There is definitely potential for growing the dairy sector in Chile. We have some really big farms and some farms like countries in Europe. Chile’s biggest dairy operation has 30,000 cows but the average herd would be from 200 to 400 cows. There is a big potential to grow in our sector but we have many big challenges to overcome too.
My own background is not in dairy farming at all. I have no farming background really and I am not from a farm – I did not grow up on one. In fact, I studied sociology in university. My family only got involved in farming when my father bought a farm about 20 years ago.
Then about seven or eight years ago, I decided to start working on the farm and I have since become the farm manager here. I have 250 cows of my own and I manage 750 cows which belong to my family.
I lived in New Zealand for a year. It was here where I started to study and learn about grazing and improving grass management. For me, this is where the big potential is. The potential for me and other dairy farmers in Chile is going down more grass-based and spring-calving systems. I came to New Zealand to learn about this because, from my perspective, New Zealand is the best at this.
We have many farmers who are milking all year around and in some parts of the country this is OK where pastures cannot yield at low cost. But when you look at costs, spring grazing is the only system that makes sense.
Los Rios and Los Lagos are the two large dairy areas in Chile and they are both in the south of the country. In these two regions over 70% of all of Chile’s milk is produced (approximately 2.6bn litres).
We only export about 10% of all milk produced here and pretty much all of the milk is for the liquid market. The rest of the milk is processed by smaller processors and local cheese producers at a smaller scale for local consumption and some exports as well.
The main processors are Colun, Soprole, Nestlé, Watts and Surlat. Colun is a cooperative owned by farmers that has been key to Chile’s dairy farmers development and industry.
Fonterra’s WPM auction and internal demand are the main factors that explain milk price, although industry is not 100% clear on how and why milk payout is the way it is. Milk prices are approximately $4.50/kg.
Low prices
Farmers in Chile have also been affected by Fonterra’s low auction prices and low prices for farmers milk have been a reality in the last two years like many other countries in the world.
The cow type in Chile is mostly the big, US-style Holstein Friesian. Slowly cross-breeding herds are growing as farmers realise how well this type of animal performs in pastures.
We are not without challenges in Chile. We are holding ourselves back in many ways. Our biggest challenge starts at home. Consumption needs to be higher. Our average dairy consumption is just 150kg/capita/year.
This figure is half that of some countries in Europe. If we could get dairy consumption in line with Europe, then we have greater opportunities for the farmer and for the sector.