ZERO GRAZING DAIRY ENTERPRIZE REPORT SUMMARY
The study by Janda Consult limited researchers carried out July, 2021 found that majority 86% of zero grazers in Northern Uganda (Gulu and Omoro) Districts own one (1) milking cow characterized by low yield. The dairy farmers under this production system are commercially driven by regular cash flows but faced with immense barriers that include; high cost of inputs, poor quality inputs, lack of dairy business management skills and limited access to finance.
Analysis of production and sales revenue for dairy farmers shows that farmers with 1 milking cow with yield of 7.8 liters/day (1,872litres per milking cycle) make net losses. The study further found that whereas for every one kilogram of concentrate fed, 2-3 litres of milk is produced over and above litres produced from the bulk forage. However, further findings show that an increase in the number of milking cows (zero grazing system), resulted in yield drop to an average of 5.5litres/day because a large herd of lactating cows are provided inadequate concentrates compared to one milking cow.
Study results show that for cows producing 7.8l/day, a farmer needs to have at least 2 milking cows while those producing 5.5litres/day needs at least 3 milking cows to get a positive gross profit margin (table1) and breakeven. Because labour and concentrates are major cost taking 33% and 21% respectively, farmers that use labour saving technologies and homemade concentrates improved profitability.
Cash flow analysis shows that zero grazing farmers with 1 milking cow experience liquidity challenges for day to day financial requirements of the farm. Under this situation, farmers will not be able to pay for key inputs when needed including veterinary services and feeds which affects production. However, cash flow improves with more milking cows because of increased inflows from higher milk volumes.
Table 1: Gross Margin analysis zero grazing enterprise (estimates)
| Year1 | Year2 | Year3 | Year4 | Year5 | |
| Productive stock | 1milking cow | 1milking cow | 2 milking cows | 2milking cows | 3 milking cows |
| Culled cow | 0 | 0 | 1000000 | 1100000 | 1100000 |
| Heifer | 0 | 0 | 2000000 | 2200000 | 2200000 |
| Non-milk revenue | 3000000 | 3300000 | 3300000 | ||
| Yield (l) | 1872 | 1872 | 3744 | 3816 | 5616 |
| Price (Ush) | 1100 | 1122 | 1234 | 1358 | 1493 |
| Milk Sales revenue | 2,059,200 | 2,100,384 | 4,620,845 | 5,180,678 | 8,386,833 |
| Total Revenue | 2,059,200 | 2,100,384 | 7,620,845 | 8,480,678 | 11,686,833 |
| Rent cattle shade (EQ) | 120,000 | 126,000 | 132,300 | 138,915 | 145,861 |
| AI services | 120,000 | 120,000 | 240,000 | 240,000 | 720,000 |
| Fodder purchase | 480,000 | 528,000 | 580,800 | 638,880.0 | 702,768 |
| Labour | 960,000 | 1,008,000 | 1,058,400 | 1,111,320 | 1,166,886 |
| Vet. services | 120,000 | 132,000 | 145,200 | 159,720 | 175,692 |
| Training costs | 50,000 | 55,000 | 60,500 | 66,550 | 73,205 |
| Marketing costs | 70,000 | 73,500.0 | 77,175.0 | 81,033.8 | 85,085.4 |
| Equipment hire (EQ) | 20,000 | 20,000 | 22,000 | 24,200 | 26,620 |
| Concentrates/Dairy meal | 600,000 | 660,000.0 | 726,000 | 798,600 | 878,460 |
| Water | 100,000 | 102,000.00 | 112,200 | 123,420 | 135,762 |
| Total costs | 2,640,000 | 2,824,500 | 3,154,575 | 3,382,639 | 4,110,339 |
| Gross profit | (580,800) | (724,116) | 4,466,270 | 5,098,039 | 7,576,494 |
| Gross profit margin % | -28% | -34% | 59% | 60% | 65% |
Conclusion
Zero grazing farmers with one milking cow cannot break even, other words the revenue from milk sales cannot cover the cost of producing milk. The study observed that breakeven was attained when zero grazing farmers have at least two milking cows.
The significance of the results is that farmers having one cow will not be able to generate enough revenue from milk sales, thus the enterprise will not self-sustain, it will require injecting in external resources including providing free inputs such as labour. Thus those interested in commercial dairy under zero grazing should have at least two milking cows and ensure adequate supplementary feeding.
Researchers: Muzira Isha (Livestock consultant), Bernerd Kazira
