Discipline: production; Keywords: smallholder, normative and deterministic model, herd profitability, gross margins.
Smallholder dairy production, which is mainly characterised by a low input–low output production system, currently makes an insignificant contribution to the South African dairy industry. Several reasons can, however, be advanced to motivate the development of this sector. In Sub-Saharan Africa, in general, the performance of smallholder dairy cows is poor, suggesting low herd profitability. In order to develop the smallholder dairy sector, it is therefore important to identify herd production models or management strategies that would improve herd profitability. The aim of the study by the authors cited below therefore was to evaluate the potential impact of alternative herd management practices and levels of cow performance on smallholder dairy herd profitability.
A normative and deterministic smallholder dairy herd model was used as a base for determining the impact of different alternative production models on herd profitability. The model was composed of three components, depicting a typical smallholder dairy herd in South Africa. These components were: (i) biological sub-model simulating herd structure, cow performance and animal live weights; (ii) sub-model for nutrient requirements, estimating nutrient requirements for maintenance and growth of cows and replacement heifers, pregnancy and lactation, and (iii) economic sub-model calculating gross margins for the base situation and alternative production models.
Gross margins in the base situation (i.e. average herd) were R978.20 per cow in the herd per year. Increasing production resulted in an increase in profit, while higher cow live weight caused lower gross margins. The break-even point for milk yield was 3 505 kg per lactation. Cow mature live weight higher than 495 kg resulted in negative gross margins (i.e. unprofitability). An increase in herd size had a positive effect on gross margins. This was due to revenue increasing at an exponential rate, while the corresponding increase in costs was curvilinear. Substantial gains in profit were achieved with reductions in age at first calving and calving interval (i.e. improved reproductive performance). Increased replacement rates led to a significant erosion of profit, with rates above 30% leading to an unviable enterprise.
The results indicate that current smallholder dairy farming in South Africa is viable, although there is extensive room for improving profitability. Higher profitability levels could be achieved by increasing production per cow, using smaller framed cows, improving reproductive performance, and reducing culling rates.
C.B. Banga, S. Abin & C. Visser, 2019. Modelling alternative herd production models for the smallholder dairy production system in South Africa. Proc. of the 51st Annual Congress of SASAS, 10-12 June 2019, Bloemfontein.