Farm Ireland

Thursday 22 March 2018

400 new dairy farmers but study says it's not for the faint-hearted

New entrants' net profit is half that of top producers

Martin Ryan

More than 400 new entrants to dairying will have been allocated millions of litres of milk quota by the end of 2013 under the Department of Agriculture's scheme, which closed last Friday.

The lifting of milk quota restrictions in 2015 and data that shows that dairying consistently offers the best returns for Irish livestock farmers is fuelling the demand for access to quota.

But for many the conversion to dairy has been challenging, with high initial costs and production often falling short of industry averages.

The result has been net profits that are just 40pc of the top producers in 2012.

Walsh Fellowship student Roberta McDonald, who is studying a group of new entrants to dairying, says that her findings confirm that dairy farming is not for the faint-hearted.


"As well as the significant workload associated with developing and running a new dairy enterprise, cash flow can be extremely tight, and there's also the technical challenges," she said.

"Large-scale dairy expansion demands significant expenditure and technically excellent systems which are entirely profit-focused and highly efficient per unit of land, labour and capital," Ms McDonald added.

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The findings of a study of a group of new entrants spread across seven counties shows that they achieved a stocking rate of 1.83 cows per hectare last year.

This compares to an average of 2.11 cows per hectare for profit monitor farmers and 2.26 cows per hectare for the top 10pc.

Yield per cow was also 10pc lower than average.

While variable costs were average, the fixed costs of the new entrants were 33pc higher than the profit monitor average and 88pc higher than that of the top 10pc.

The results for 2012 showed net profit of 7.9c/l for new entrants, against the 11.5c/l average and 19.2c/l for the top farmers.

Crucially, however, many of the new entrants say that their profitability is still significantly higher when compared with margins in their previous drystock enterprises.

Some of the farmers studied will be at the Teagasc new entrant marquee at the open day in Moorepark on July 3.

Irish Independent

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