Dr . Carel Muller
Research Associate , Faculty of Animal Sciences , University of Stellenbosch
D airy farming generally shows small profit margins . A large capital outlay is required at start-up while operating a dairy farm also requires a daily , mostly feed , cost input . A number of factors affect the economic success of dairy farming . The average milk yield of cows is often regarded as the most important factor affecting profit margins . Although , generally , higher producing dairy herd have higher profits , a high average milk yield does not always guarantee high profits . In South Africa , productions systems vary from pasture-based systems to total mixed ration ( TMR ) systems . It would be simplistic to regard the lower milk yield levels of cows in a pasture-based system as not profitable while , regarding high milk yields levels in TMR systems as profitable .
The reason for this being illogical is because each production system has its own cost structure and break-even production level . Simply because of the difference in the chemical composition of roughages , the feeding cost of a pasture-based system could be less than 50 % of a TMR containing lucerne hay . The break-even milk yield level for Jersey cows consuming 15 kg / cow / day at a milk price of R4.50 would be 17 , 15 , 12 and 9 litres of milk per day for total diets containing lucerne hay , oat hay , kikuyu pasture and ryegrass pasture , respectively .
It is well known that the milk yield of cows increases after first lactation reaching peak lactation milk yields at about 5 th to 6 th lactation .
After this , milk production per lactation decreases again , although usually not to the same level as in first lactation . This means that the lifetime production of cows increases the longer they stay in the herd resulting in an increase in production efficiency . This becomes even more important when the rearing cost of cows as a heifer is included . This cost can only be recovered in two ways , i . e . selling the heifer as a breeding animal or during the milk production stage of a cow ’ s lifetime . Although an advanced age at first calving ( AFC ) may increase the first lactation milk yield of cows , it also increases the rearing cost to first calving and therefore may reduce the lifetime profit margin of a dairy cow .
Surprisingly , the lifetime profit margin of cows is not a commonly discussed concept in the South African dairy industry . Most dairy farmers do not have such a figure for their production system . At most the difference between the daily production cost and milk income per litre of milk is used as an indication of profit , i . e . milk income ( milk price ) at R4.80 per litre and production cost is R4.40 per litre gives a “ profit ” of R0.40 per litre . It is not clear which costs are included in the daily production cost of milk . Using this method , profits would change when the milk and feed prices change . Simple modelling can be used to estimate lifetime profit margins towards determining the effect of different factors on the lifetime profit margins of cows . It is to be expected that a number of factors would affect the lifetime profit margin of cows .