We are what we eat
24-04-2018The Federation of Dairy Farmers of Santa Cruz (FEDEPLE), which represents 9 associations and 900 dairy farmers, organised four costs record keeping workshops with the support of Agriterra. During the training farmers found that the cost record keeping is a marginal practice among them and that the dairy farm management in the region still maintains a high component of intuition and tradition.
Milk delivery by an associate in San Isidro
At the beginning of the workshop most of the farmers do not know the cost structure and profits of their farms, but with the support of FEDEPLE´s veterinarians they complete the registration tables until they reconstruct a true image of their businesses. At the end of the workshop farmers share their results and discuss the strategies of improvement with the veterinarians´ advice.
Cost record keeping workshop in San Isidro
Conclusion
The main conclusion of the workshops is that the Bolivian dairy sector is made up of a very large industrial company that offers a fixed price to the farmers according to the quality of the milk, therefore, sales price is an external factor that the farmers cannot control.
Also, while dairy is a business run by economies of scale, currently in Bolivia a dairy farm´s profits do not depend directly on the volume produced. The size is not momentousness, yet. The most profitable farmers are those who focus their efforts on controlling production costs and improving quality, factors on which they exercise a direct control.
The most profitable farms are those that manage better their feeding costs.
Here food plays a paramount role. Animal food can improve or worsen the quantity and the quality of the milk produced per cow. And, at the same time, animal food is the primary cost, in many cases, representing more than half of a dairy farm costs. Therefore, the most profitable farmers are those who manage best their animal feeding cost. This is the reason why FEDEPLE is directing its efforts to offer the best animal feed service to its 900 associates.
Automation animal feeding factory
Since the end of 2016, when FEDEPLE started its collaboration with Agriterra, FEDEPLE has invested USD 407,000 in the automation of its animal feeding factory, the construction of a second cereal reception area and the acquisition of a salt plant. It has invested to triplicate its cereal storage capacity from 400 tons to 1,200 tons and it has contracted a warrant valued at USD 1.28 million to purchase cereals. These improvements have been quick to notice.
Now FEDEPLE sells the same quality fodder a 3.6 percent cheaper, buyers have increased by a 15 percent and total production have increased by a 20 percent, reaching a monthly average production of 1,800 tons.
FEDEPLE meeting Forfarmers in The Netherlands
FEDEPLE´s next challenge is to develop a fodder distribution system in bulk through the 9 affiliated associations, an idea that Management and Board elaborated during a study tour to Spain and the Netherlands organised by Agriterra. This bulk distribution system saves costs and generates an extra income for all 9 associations, offering feed on demand to farmers. FEDEPLE has begun the construction of 36 silos of 20 tons each using internal capital to co-invest with their associations USD 127.800.
Guido Guerra
business advisor Bolivia
