Farm Ireland
Independent.ie

Monday 5 December 2016

'It makes sense for us to operate a housed system'

Published 07/09/2016 | 02:30

Rodney Elliott has built a mega dairy in South Dakota since emigrating from Fermanagh 10 years ago
Rodney Elliott has built a mega dairy in South Dakota since emigrating from Fermanagh 10 years ago

So how does an Irish farmer at the national average of 70 cows compete with the Elliotts with their 4,500 cows?

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This is a question that Rodney often receives from the many Irish visitors that make the pilgrimage to his farm every year.

"Irish farmers can't compete on size, but you've got to play to your strengths," he says.

"Grass grows brilliantly here for about five weeks, but it's too hot or cold for the rest of the year."

As a result, Rodney's cows are housed year-round, and his costs are slightly higher than the Irish national average of 27c/l.

"I'd say my break-even is about 31c/l. But it makes sense for us to operate a housed system here because there's some of the cheapest feed in the whole of the US in South Dakota because there isn't much local demand for it."

Maize meal, which might cost €200/t here is available to Rodney for about €100/t, while spent distillers grains from the huge ethanol plants locally is also dirt cheap at €55/t.

Even though US milk production costs may be higher than Ireland, they have a massive domestic market that buffers US milk producers from the worst of slumps in global markets.

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So while Irish producers have been struggling with prices that were rarely over €0.25/l this year, Rodney's lowest price during the current downturn has been about €0.32/l.

"There's 330m people in the US market, and dairy is included liberally in almost every dish you are served in a restaurant, whether it's cheese, cream, or butter. We actually import as much as we export," he comments.

The other big advantage - provided you can manage the finances prudently - is the opportunity to strive for massive scale.

When Rodney bought the 300ac site he had a permit for 5,000 cows, albeit with various clauses regarding set-back from public roads, soil permeability, and weekly ground-water readings.

But this scope for expansion brings its own pressures, with Rodney claiming that rapid expansion is the only way to survive.

"The Amercian economic system is built on the bottom 50pc feeding the top 50pc. Historically, if you're not doubling in size every 10 years, you're probably going backwards, and I don't see any reason why that wouldn't continue," he said.

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