Tuesday 27 September 2016

Viewpoint: Why the figures no longer add up for winter milk producers

Published 02/02/2016 | 02:30

There was a 16pc fall in dairy calvings during the last three months of 2015.
There was a 16pc fall in dairy calvings during the last three months of 2015.

The exodus from winter milk production continues apace.

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It's ironic that at a time of massive expansion in dairying, one of the original cornerstones of the industry is contracting in size faster than any others. There was a 16pc fall in dairy calvings during the last three months of 2015. This is almost entirely accounted for by farmers switching to 100pc spring calving systems.

Who can blame them? The most recent figures from Teagasc suggest that it costs almost 3c/l to produce milk year-round. This is the average across the whole year - the actual extra cost of the extra litres produced during the winter months is close to three times that.

Contrast this with the average premium paid to winter milk producers in the last four years - 1.6c/l according to the National Milk Agency.

And that's before any lifestyle considerations are taken into account. Teagasc winter milk specialist, Joe Patton notes how many winter milk operations convert to 100pc spring-calving when the next generation comes home with different lifestyle expectations.

That's why the 3,359 producers that were registered to produce winter milk on contract in 2001 has shrunk to just over 2,000 now, a drop of 40pc.

The processors are probably quite happy to let the smaller winter milk producers fall by the way-side. Over 20pc of remaining suppliers account for just 5pc of the total winter output.

In contrast, the 15pc of suppliers that produce more than 700,000 litres a year account for 40pc of the total. These are the people that the processors really want to keep on-side, because they tend to be professional, and drastically reduce collection costs.

But the processors could be sailing too close to the wind. Joe Patton has shown many winter producers how to make systems more profitable by altering the reliance on the 'holy trinity' of maize, brewers and big Holstein cows.

The winter milk herd at Johnstown produced 534kg of milk solids on 1.3t of meal, at a stocking rate of three cows per hectare last year.

"What the good guys are finding is that the more that they fine-tune their fertility, cow type, and grassland management, the closer they are to effectively becoming 100pc spring calving operations," said Mr Patton.

At that stage the psychological leap required to make the switch effectively evaporates.

There's also a growing realisation among winter milk men that there is no magic new product that requires fresh milk all year-around. The real action in the added-value space is in protein isolate powders.

This partly explains the shrinking premiums available for fresh milk. But with increasing losses on dairy farms in Northern Ireland, the South may not be able to rely on them for liquid milk forever. A shortage of winter milk may be closer than anyone realises.

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