South American Real Estate News

The model that led Chilterra to be the third-largest milk producer in Chile

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The productivity concept appears frequently in the dialogue with Ricardo Ríos. This civil engineer in computer science, who graduated from Santa María University, knows very well what he is talking about. He started in 1992 with the purchase of 200 hectares of the Santa Laura Farm in Paillaco and today his company, hand in hand using the New Zealand production model, stands as the third most important dairy producer at the national level.

With hard work and with the support of his wife Sandra Grob, a woman who grew up in a family of farmers in Valdivia, he took his first steps in the dairy business and consolidated the pillars of what is today Chilterra.

“I always wanted to have a farm when I was little, and my father, who was a very strict person, told me: no, I’m not going to finance an agricultural career, because it doesn’t make money, so study engineering. My wife, who was the daughter of a farming family, always told me that she wanted a farm, and so we did it,” said Ríos.

After a short time, he realized that he did not have the capacity to produce in the way he needed to pay off the bank fees. It was during this period that a friend told him about the dairy industry in New Zealand and about the interest of Chilean producers in emulating this system in their own country.

Mindful of turning his firm into one of the most competitive in Chile, Ricardo in 1995 decided to learn from the “best farmers in the world” and that is why he travelled to New Zealand, where he verified that the successful model could be replicated in Chile due to the similarity of soil and climate.

“There I realized that they worked agriculture in a country way, that they were tremendously productive and that they did things in a simple, but very effective way. Back in Chile, I realized that if I didn’t have a New Zealander to help me, my project would die”, he confessed.

Once in Chile, he begins to implement the model with the advice of a New Zealand specialist, Paul Corkill, based in Osorno, who worked on two dairy farms there. Corkill sadly died. Ricardo then contacted another New Zealand dairy expert, Mike Macbeth, who travelled to Chile in 1998 to learn about his initiative on the ground and since then began to play a leading role in the Chilterra company.

In 2005 they joined commercially with Macbeth so that the firm would continue to grow, forming another company the following year, Cruz del Sur, with which they acquired other farms, the Los Radales a farm, near Osorno, and in turn, bought the El Huite farm. With this, on September 1, 2006, the Chilterra company was formally created. In 2010, the El Huite production unit was created, which was inaugurated with the presence of the Minister of Agriculture, José Antonio Galilea, where a series of facilities were also modernized to make work more efficient.

Of course, he added other ingredients to his project, such as closeness to his workers and respect for the environment. For this farmer transplanted in Valdivian soils, the good results of a company also depend on the affection that its workers profess for the activity they carry out and time has proven him right. With his particular style, he managed to get the young people of the area to look at the field as a niche full of opportunities.

As a good engineer, Ricardo Ríos has always been concerned with improving productivity and devising formulas to increase the company’s performance. With these goals in mind, it has been improving its milking parlours for 20 years.

MODEL

The New Zealand model is characterized by being a high-performance production system, which in Chile promotes different fields through the transfer of information and technological innovation, which in the case of Chilterra, has allowed it to position itself as the third most important producer at a global level. nationally. If, however, not everything has been hunky-dory, one of the complications that must be faced is the long production cycles of this system and being inserted in an environment that works differently to that in New Zealand.

“It’s difficult to implement something when the whole media uses another method that can be as valid as this one. For a strategic reason we decided to use this method and it has given us very good results”, explained Ríos, who warned that these good results are also experienced by its workers and the communities where Chilterra is inserted, such as in the Indigenous Mapuche communes of Paillaco, Futrono and Los Lagos.

Among the differentiating characteristics of the New Zealand method compared to the traditional one is having a seasonal job. This means that the cows rest from mid-May to mid-July. They feed only on grasslands, without additional bales with concentrated forage. 70% of calf deliveries are planned in the spring and 30% in the fall.

“We do not produce milk, we produce grass and we maximize the transformation from grass to milk. In this process is when you generate the margin of this business. The other important thing is that in this method everything has its completion date. If you don’t do things on time you stay out of business, for this then you have to form a human structure to ensure that times are respected,” said Ríos, who asserted that in Chile there is still a lack of trained people and the necessary resources to fully meet the demands of the industry.

Precisely to face this complexity is that they have proposed to participate in all the links. So much so that they have been concerned from training their workers to having a workshop and technologically equipped milking rooms to improve yields.

“What New Zealanders did was develop knowledge for this industry, because they realized that their economy depended on it. As this industry is successful, many people want to work in it and have been concerned that interested people do their job well with the right infrastructure. Having comfortable milking rooms, good roads and optimal machinery”, explained Ríos.

In this dynamic, the businessman stressed that in order to build his business, he sought knowledge in New Zealand and handed over power to his workers so that the “want and continue to grow” is born in them.

In favour of this model is added that inefficient practices are eliminated. In this way, the model is more profitable and participative among those who work the property, and who have high technical knowledge. For this reason, the workforce in Chilterra is well paid. You can earn three times more and the work method is transversal, which improves the employment relationship.

“First you have the knowledge and with it you can generate a method and improve productivity and thus generate good profits. It’s not that people here earn more, but that they produce more and get paid more for it. We realized that if we didn’t have the productivity of New Zealand we couldn’t compete, because in the long run, the price of milk will remain the same,” he asserted.

For Ricardo Ríos, the path that the State must follow to improve the competitiveness of the sector is to bring knowledge and promote training.

“Here it is the professional people who have that knowledge and they are the ones who give their knowledge to those who have just entered. Sometimes education is so theoretical that when a graduate faces a machine they don’t know what to do”, he specified.

Along the same lines, they want to overthrow the idea that a worker who enters a milking company as a milker stays as a milker. This is the case of Jorge Cifuentes, who arrived in Chilterra three years ago and his experience earned him the opportunity to become the manager of a dairy unit.

” I had worked in traditional dairies and it had always been the same. Here, because of my experience, they gave me the opportunity to manage a dairy unit. Until now I had the idea that whoever enters as a milker dies as a milker. Without having professional studies, I am in charge of this unit and I take care of approximately 700 cows”.

Graciela Cifuentes recently took over the management of the same dairy unit. It is a great work experience for her. “This is all learning. One realizes how yields have been improving,” he said.

TECHNICAL EDUCATION

To spread this knowledge, Chilterra is related to the educational establishments in its environment through agreements to strengthen the education of technical-professional high schools, thus promoting the dual education system.

Thus, it is not surprising to find students in the work units of Fundo El Huite. This is the case of Carlos López and Roberto Mora, both students of the Liceo Conrado de Futrono. “There is good animal management here. There is respect for animals and that is really valuable,” said Roberto Mora.

PROJECTIONS

Chilterra’s plan is to grow and provide work. “Each time a dairy opens, there are four to five families that improve their standard of living, because a percentage of the income from the dairy is what goes into wages and it is several times the average salary paid by the industry. This is because I decided that my competition was the mining industry and in order not to be complicated with the workforce, we worry that they have the infrastructure to be productive.”

Chilterra currently has about 5,000 cows in production out of a total of 10,000 head of cattle. Over the years they have grown explosively and want to maintain this pace, with a growth perspective of 20% per year. To this end, they have invested in training people and, above all, in technology transfer from New Zealand to Chile.

Until now, 8 dairy units have been developed and the aim is to reach 16 in the 5,000 hectares.

“What is relevant here is that people have the power to grow and develop. We have all the appropriate infrastructure to improve productivity,” concluded Ríos.

Source: Campo Sureño

Written in 2013. Sadly the company has gone into administration in the past week. Richardo Rios seems to be now trying his hand at local politics.

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