Farm Ireland
Independent.ie

Thursday 19 July 2018

Butter surge lifted all boats but are there some choppy waters ahead?

Kerrygold butter
Kerrygold butter
Henry Walsh

Henry Walsh

As the farming year rolls to its annual conclusion I find myself looking back and also looking ahead to shape our plan for 2018 and future years.

We received an excellent overall milk price for the year which was very welcome.

The price rise has been driven by a very strong and unexpected increase in butter prices globally.

The internationally recognised Kerrygold brand delivered in spades for Irish milk producers this year and confirms the value of strong brand names that deliver returns back to us not the retailer.

Butter prices peaked at extremely high levels but have now settled back at around €4,500 a tonne. This is a solid level and would create a sound base for the dairy farmer/industry going forward.

The price reflects the renewed appreciation consumers have for butter after the prolonged popularity of synthetic margarines.

Germany, of course, is the most rewarding market for Kerrygold premium priced butter sales, but the UK takes a quarter of our butter exports along with two thirds of our cheese exports.

The UK is our biggest, best and nearest market and it is absolutely critical we retain the current level of tariff and border-free access.

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With the growth that is coming in milk output there will be a major challenge to find new premium markets and we can definitely do without losing any ground in the very important existing one right on our doorstep.

One interesting change that has shown up in our milk payment statements is the way fat and protein are paid for.

Over the last few years we have become accustomed to being paid at least twice as much per kg for protein as against fat.

In my October Aurivo statement there was near parity at €5.90/kg of protein and €5.30/kg of fat.

The value of powder will have a massive bearing on future milk price and we need prices to rise to ensure that EU Intervention is not the best buyer.

This year Aurivo came out with a very strong fixed milk price offer of 33.5c/l. When combined with their "Flexi Milk Loan" scheme, this gives a very stable foundation on income security.

Aurivo are to be complimented on this as it helps milk suppliers to manage volatility which is a threat to any business and in particular a growing one with substantial borrowings.

While 2017 has been a good income year, I am more wary of 2018. Some of the risks could include:

  • A lower milk price.
  • Deferred taxation by paying preliminary tax based on 100pc of 2016 a very low profit year.
  • Higher costs for fertiliser, labour, fuel etc.
  • Higher expenditure, in particular on recurring payments over five or 10 years.

Milking platform

On the milking platform grazing finished on December 4. Closing farm cover was 560kg/DM/ha. Our highest cover was 1350kg/DM/ha and 20pc of the farm has covers over 1000kg/DM/ha.

All the herd is now dry and on winter feed, some on the pad, some in the cubicles and more on grass.

We have good covers of grass on the winter blocks averaging 2000kg/DM/ha and they are mostly on 24 hour breaks. We have fed a few bales of silage but mostly grass so far as the ground is soft and will not take extra feeding on each block.

This week we will hoof pare, dose and treat all the cows for lice. Once that is done, we will batch the cows based on calving date and body condition.

All empty cows have now left the farm so we are only wintering in-calf animals. They will get dry cow minerals from here on as part of the winter regime.

We have decided to buy half the tags this year electronic and they will be attached to all the heifer calves.

This will facilitate auto drafting in the future when we construct the new parlour.

Henry and Patricia Walsh farm in Oranmore, Co Galway, along with their son, Enda, and neighbour and out-farm owner John Moran


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