High-cost expansion and over-borrowing has left up to one-third of New Zealand dairy farmers struggling to make any profit at a milk price equivalent to almost 30c/l.
It is estimated that 28pc of Kiwi dairy farmers are losing money at a NZ$6.00 dollar pay-out, which is equivalent to almost 30c/l. Many are now in danger of having their farms repossessed by banks.
The figures were revealed on a study tour of New Zealand led by Cork dairy farmer Michael Murphy.
"The average debt level on New Zealand dairy farms is NZ$21/kg of milk solids, which is the equivalent of €4,725/ac," explained Mr Murphy.
"When you consider that around one-third of New Zealand dairy farmers are not borrowed at all, that means that some farmers are extremely highly borrowed," he added.
Mr Murphy said that the group of 30 Irish farmers met one New Zealand farmer who had been running four farms with 26,000 cows and had been sold out by the banks for NZ$27m at the time of their visit.
"Our aim in highlighting the New Zealand experience is not to warn Irish farmers against expanding in the coming years but to urge them to take only reasonable risk in doing so," said Mr Murphy.
The Cork man is one of a number of high-profile speakers set to talk at the Positive Farmers Conference in Limerick on Wednesday and Thursday, January 16 and 17.
Among the other speakers will be Jim van der Poel, a farmer director of the giant New Zealand co-op, Fonterra. Mr Van der Poel will outline an internal Fonterra report on the outlook for world markets and milk prices in 2013 and onto 2020.
The farmer and his wife, Sue, started from scratch in dairy farming 30 years ago and today run three herds in the Waikato region comprising 20,000 cows.
The pair are also part of the Focal Equity Partnership on the South Island, farming 16,000 cows and a 5,000-cow herd in Missouri, USA.
Wicklow farmer John Leeson will also address the conference. Mr Leeson began dairy farming in Bray 50 years ago where he milked more than 400 cows in two milking parlours . Mr Leeson will talk about his experience of the 1970s when Ireland doubled milk production. In the intervening years, he has bought a farm in Devon, rents more land to milk 1,600 cows and is currently in the process of converting a Kilkenny farm he bought recently to dairying.
Mr Leeson will outline the key factors that determined success and failure during the expansionary decade leading up to 1983 – when quotas were introduced – explaining why some farmers were very successful while others met serious financial difficulty.
Tipperary farmer James Walsh runs one of the two monitor farms that are part of the Teagasc Greenfield project. Since 2010, he has expanded his milking herd to 280 cows in 2012. The Carrick-on-Suir farmer will outline the risks and pitfalls to be avoided in project management and budgets when expanding the dairy herd. The Positive Farmers Conference will take place in the South Court Hotel, Limerick on January 16 and 17. Booking is essential. Go to www.positivefarmers.ie or call 087 6070150 or 087 6070151.