IT’S five years since the abolition of EU milk quotas, but dairy expansion in Ireland is still going from strength to strength.
Poor profitability in beef, weather challenges and import price competition in tillage have prompted more beef and grain growers to do the sums on converting to dairying.
Add a potentially unfavourable Brexit deal, reduced CAP payments and the climate change challenge into the mix and it’s easy to see why some beef and tillage farmers/landowners are considering a change of direction.
As a nation, we punch above our weight in many spheres including business, sport and the arts; as a people we are regarded as good company, but we have a disappointing tendency to knock our most successful citizens. Whether it’s Bono, Roy Keane or Michael O’Leary it is an unfortunate part of our psyche that we must find a chink in people’s success.
This malaise has spread into farming and many dairy operators are almost made to feel guilty when taking on a lease of land which has been historically farmed by beef and arable farmers.
Dairy farmers are showing glimpses of their purchasing power at land auctions and they are still investing heavily in their dairy units. All of this is happening while they are still making repayments for expansion plans after the removal of EU milk quotas. This is the envy of farmers in other sectors.
But a lot of people have forgotten that dairy farmers farmed with the handbrake on for over 30 years during the milk quota era;
surely, they now deserve their time in the sun? The question worth asking is, how much scope is there left for new entrants? Is too late to get into dairying?
There’s a business theory (Diffusion of Innovation Theory) that divides those who adopt new technology or innovations into five categories and by percentage.
It is interesting to look at dairy farming in the context of this theory and where are we in the curve today.
The innovators were those who expanded or got into dairying after the announcement by the EU in 2007 that milk quotas were going. This phase continued until the risk of super-levy started to emerge in 2011. There were some teething problems among this cohort of farmers, but most are up and running today.
At the other end of the scale are ‘the Laggards’ (16pc) who just aren’t interested in innovation or decide on a change of direction when it is too late.
Early Adopters (13.5pc)
The Early Adopters are those made plans and retained extra dairy replacement stock to prepare for an increase in cow numbers from the get-go on April 1, 2015. These are the well-established dairy farmers today.
Early Majority (34pc)
The Early Majority are those who have now completed their development plans and maximised cow numbers to suit their farm business and production system.
These plans were conceived as far back as 2012 and many of these dairy farmers are humming as their owners concentrate on fine-tuning the business rather than expanding it.
The area of land in the grazing block is the new quota as this economically limits the viable number of milking cows.
Late Majority (34pc)
I believe we are entering the Late Majority phase now. The more conservative farmers who held off to see how the dairy boom would develop have been sufficiently impressed to take the plunge and make the move into milking cows.
The systems of production and the capital investment required are clear; the research and advice is readily available, reducing the risks for the more cautious farmers.
It is difficult to predict how long will this phase of the cycle last. World demand for dairy products and the competitiveness of Irish milk production are the two key factors. Both look positive at present.
Factors such as climate change legislation leading to lower stocking rates, animal welfare legislation forcing beef production from the dairy herd due to constraints on live shipping, labour supply and alternative milk sources are all upcoming challenges for the sector.
However, I believe our dairy industry has the capacity to take all these known and unknown challenges head on and will continue to succeed.
We are certainly a long way away from the Laggard phase of the industry where it’s too late to enter the industry.
I believe we should celebrate the success of our dairy industry and continue to encourage its expansion and development while conditions are favourable.
The increased exports will benefit the overall economy and, more importantly, more dairy expansion will create more jobs in both urban and rural communities.
And to answer my own question, it is definitely not too late to get into dairying.
Mike Brady is managing director at Brady Group agricultural consultants & land agents; email: firstname.lastname@example.org