Farm Ireland

Thursday 22 February 2018

A tale of two herds reflects the toll disease can take in dairying

The €100,000 differential in the performance of two Teagasc demonstration herds in Cork and Kilkenny reflects the toll disease can take on a dairying enterprise

Mastitis, lameness and infertility can take a serious toll on profits.
Mastitis, lameness and infertility can take a serious toll on profits.
Darragh McCullough

Darragh McCullough

The 214-cow demonstration herd at Shinagh in west Cork had over €100,000 more free cash at the end of the 2014 compared to its larger sister operation in Greenfield in Co Kilkenny.

Despite the latter having almost 50pc more cows during one of the most profitable years ever for dairying, the Greenfield herd suffered from the hidden costs associated with higher levels of mastitis, lameness and infertility.

In 2014, the Shinagh herd generated a massive cash-flow of €145,000 compared to €31,000 for the Greenfield herd, proving that size isn't everything in dairying.

The difference highlights the importance of getting the fundamentals right from the very start in the establishment of any new large herd operation.

Replacement rates have been running at 23-29pc at Greenfield for the last three years. Out of the 332 cows that started 2014 on the Kilkenny farm, eight died and 78 were sold, resulting in a replacement rate of over 25pc.

Mastitis and lameness accounted for 35 of the cows culled. Some 102 cows were sold or died the previous year.Most of the heavy replacement rate in Greenfield is being put down to mastitis that appears to have been latent in some of the older cows that were bought in during the establishment of the herd on the former Kilkenny tillage farm.

The underlying mastitis problem also resulted in an average SCC of 190,000 during the year. Shinagh had an SCC of 155,000 and won a milk quality award with Carbery.

Replacement rate

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Greenfield's heavy replacement rate has hampered the maturation of the herd and compromised fertility.

The six week calving spread was 76pc this year, compared to 93pc for the Shinagh herd.

The Shinagh herd was established a year after Greenfield, but with heifers only.

While this proved challenging in the first year, with elevated SCC and milk solids of just 255kg per cow, the pay off has become more apparent with every passing year.

With similar milk solids and basic milk prices, the difference in milk quality between the two operations is the biggest factor in the 2.2c/l difference in the milk price achieved per litre during the year.

However, John McNamara, the Teagasc advisor that works with the Shinagh herd admitted that the 16pc replacement rate that the herd recorded last year was likely to creep up over the coming years as the original heifers that started up the herd move into their fifth and sixth lactations.

"It's a big decision for people starting up new herds. I was even surprised at how low the milk solids per cow were in the first year, and the SCC was high as well at 142,000.

"But if you buy in older cows, you need to be really ruthless about high cell-count animals, which can be hard on morale," he said.

Despite the variance in performance, there is no doubt that both herds remain highly profitable and rank among the top 10pc nationally. Greenfield is on target to clear all its debts within 12 years of its establishment.

However, there is no doubt that the Shinagh herd is excelling, recording a massive 50pc return on equity for each of the last two years, meaning that the four West Cork co-ops that originally invested €260,000 in the project back in 2010 have got all their money back already.

While Greenfield managed an impressive 21pc return on equity in 2014 and 2013, this figure is less than half that of Shinagh, and means that the backers will have to wait longer to get their money back.


Many of the key performance indicators for the two herds in 2014 are remarkably similar. Greenfield recorded grass growth of 13.5t/ha of grass drymatter in 2014, while Shinagh produced 13.2t/ha.

While the Kilkenny unit has had to invest heavily in bringing up its phosphorus and potassium levels in the last two years, the same amount of nitrogen was used per acre in both units.

Milk solid production per cow on the Kilkenny and Cork site was 396kg and 381kg, respectively.

Mean calving date was almost identical, at February 13 in Greenfield and February 11 in Shinagh, and empty rates were 10pc for Greenfield and 8pc for Shinagh.

Sales per cow were also similar, at €2,393 in Cork and €2,226 in Kilkenny, but a higher stocking rate at Shinagh and an extra 2c/l from the higher price achieved per litre gave the southern demonstration farm a €827/ha advantage.

The difference was more stark when costs are compared - nearly 8c/l lower in Cork. That's equivalent to €759/ha.

Some of this difference in costs were made up by higher interest charges, land rent and contract heifer rearing costs in Kilkenny.

The better interest rate for the Shinagh project is a function of the deal that was done at the time, but is worth €80/ha or almost 0.75c/l.

At the time of establishment, both land lease charges were identical. However, the land rent in Kilkenny has been index-linked to agricultural output prices, which rose to record levels in the last two years. This has resulted in a scenario where the Greenfield land rental was over €140/ha (1.3c/l) more expensive than Shinagh.

This index is averaged over three years, so the hangover effect of this for Greenfield will continue into accounts for 2015 and 2016, even if milk price is on the floor.

The difference in contract heifer rearing is another interesting difference in cost structures between the two projects.

Shinagh looks after calf and heifer rearing during two of the most expensive periods of the two-year block - the first three months after they are born and the last three months before they calve.

Contract rearer

In Greenfield, the calves go to the contract rearer two weeks after they are born and return just before they are due to calve. This measure alone saves Shinagh 1.25c/l.

Another key difference is the additional capital expenditure that was required in Kilkenny last year. Over €66,000 was spent on extending the lagoon, installing new automatic scrapers, and a new feeding area - with the latter accounting for the vast majority of this spend. This added a whopping, albeit once-off, €547/ha or 4.7c/l to Greenfield's costs in 2014.

This was part of the fall-out from the decision to move away from a stand-off pad concept for the milking cows. Shinagh had the advantage of being able to convert a beef shed for winter accommodation for the cows.

However, observers point to the higher replacement rates in Greenfield as being the real key to the difference in profitability between the two enterprises.

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