'The only competitive advantage we have is the ability to grow grass'
Our grass-based competitive advantage is key for Irish farmers aiming to achieve targets of profits of €2,500/ha per annum.
Speaking at the recent Irish Grassland Association conference in Charleville, Co Cork, Teagasc advisor Lawrence Shalloo told dairy farmers that in order to achieve the €2,500/ha profit target, they need to utilise their grass system and cow output in such a way that will allow them to weather the storm of milk price volatility.
"The only competitive advantage Ireland has is the ability to grow grass. Our system needs to maximise the utilisation of grass which allows for a low-maintenance, highly fertile and productive cow," he said.
"We're in a new era. We have volatility but that's life. It's impossible to tell what's going to happen at market level. It's what we have to live with and should be part of our thinking when we're talking about cost production and output. You have to make sure you can cope and survive a year like 2016 when milk price was poor and that you're able to bounce back, and that your system doesn't crash when milk price drops."
According to Mr Shalloo the increase to €2,500/ha will only happen if we drive efficiency at farm level and if there is a national output increase from the current 2pc to 8pc. He pointed out that every tonne increase in herbage is worth €173/ha and that farmers should be pushing to meet targets of 13 tonnes per year.
Drop in profits
"Nationally we know we're utilising about 7.8 tonnes, but the target is 13. Our target stocking rate should be 2.9pc but only if you're growing that 13 tonnes.
"Our top 5pc of farmers are utilising 12.3 tonnes per hectare but 1pc of farmers are achieving the target of 13 tonnes so it can be done."
Mr Shalloo added that dairy farmers must buy in less feed if they want to avoid a drop in profits.
"There was a spike of feed bought in 2013 as we'd a very tough spring.
"Every 10pc increase in purchased feed leads to a drop in profit by €97 and that's large, robust data and analysis that has been collected over eight years but we can see that less than 6pc of farmers are hitting it," he said.
He pointed out that spring calving has increased from 53pc to 63pc since 2008 but that it's a long way off the 90pc target needed to achieve €2,500/ha.
Meanwhile, 3pc of farmers are achieving milk fat targets of greater than 4.2pc, while 4pc are hitting the milk protein aim of greater than 3.5pc.
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