Brazil is a significant market for dairy products. With a population of 212 million people, Brazil consumes approximately 35.2 billion litres of milk per year from various dairy sources. The majority of this consumption, 97%, comes from domestic production, and only a minimal percentage of the national production is exported.
The level of competitiveness among Brazilian farmers in this industry is a topic of interest. How the milk is produced is also a subject for examination.
Roughly 80% of the farms utilize grazing methods that are comparable to those utilized in New Zealand, with herds being milked two times a day.
Various options for feed concentrates are available, similar to those available in the United States, with prices ranging from $204 to $526 per tonne.
Milk prices have traditionally been based on volume rather than other factors. Therefore, the milk solids content is relatively low, with an average fat content of 3.8% and crude protein content of 3.2%. This results in a value of $0.42 per litre in the past 12 months, equivalent to $6 per kilogram of milk solids. Some companies may offer additional compensation based on milk solids content by percentage rather than weight. However, the primary factor determining the farm gate price is still the overall volume of milk produced.
Hence, larger producers are able to attain higher prices in the market. This is a matter of political sensitivity, which can only be explained by the challenges posed by precarious municipal roads and long distances, which significantly affect the cost of pickup.
The remaining 20% of farms function on semi-confined or confined systems, specifically using methods such as free stalls and composting barns. In such cases, concentrated feed can account for as much as 50% of the cows’ diet based on dry matter.
This occurrence can be attributed to various factors, including heat stress, topography, lameness, excessive mud, and variations in grass growth within and between years. However, the primary reason is the cultural aversion or lack of expertise in grazing.
Milk production is generally carried out by small family units that own land between 20 and 40 hectares, rarely exceeding 100 hectares. The production rate ranges from 0.1 to 1.2 million litres per year, with machine milking on an average of 12 to 40 cows per labour unit. This farming practice is generally found in 1.5 to 4 units per farm. On the contrary, the top 100 farms produce 7.6 million litres on average, with the largest farm producing 27.4 million litres.
The dairy farms in Brazil utilize a free-stall system with a rotary shed capable of milking 320 cows per hour and producing millions of litres of milk annually. Despite the large-scale operations, labour efficiency remains low, with one labour unit required for every 40-70 cows. Most milk production is concentrated in the Southeast, South, and Central regions, with varying volumes in descending order.
Milk production occurs year-round except for some seasonal farms that deliberately choose to operate on a seasonal basis. The South region is characterized by a subtropical and temperate climate, while the rest of Brazil experiences a tropical climate with a dry season from April to September. The annual rainfall ranges from 800 to 2,000mm, and temperatures range from -7°C (South) to 42°C (all areas except above 700m).
A typical tropical farm utilizes Girolando cows (a mix of the Gir and Holstein breeds) yielding 2,400 litres per 305-day lactation period or 3,000 litres per hectare per year, including dry stock land and milking platform. In contrast, the cows in the South region are primarily Holstein (with a 10% Jersey breed) and have a higher yield of 3,700 litres per 305-day lactation period and 5,500 litres per hectare per year.
Two New Zealand companies have been shown what is achievable in Brazil despite the bureaucratic obstacles many face when entering the Brazilian industry. They are Leitíssimo ( post )and Kiwi Group.
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