Traveling through the Holstein Universe

by Hu Team on June 1, 2014

Fasten your seat belts, sit back, enjoy and relax. Our journey begins here.

Francisco Rodriguez, DVM
Dairyman & Holstein Breeder Market Development Manager
AMS and Feeding DeLaval – North America

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Francisco Rodriguez

In a globalized world of doing business and living life, it is necessary to understand the different markets and cultures in order to build and develop successful businesses. The concepts of local markets and borders from the trading and networking stand point have been completely reevaluated due to communications, infrastructure, modern technology and social media. Those changes have made our world more fascinating than ever, however there are some challenges that come along with it, and we must be prepared. Traveling through the Holstein universe pretends to offer a fascinating opportunity for all of us to learn and share ideas about two crucial topics. Our globalized customer and the unstoppable dairy industry trends.

YOUR NEXT CUSTOMER, COULD BE SOMEBODY YOU DON’T EVEN IMAGINE TODAY

If you think about it, not many years ago as Holstein Breeders our customers were neighbors, family, friends, or in the best case scenario people with access to written magazines or traveling possibilities. Those times are gone and technology has changed the way we do business for ever. Now your next customer could be somebody you don’t even imagine today.

A few days ago I saw on facebook a young passionate man from India, asking for advice to some of the most prominent and elite breeders in North America, the question was very simple, how can I make my calf look great for our local dairy show? Do you have any ideas or tips? Now, when you look at the way dairy shows are run in India or some other developing countries, those could be really different from that in North America. However, this dairy farmer shares the same passion, objectives and similar challenges as the ones you may have as a breeder in Wisconsin, Ontario, Quebec or New York.

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What is truly amazing is that this person could be following you in a daily basis developing a strong connection with your statements, philosophies and ideas. Very easily you could influence this facebook friend located 8.500 miles away from you, even becoming his source of inspiration. Of course he knows he is not the owner of Hailey, Missy, or Apple, etc. although he would love to be, as all of us would!  Who knows if in the years to come he is going to become the owner of a similar one?. At the moment all he wants is to do his best in a country where still dairy farming and showing cows is at a totally different level. So, the questions would be, are you aware of the level of influence you are having in people you don’t even imagine? What are we doing to plant the seed in order to expand our networks to international customers? Could this friend become the owner of the next great cow? What will be his customer’s needs as a genetics customer or milk producer? What kind of added values or services could you offer to him? Let’s review some simple facts in order to realize how much we need to learn every single day about our future customers and my top 10 business trends moving forward:

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TOP 10 FACTS OF THE GLOBAL MARKET PLACE

  1. Although North America, especially the USA has had record milk prices in 2014 and expecting a great profitability for the rest of the year, the region with the highest profitability a year ago was Oceania were grazing systems are predominant. This illustrates in a simple way, that we face a very dynamic – fluctuating industry, where regardless of location, herd size, volume, or production system, the most important aspect to keep in mind as dairy producers is flexibility and capacity to  adapt to change. Most of the variables that influence milk prices today are out of our control, the only thing we can do is to make the right decisions to protect our margins.
  2. Largest milk producer in the world is India, with 120 million milking cows and water buffaloes (12 times more the number of milking animals in the USA and 120 times more the number of milking animal in Canada), of course productivity per cow is very low but just imagine the impact if daily yield improves by 1 lt or 2.2 lbs per cow in a yearly basis for the next 10 years due to improved management skills and genetic selection. Just remember our facebook friend  learning and benchmarking from the North American breeders!
  3. Due to volume, size and economic growth the country that is defining the global milk price is and  will be for a long term is China, where 1.4 billion people (4 times the population of the USA) is increasing milk consumption every day. Farm gate milk price was the highest in 2013. Production costs are one of the highest as well due to big limitations from the production stand point, becoming the milk importer by excellence. This represents unlimited market opportunities for milk producers, breeders, professionals and industry people.
  4. Largest importers of dairy cattle today are China, Russia, Turkey and some countries located in South East Asia, especially Vietnam, were mega projects have been built. On the other hand, some countries in Latin America have been developing interesting mega projects representing a big potential for milk production and cattle trading. However, political stability could represent some important challenges.
  5. The regions with the highest milk yield per cow are North America, Western Europe and Middle East. Now, Oceania represents an icon from the competitively and flexibility perspective. In any case the key for that success has been feeding research, genetic selection and education; in simple terms ‘knowledge’. My invitation to all of you as dairyman from this region is to realize that the rest of the world is hungry to learn from you, and you must capitalize that in a way that you add value to your genetic and dairy products.
  6. The biggest change in the European Union will be the end of quota system the next year, for many that will represent a threat but for some others it represents exciting opportunities. No doubt it is going to have a huge impact on the global dairy market as some countries will need to expand and gain efficiency and possibilities to compete head to head for international market shares. It will represent very important businesses opportunities for the overall industry as new challenges will need to be solved.
  7. More than 11.000 farms are milking cows with robots, with more than 22.000 robots milking cows globally. Although, many AI companies are offering “Robot” genetics based on the combination of specific traits, Holland is the first one developing an exclusive Robotic Milking index, that will represent a very important competitive advantage as AMS is very well established in developed countries and rapidly expanding to developing countries as well, actually out of the BRIC countries (Brasil, Russia, India, China) India is the only one that hasn’t seen robotic milking as a reality, Russia, Brazil and China are now on Automatic Milking mode!
  8. Social media has become the way to communicate, by last year facebook had 1.26 billion users (4 times the total population of USA), 757 million daily active users (2.5 times the total population of USA) and the country with the most active users is Canada! So, we better continue developing strategies in order to communicate effectively to newer generations.
  9. The Holstein breed remains as the most popular for both pure and crossbreed operations. It is crucial to continue making progress towards production and fitness traits in order to fulfill the economical expectations of commercial milk producers around the world as well as seed stock breeders. However, new opportunities could be represented in the dual purpose segment and crossbreeds of Holsteins and Cebu breeds as it remains very popular in regions like Asia, Africa and Latin America due to hot and humid tropical weather conditions. For instance the Girolando breed (Holstein x Gir) developed in Brazil has become the predominant dairy genetic program in this country representing a very important source of income for AI studs and Holstein Breeders as a source of oocites to produce the F1 females. It is fascinating to travel through some of the regions in Brazil, and see pure Holsteins housed in freestall facilities “North American style” and a neighbor farm milking Girolandas under grazing strategies with very limited grain supplementation and low costs. Both are  equally competitive and profitable under the two breeding programs and production systems.
  10. Milk is and will be the most complete food ever,  despite some different opinions from specific and activist groups, all I can say is that while in developed countries and regions people have the luxury to care about milk content, fat content, BST, natural, organic, etc. Millions of people still die because of hunger and the majority of the world is still looking for more and better food, so as dairy producers we must keep the larger scope and our main commitment which is feeding the world and while some may criticize us, some others appreciate our hard work and love having that glass of milk on the table.

TOP 10 TRENDS OF THE DAIRY INDUSTRY GLOBALLY

The following are what I consider my top 10 trends of the dairy industry globally. The objective is to start developing an index of topics to discuss with you towards the future, and based on that raise productive and constructive discussions contributing to the thinking and progress of our dairy sector:

  1. Both Family and corporate dairies will remain sustainable
  2. Automatization of dairy farms, including Automatic Milking, feeding, etc will grow in all farm segments at an exponential rate.
  3. Clustering of farms and farm consolidation.
  4. Genomics will lead the genetic selection programs.
  5. Organic and natural milk production will continue gaining share as global average income increases and consumers raise their standards.
  6. Foreign investors partnering with locals to develop mega projects. Knowledge will be the most valuable exporting product.
  7. Supply chain management will have a hard time to survive, as free trade agreements become stronger and involve wider interests from other sectors.
  8. Countries buying land and building dairies in other countries with better natural conditions.
  9. Professional dairy farming will be the rule as the only way to overcome milk price fluctuation.
  10. Exports and international trade will force to local production system standardization. Business decisions will drive our industry.

As a dairyman or Industry professional, we may or may not be interested in making a difference, and that is ok as it is a personal choice, what is not negotiable in order to build a healthy and prosperous industry is our commitment to learn every single day. You may or may not agree with these statements and ideas, and that is great, as diversity builds society and all different angles are important to build the house. At the end of the day, remember that this is all about enjoying the journey, not just reaching the destination!

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