Simulation of Holstein and Jersey profitability by varying milk price payment system

Abstract

The objective of the study was to compare through simulation Holstein and Jersey breed herds, considering the farm size, zootechnical and economic indexes and profitability of the activity, by using different systems of bonus payment for milk price based in percentage of fat and protein in the milk. The comparisons were made, initially, disregarding the bonus payment for milk price based on the increase in the fat and protein percentage in milk. After that, the profitability of the activity was compared considering bonus payment for milk price of the Jersey breed herd, for each unit increment in fat and protein percentage in milk above those obtained with the Holstein breed herd. Finally, the profitability of the activity was compared by using the bonus payment for milk price based on quality of that used by company A systems. When there was no bonus payment for milk price based in the percentage of fat and protein in the milk, the profit obtained with the Holstein breed was higher because of the lower production costs. In order to make the activity more profitable with the Jersey breed, a bonus payment of 5% for milk price would be needed for each percentage unit of fat above the percentage of that obtained with the Holstein breed, or a bonus payment of 10% in the milk price for each percentage unit of protein above the percentage obtained with the Holstein breed. By using the bonus payment system proposed by Gimenes and Ponchio, the annual profit with the Jersey breed was higher than the profit obtained with the Holstein breed. However, with the application of the bonus payment system used by company A, the Holstein breed became more profitable than the Jersey breed.