Production costs, economic viability, and risks associated with compost bedded pack, freestall, and drylot systems in dairy farms.

ABSTRACT

The adoption of intensive production systems, such as compost bedded pack (CB) and freestall (FS), has increased recently in tropical regions, mainly replacing the drylot system (DL). Thus, our objectives were to compare production costs, economic outcomes, and risk of dairy operations in CB, FS, and DL systems. We collected data from 2 181 Brazilian farms over 120 consecutive months; 960 farms (144 CB, 133 FS, and 683 DL) met our selection criteria. All costs were modeled for two animal production categories milking cows and non-milking animals. We used a regression model that included linear and quadratic parameters, and we added the production system as a fixed variable for all parameters tested with this model. Consultant, year, herd, and herd × system interaction were included in the model as random variables. Further, we simulated annual technical and economic indexes per farm. In addition, we developed a risk analysis to measure the probability of negative profit of the farms based on a 14-year historical series of milk prices. All production costs were affected by the system. Feed, medicine, sundry, and labor costs per farm per year were greater in DL farms when milk yield (MY) was greater than 3 500 L/day. The variables such as milk yield, assets per liter, asset turnover rate, return on assets, operational profit, profit per cow, and per liter of milk variables were greater in CB and FS with high MY (>3 000 L/day). Nonetheless, DL had the greatest economic indexes with a lower MY (<3 000 L/day), lower operating costs, and greater economic outcomes. The risk analysis indicated that the probability of negative profit (risk) was reduced for CB and FS as MY increased, but DL had the lowest risk with low MY levels. In conclusion, we suggest DL as the most attractive system for farms with MY between 150 and 3 000 L of milk/day as the DL had the lowest risk and the greatest profit in this production scale. Despite similar outcomes for CB and FS in most of the farms, the profit per cow ($/year), assets turnover rate (%), risk (%) and expected profit ($/L) analysis indicated that CB could be recommended for farms with MY greater than 3 200 L of milk/day, whereas based on risk (%) and expected profit ($/L), FS would be the most profitable system in dairies producing more than 8 000 L of milk/day per farm.