.Economy: Choose a breed that will give you the income and profit that you need. Base yourchoice on three very important things: the highest quality milk; the highest quantity of milk(high production); the lowest possible cost.Area: Choose a breed that is available in your area. If you have to transport your cattle overa long distance, it can cost you a lot of money. Transporting animals can also cause injury.Climate: Some breeds perform best in hot areas, while others perform better in coolerareas.Feeding: Before buying cattle, be sure of the feeding system that you can provide for yourcattle. Some farms are suitable for zero grazing systems, while others are more suitable forgrazing systems. Some breeds are more suited to grazing than others.Volume: Decide whether you want to produce a large amount of milk (high volume), orwhether you would prefer milk with a higher butterfat or protein content. These factors arevery important when you start selling milk to a milk buyer. Some buyers prefer milk with ahigh butterfat content, as this milk is used to make cheese and other dairy products.Learn from your neighbour: If other farmers are farming successfully with a certain breedof cattle in your area, then you should probably follow their example. Do not try to farm witha breed that has not been proven successful in your vicinity.Heifers or cows?If you decide to buy heifers, always buy from a good breeder who will give you all theinformation you will need. Ask for the records and milk production figures. Buy only healthyanimals that are certified as TB- or brucellosis-free. Your heifers should replace your oldcows, so buy accordingly.Heifers are easier to transport and adapt to their new environment quickly. They are usuallyalso cheaper than cows, but produce less milk during their first lactation.By buying a cow that adapts to your farm quickly, you will be sure of a good income becausethe cow will start producing immediately. However, older cows may have mastitis anddamaged teats. Take great care when buying an older cow.30AA- PG013-038 CHAPTER 1.indd 302014/06/06 3:26 PM

Chapter 1 The South African dairy farming environment Talk to your successfulneighbouring farmer foradvice.31AA- PG013-038 CHAPTER 1.indd 312014/06/06 3:26 PM

The Milk SA guide to dairy farming in South AfricaC. Selection criteria for cattleNow that you know what to look for and which breed will suit your farm best, it is time tochoose the cows or heifers that you want to buy. This process is called selection and isdone by looking at six basic factors. These factors all determine the “dairyness” of a milkcow – in other words, the things that make her look like a dairy cow.Milk productionSelect a cow that produces a high volume of milk. Ask for its production records. Do not buya cow that is too old, as it may have mastitis and may be in its last lactation, which meansthat you will only be able to milk it for one lactation.Butterfat and proteinYour milk buy

2nd edition Published by ISBN: 978-0-9922220-6-2 AA - COVER.indd 1 2014/06/06 3:24 PM. . E Dry cow management 164 CHAPTER 4 DAIRY ANIMAL PRODUCTION . a dairy enterprise cannot be sustainable. Non-commercial dairy farmers A non-commercial dairy farmer, being an emerging, small-scale, communal or subsistence .