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Large dairy herds: foreign experiences

Jean-Luc REUILLON

Benoit RUBIN.

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Germany

Denmark

The Netherland

Great Britain

Italy (Lombardy)

Czech Republic

USA (Wisconsin)

New Zealand

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Survey in 8 countries

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Thanks to:

Susanne CLAUSEN KCA Dk

Judith KUHL Allemagne (IFCN)

Michel de HAAN Wageningen NL

Alberto MENGHI CRPA IT

Mark TOPLIFF DAIRY CO UK

Iveta BOSKOVA UZEI CZ

John HAUSER consultant AU

Tom KRIEGL USA (Université Wisconsin)

Nicola SHALBOT (Massey University NZ andFonterra)

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Dairy farms per size of herds in France

0

100 000

200 000

300 000

400 000

500 000

Evolution du nombre d'exploitations laitières par classe de cheptel

<5VL 5-10

10 25 25 50

50 75 75 100

100 150 >150VL

(projection) (scénario)

0

100 000

200 000

300 000

400 000

500 000

Evolution du nombre d'exploitations laitières par classe de cheptel

<5VL 5-10

10 25 25 50

50 75 75 100

100 150 >150VL

(projection) (scénario)

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Why did we carry out this survey ?

In the future, we are going to have big changes : • Before their abolition, quotas were managed within

each region, now we’ll likely see a redistribution of milk production on the territory.

• a large part of dairy farmers are going to retire in next few years

• milk volume by farm, by worker and by hectare is going to increase.

Some large dairy herds (200 to 300 cows) are appearing and farmers and advisers have many questions about this kind of herd.

Journée GEB 12 avril 2012 5

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DE DK NL UK IT CZ NZ USA

% farm en 2012.

10% 70% 25% 33% 15% 50% 95% 30%

Évolution 2007-2012

Herds with more than 100 cows in each country

« Large herd » is a relative concept

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Medium and large herd farm types per studied country.

UK: 100-150 Vs 300-400 vaches

DK 100-200 Vs 240-320

vaches DE

30-100 Vs 120-250 vaches

CZ 80 Vs 730 vaches

IT 40-90 Vs 100-200 vaches

NZ 390 Vs 1100 vaches

USA (Wisconsin) 80 Vs 500 vaches

+ 3000 VL (CA)

NL: 85 Vs 180 vaches

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• Germany: historic in the East, since 1980 in the West

• Denmark : liberalization of quota in 1990

• Netherland: progressive increase

• Great Britain : it is historic

• Italy: In 1990-2000 concentration of milk in the North

• Czech republic : inheritance of the communist regime.

• Wisconsin: have increased later than elsewhere in US

• New-zealand : new system in South Island

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Origin of large dairy farms:

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Specificity of large dairy farms compared to average farms in the

same country: labor, capital, herd management,

equipment, milk price…

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Labour

DE DK NL UK IT CZ NZ USA

Labour? Salaried

workers

Salaried workers

Farmer and

family, sub

contracting

Salaried workers

Family company

Salaried workers

Salaried

workers

Salaried

workers

Who manages?

Farmer Farmer,

Employees cows and field

Farmer Farmer or

salaried

Farmer Salaried Farm manag

er (salarie

d worker

s)

Farmer

Increase in dairy farms staff with hired workers. Salaried workers can have responsibility of herd management

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Capital

The funding is usually from the bank.

In some countries (USA-NZ) there can be private

investors.

In Denmark there is a specific system based on

mortgage funding.

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Type of barn, milking

(=) pas de différence entre moyens et grands troupeaux

Same type of barn Milking Robot milking is less frequent in large dairy herds. The farmers prefer to invest in high capacity rotary or herringbone milking system.

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The farming system in large herds evolves with the size

The stocking rate per hectare increases DE, NL, UK, NZ,CZ The scarcity and cost of land explain this choice In addition, in many large dairy farms (Germany, Czech Republic), main fodder areas are limited to increase crop areas. This strategy of diversification is justified by the cash coming from crop sales. Grazing: - has stopped in Denmark and in Germany. - reduced in the Netherlands and in Great Britain. - same level New Zealand, - Zero in IT and CZ (the same level in average herd)

The increase in milk yield is not systematic. It is only the case in Germany and in Italy.

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Milk price :

In DE, UK, CZ and US there are bonuses for the large dairy herds

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Strengths of large dairy herds

DE DK NL UK IT CZ NZ USA

Living conditions and labour

X X X X X

Efficiency of labour X X X X X

Economy of scale X X X

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Weaknesses in large dairy herds

DE DK NL UK IT CZ NZ USA

Skills to manage salaried workers

X X X X X X

Fragility linked to volatility of economic

situation

X X X X X

Debt, dependance on the bank

X X X

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Opportunities for the large dairy herds

DE DK NL UK IT CZ NZ USA

End of quota X X X

Global increase consumption of milk

X X X X

Contribution of outside capital

X X X X

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Threats for the large dairy herds .

DE DK NL UK IT CZ NZ USA

Social acceptability (animal welfare, environment …)

X X X X X

Volatility of prices X X X X X X

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Méthod to calculate the labour income /1000 l milk/ year

19

50 €

100 €

150 €

200 €

250 €

300 €

350 €

400 €

450 €

Returns

Returns

by products

Subsidies)

Milk

Cash cost

Depreciation

Costs

Capital cost

Labour cost

Labour income

Costs

Unit : € / 1000 liters of milk

Economics results.

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Labour income in France

Source : Data base 2012/ Inosys network livestock

20 farms more than 100 cows.

400

75

170 farms less than 100 cows

80

300 80 * 300 =

24000 €/unit labour

75 * 400 = 30 000 €/unit

labour

1000 L milk / annual work unit

Labour income / 1000 liters/ year

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DK,USA,NZ Income labour€/1000L = milk/work unit +

NL,IT, DE Income labour €/1000L + = milk/work unit +

UK, CZ Income labour €/1000L + milk /work unit -

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Summary : There are more hired workers in large dairy herds: - Human resource is the first factor and the capacity of farmers to recruit and to manage hired workers seems to be the first condition for success in large herds. Economic advantage of large dairy herds is explained by labor productivity per worker rather than by income per liter This productivity is explained by: - specialization in tasks - automation - outsourcing

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Lessons for French dairy farms(1/2).

In our survey, large dairy herds have often higher incomes than smaller ones.

There main advantage is labor productivity, balancing in some case a lower profit per liter.

But they are also more fragile (more cash costs and investments)

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Lessons for French dairy farms(2/2).

Farmer have to switch from « farmer » to « farm manager »

We must build a new system of farm (labour and capital)

Big challenge for large dairy herds is also their social image (animal welfare, environment…).

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Thank you for your attention.