‘Cow hotel’ offers South African producers option for future

As in most parts of the world, dairy farming is a tough business in South Africa – plans need to be made to stay economically relevant or face foreclosure. Going bigger is most farmers’ first option, but another is to find a partner to share the burden.

The leasing of cows and sharemilking in South Africa is not unknown, but also not commonly found in this dairy farming community.

Farms range from small, intensive operations to large pieces of land spanning tens of thousands of hectares. The problems associated with turning a profit does not differ much from the rest of the world. In simple terms, input prices and operational costs outweigh the income derived from milk sales on many farms.

Economies of scale

It is against such a background that the Mooimelk Cow Hotel – literally meaning “beautiful milk” – has been developed.

It is here where the answer lies for many dairy farmers – especially those with herds smaller than 200 cows – to keep their assets, but reap the benefits of the economy of scale.

Situated near the Fish River in the Eastern Cape, the climate and ample water supply makes for extremely good feed and pasture production almost all year round.

The Mooimelk Cow Hotel houses 4,000 cows and reaps the benefits of economies of scale by concentrating this large number of cows in an area where milk production can be done at a cheaper rate than in most other parts of the country.

The hotel is owned and operated by Gerdie Landman (pictured), a maverick of sorts in the SA dairy industry. He and his son Chris and some 100 full-time workers operate the dairy, crop production, feed handling and other farming operations.

Caring for such a large herd means feed management runs almost non-stop and the rotary operates for 22 hours a day.

Cows are sorted into groups and milked according to lactation stage and production, either four times, three times or twice a day.

Business agreement

As the name indicates, the residents are visitors of sorts. The Landmans own their own herd of Holsteins, but to make the best of the resources they have a larger herd is needed.

And so enters dairy farmers who either don’t have the opportunity to profitably keep on farming or people who want to own cows, but don’t have the know-how or land to keep them.

One such example is that of Bertus Theron. The dilemma for Mr Theron and his wife René – long-time dairy farmers from the more arid parts of the Western Cape, near Eendekuil – was that they were simply not making ends meet.

Despite a fair price from the milk processor, the rise in fuel, electricity and feed prices shot through the roof and for many months it was touch-and-go to survive – not even thinking about making a profit.

“We buy in our feed and with prices for both feed and transport rising, we simply had to make a financial decision that made sense,” says Mr Theron.

“I’m now a ‘remote’ dairy farmer,” he says. They had to make some tough decisions and finally opted to move their herd the 800km from Eendekuil to Mooimelk Cow Hotel.

“The cows are properly cared for, I still make some money off them, but the effort and stress of keeping the dairy profitable is over. It is like starting a new life,” says Mr Theron, who now spends more time with his family and keeps himself busy as a contractor.

“I’ve always liked working with farming tools and machinery and now I can manage my time much better than before. Having a dairy farms means you are on-call 24/7 all year round.”

Profit share

Back at the cow hotel, Mr Landman operates the farm on a system that is similar to share milking elsewhere. In basic terms the owner of the cow will always own one cow (similar to shares), whether it is the same one or a replacement heifer.

The business side of the cow hotel concept is based on what Mr Landman saw worked well in the fruit industry, where farmers joined together to pack their harvests in one shed.

By having one farm and many owners of the milk harvest, the 2,000-strong milking herd is managed much more economically than 10 farmers milking 200 cows each, which would mean 10 more dairy parlours battling to make a profit.

The cow owners – or shareholders – each negotiate a contract, says Mr Landman. “We negotiate a share of the profit and pay that amount monthly per cow to the owners. That profit is about one-third of the net farm profit a cow a month. The progeny from the cows stay with the Cow Hotel as they are needed to replace cows as they get older or are culled from the herd.

“The original number of cows delivered to Mooimelk Cow Hotel is the number that generates profit for the owner – the cows therefore don’t age, as they keep their status as six- to eight-month in-calf Holstein heifers,” he explains.

Cow and milk supply

The hotel takes in the cows from fellow dairy farmers who want to quit dairy farming or retire.

“Like any hotel we take full care of the guest cows and their progeny,” explains Mr Landman. “The pre-determined profit gets paid out every month and that amount is about double what any bank would pay on any similar investment.”

The key benefits in terms of negotiating a good milk price with the milk buyer benefits both parties. The cow hotel gets a good price for producing in bulk and the milk buyer only needs to fetch milk at one farm instead of 10 or more smaller farms.

The Mooimelk Cow Hotel produces about 50,000 litres a day, which is attractive for the milk buyer, as the bulk tanker truck can fill the load any time of the day or night and return to the milk processing factory 800km away.

And milk production is kept as steady as possible right through the year. “We produce milk in a straight graph through the year and that assists the processor to supply markets that demand the same volumes of milk every day of the year.

“This also adds to our status as a preferred supplier with our milk processor. We can therefore negotiate a premium price for the milk and that premium pays for the ‘share of the profit’ of the additional cows.”

Situated near the Fish River in the Eastern Cape, the climate and ample water supply makes for good feed and pasture production almost all year round.

Management

On the technical side, this super dairy is run like clockwork. Cows are grouped in herds of 300 for every feed pad.

“We use 11 managers who each take responsibility for a specific aspect of the dairy – for example, calf rearing, heifer rearing, cow feeding, the cow clinic, artificial insemination and inoculations, milking shifts, crop production, admin and labour matters.

“We milk on a 50-point rotary parlour and the first shift starts milking at 2pm and finish milking at 12pm the next day. Workers are divided into three shifts.”

To help in monitoring production, Mooimelk uses electronic milk meters and a cow management system.

According to Mr Landman, the bigger herd comes with bigger challenges. “Reproduction rate is our biggest challenge. We use all possible methods to get cows in calf, but still lose too many cows that do not conceive.”

The feed production and silage management is an impressive operation that requires skill, planning and good management to keep the feeding troughs full all year round.

“We feed a TMR that consists of 50% balanced dairy meal, 30% maize silage, 10% green chop lucerne and 10% oats, all calculated on a dry matter base.”

A fair amount of the TMR is produced on the farm, thanks to irrigation water that is pumped from the Fish River, which gets its water from the biggest dam in South Africa, the Gariep Dam.

Liza Bohlmann is editor of South Africa’s Dairy Mail.