Marketing of Animals

Marketing of milk and beef is a key factor to the financial results of the dairy operation.

 

  Animals - beef

Any dairy farm will always have cull cows to be sold for slaughter. Sometimes cows get injured and then an emergency slaughter has to be performed. It is a huge advantage when the regular buyer of the cull cows can also buy the emergency culls at a reduced price.

  Animals – bull calves

Any dairy herd will always end up with about 50% bull calves from the progeny born. These bull calves are worth about R200 to R300 each at one week old

  1. The dairy farm can decide to raise these calves

  2. There is a huge demand for bull calves as they can be sold to people who raise them until they are big enough to sell to the feed lots.

  3. There is only a limited market to sell them at 6 weeks of age to the abattoir for veal – a delicacy on some restaurant menu’s

  Animals – heifers

Once the dairy has reached its full capacity, surplus progeny will be sold to other dairy farmers. Therefore it is important to breed high quality animals by using the best genetic material one can afford. It is also important to keep proper records of all cows To enable the supply of genetic backgrounds, a history of cow health and milk production records are important. If all information is available and if the heifers offered for sale also attractive, then a premium price will be fetched.

  Season

Timing in marketing is very important when it comes to selling at a premium price. Milk flow in the RSA follows a very distinct pattern – every year during the autumn and winter the cows produce about 30% less milk. Comes Spring and summer the milk increases by 30%.

Beef prices have the same pattern – every year during the late summer and autumn farmers want to sell all surplus animals before the winter. In springs when the rain comes and the grass grows again, they hold back their animals It is therefore important for the dairy farmers to sell their surplus in the spring towards Christmas.

 

Marketing of the Products

 Melk

Every dairy farm has a competitive advantage which should be marketed correctly.

Any dairy farm will always have cull cows to be sold for slaughter. Sometimes cows get injured and then an emergency slaughter has to be performed. It is a huge advantage when the regular buyer of the cull cows can also buy the emergency culls at a reduced price.

The following factors are important:

  1. Location from the processing factory – the closer the better!

  2. Location from the market – the closer the better.

  3. High solids in the milk

  4. Large volume at one pick up point – preferably enough to fill an interlink tanker every day – 30 000 liters per day.

  5. High quality milk – low in bacterial count, low in SST (Somatic Cell Count), high in butterfat, high in protein – no use of BST hormone, no antibiotic in the milk.

Marketing Channels

In the dairy industry you have to choose a reliable milk buyer who will buy and pay for your product every month. Because milk is a perishable product dairy farmers cannot keep the milk on the farm for more than 48 hours. Therefore the Mooimelk Cow Hotel has chosen Parmalat as their milk buyer. They have also managed their risk by signing a milk supply agreement for 12 months until the next year when the milk flow is at its lowest.

Beef is much easier to market as you can shop around while the animals are still gaining weight. Once the best offer for the cull cows has been negotiated, a truck can be booked to load the animals for a specific abattoir.
 

Economics

Negotiating the best price when selling the farm’s milk, can result in a 5% premium for the year. On 10 million liters of milk volume of the Mooimelk Cow Hotel, such a premium can amount to R1,5 million! Therefore proper timing and research has to be done before choosing a particular milk buyer for the dairy’s produce!

Critical factors for profitability

  1. Economy of scale – produce maximum volume with the same fixed cost structure.

  2. Growth – the business keeps growing in cow numbers as the culling rate of 25% is less than the 35% offspring that is added to the herd every year.

  3. Production efficiency – cut out any non-profitable animal or process.

  4. Product price – sell at a premium for pure profit

  5. Control cost – strict measures are needed to enforce discipline when buying any items for the farming operation.

  6. Control the number of workers – do not overspend on too much workers on the farm.

  7. Add value – don’t stop at the production of fodder – feed the fodder to cows and then you can sell milk and beef – which is much more valuable than the original fodder!

  8. Risk management – by engaging in supply agreements for the farm’s products, risk is reduced and profitability over the long term improved!

  ECONOMICS OF ENTERPRISE

The Mooimelk Cow Hotel adheres to most of the important economical principals to be a successful business enterprise!

  1. Producing a large volume of milk at one dairy, the Mooimelk Cow Hotel receives a premium of 30 cents per liter of milk… on 10 million liters per year this amounts to a R3 million premium!

  2. Value is added to crops grown on the irrigation farm by feeding the fodder to dairy cows and selling a humanly consumable product such as milk.

  3. Asset building takes place as the value of the cow herd keeps increasing to keep up with the inflation rate!

  4. The value of the fixed asset, the agricultural land also keeps increasing with the rate of inflation.

  5. Cow numbers increase as a result of sound animal management – thus creating an opportunity for growth of the business.

“NOTHING MOTIVATES
LIKE MONEY”

This method of motivation for staff’s performance is working very well for the Landman family on the Cookhouse farm. Staff members are always keen to earn bonusses and in this way management has never had any serious labour problems in 30 years..

 

DAILY ROUTINE OF DAIRY OPERATION

The staff component working on the irrigation farm and the Mooimelk Cow Hotel totals 44 people including 6 managers. The secret of a sustainable dairy operation is to manage staff in such a way that they can get away from the dairy every second week-end.

Therefore the Mooimelk Cow Hotel has two milking teams, two feeding teams, two management teams, two irrigation teams... This works well as there is always somebody on leave and then there has to be someone standing in for the absent person.

  Daily programme

04:00 Morning shift milkers arrive Start milking
07:00 Irrigation staff starts Move sprinklers
07:00 Rest of dairy staff start Hoof trimming, feeding, AI
11:00 Milking staff finishes milking Go home for rest of the day
12:00 Rest of staff go home for siesta Rest during middle of the day
14:00 Irrigation staff resume work Fodder making, maintenance
14:00 New feeding team starts Feeding TMR to cows
15:00 Afternoon shift for milking starts Milking cows for second time
17:30 Irrigation staff stops Go home for the night
17:30 Dairy support team stops Go home for the night
20:00 Night shift milking team stops Go home for the night

(The farm’s staff are split into two teams. Each team works a 12 day week. After every 12 days, every person gets his 2 day week-end off. On a dairy and irrigation farm, work is the same every day – cows must be fed, lands have to be irrigated, cows must be milked…

The only way of ensuring that there will always be enough staff to work on week-ends, public holidays – always… is to pay the staff a better salary than other farms in the area! Bonus systems also play a huge part in motivating staff to come to work when on duty. The following bonus systems are in place at the Mooiwei Boerdery farm in the Eastern Cape.

  1. Satisfactory bonus – R300 per month bonus for all staff (About 10% of their salary) for satisfying work, for 100% attendance, never late for work, no damages caused. About 90% of all staff receives this bonus every month.

  2. Transport bonus - R20 per person to pay for the Taxi when staff goes to town when paid monthly.

  3. Machine washing bonus – R300 per month for the two milkers who also wash the milking machine after milking.

  4. AI bonus – R10 per cow certified in calf after the vet check.

  5. Heat spotter bonus – R2 per cow certified in calf – for all the inseminators’ cows.

  6. Tank wash bonus – for the person responsible for cleaning the bulk milk tank at any time of the day, after the milk has been taken from the bulk tank by the milk buyer.

  7. SST bonus – R1 000 each per month to the two dairy managers responsible for supervising the milking process – when the SST count is below 500 000 per ml.

  8. Bacterial count bonus – R1 000 to the two dairy managers for keeping the bacterial count within the expected limit of 80 000

  9. Thirteenth cheque – All staff members receive a percentage of their monthly salary as a thirteenth cheque – depending on their performance appraisal during the year.

 
     

     
 

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