Michael Doran turned many heads when as IFA livestock chairman he ditched his 120-cow suckler herd in favour of a future in dairying.
When he spoke to the Farming Independent on his plans in 2014, he said he believed that the tightest margins in dairying are better than the most optimistic returns from beef.
Six years on, he has no regrets about his decision.
“It has surpassed my expectations,” he says. “We are milking more cows than we thought, we bought land which I never thought we would have the opportunity to in my life, and we are benefiting from the profitability of dairy farming.”
Michael calved his first dairy heifers in Jan/Feb 2014; he had never milked a cow before and he needed to master the basics of dairy farming.
Calf rearing was another big hurdle but it didn’t take long to get into the swing of things.
“We had never been used to rearing calves, so trying to get it right was a real challenge,” Michael says.
“After about six weeks when we got our first milk cheque and I saw that I could calf an animal and have a return coming in in just a few weeks, it started to change the focus, and I started to realise the cash-flow that comes with dairying.”
Michael says that a new entrant training course he undertook with Teagasc was a big help. A number of the students set up a discussion group that is still active today with “like-minded people” that were facing the same challenges.
Michael says he is comfortable keeping his cow numbers at 240 with his milking platform currently stocked at 3cows/ha.
Every year, Michael has between five and ten people get in touch for advice on making the switch to dairy.
“First thing I say to them is that there are massive opportunities — there is a good return if you do it right,” he says.
“The most important thing is to do a good business plan. It’s important not to over-complicate the system and to keep it simple and keep it grass-based.”
However, he also warns farmers that they have to be prepared to put in the workload.
“The spring is going to be an awful lot busier than you would have experienced before,” he says.
There are times when he misses his former career in sucklers.
“You miss looking out at a field of Limousin or Charolais animals,” he says.
“There’s nothing nicer, but you have to realistically look at your own family business and what’s best for you.
“There’s clearly a massive opportunity in the dairy industry.”
A belief that the tightest margins in dairying are better than the most optimistic returns from beef has convinced one of the top suckler-to-beef producers in the southeast to switch codes.
ormer IFA livestock chairman Michael Doran has already completed the first phase of his planned conversion from beef to dairying.
Within months the last of his 120 suckler cows will be gone to make way for a 200-cow dairy herd on his 320ac holding at Duncormack, Co Wexford..
Michael is convinced that the challenge is worth the investment in planning, and hard cash that he has committed to his green field dairy set up.
"As livestock chairman in IFA I saw different systems around the world and the one thing I realised was that I could not compete on beef on the world markets, while we are very well positioned on dairying," he explains.
"A lot of dairy farmers would have thought that 2009 was a difficult year. I know it was. But I know some people who started in dairying that year and they said it was the first time that they had made money from farming even at 20c/l for milk," says Michael.
The Teagasc Beef Monitor farmer, and active member of a beef discussion group, has been producing U grade young bull beef at 16 months from his half- bred Limousin cows. These bulls are 400kg carcass weight and finished at 16 months. He used a Simmental sire and all the progeny not required for herd replacements were finished to beef on the farm.
"I made the decision to get out of beef in June 2013, when I was getting €5/kg for heifers. You could say that it was the top of the beef market, but I found that the cost of keeping the cow was something that I was not able to reduce enough to keep going."
The suckler herd was carried on the 200ac home farm. A further 130ac 18 miles away which is rented from his uncle was used for winter cereal production. The barley is retained for farm feeding and some of the wheat retained, with the balance sold as a cash crop.
On the Teagasc profit monitor analysis, he had a gross margin of €800-€1,000/ha which placed him in the top league of monitor suckler-to-beef farmers."My biggest problem was the cost of keeping the cow and without some reasonable support for the cow it was very difficult to maintain her on land that was suitable for doing something else.
"The [partial] flattening of the SFP [single farm payment] was having a big impact on me, as on beef farmers generally. In the past the beef farmer had the Suckler Cow Premium, the 10 and 22 month premiums, and the Slaughter Premium, which formed the basis of keeping the profitability in the system.
"When they were taken away we were able to keep going, but it was getting more difficult and then the 'welfare scheme' went. I could see that milk quota was being abolished. A number of things were coming together at the same time."
So what would have been necessary to influence him to continue as a beef producer?
"I would need to be getting €300/cow. I had seen the situation in France where the suckler farmers were looking at the same figure which would have brought me back to the older situation of €220 plus €80 on extensification. That was there and it was not that I was looking to reinvent the wheel.
"If I was getting that level of support I could have survived at a beef price above €4.50/kg. There is a lot of talk now about the volatility in dairying, but the volatility in beef was killing and the uncertainty on price. There may be only a few sale days in the year on beef and the price could either rise or collapse between sale days.
"That killed me with the 16 month beef because they were all coming in at the same time. This spring if they were over 16 months there was even more interest in them because they [the factories] were getting them for nothing. I could not see a future in it.
"I view myself as a grass farmer basically and the challenge for me is to find the best system that will convert grass into income for me."
During the early months of 2013, Michael Doran took a hard look at his farming enterprise, his options and alternatives. He came to the conclusion that it was time for a change.
"Looking at the profit monitors over the last few years for beef and dairy I could see that what I was trying to achieve on a gross margin dairy farmers were achieving in net margin for their enterprises.
"The dairy figures over a few years really opened my eyes. With the abolition of the milk quota I realised that the opportunity was going to be there."
He applied for milk quota as a new entrant in 2013 and got 200,000 litres.
The pressure was then on to get grant approval for the dairy unit and the first cows were in the parlour before the end of January last.
"I bought 80 Jersey cross Friesian in-calf heifers, all by AI. I had a very fertile suckler herd and I did not want to go into a situation where fertility could be a problem in dairying,
"On the board of ICBF I saw the benefits of the EBI. I visited Moorepark and looked at a few farm situations which convinced me that it was the right thing to do," he recalls.
But why Jersey given the poor market value for male offspring?
"I would have been opposed to Jersey as a beef farmer, but I was looking at what was fit for purpose for the enterprise that I was going into.
"I did not feel that I owed the beef industry anything in so far as I believed that they had not worked with us to ensure the viability of the sector
"When you look at the overall profitability of the system I am going into, the calf value plays a very minor role in a successful grass-based dairy system and has very little impact on the bottom line.
"So whether I get €20/hd or €120/hd, the most important thing for me will be to get them off the farm ASAP," he believes.
The 80 cows milking in the herd this year will increase to 150 in 2015 as milk quota is abolished.
"I have another 80 heifer calves from this year so I would be looking at 180-200 cows in the herd in 2016, which is what I estimate that the farm can carry," he explains.
Although the milk quota for 2014 is filled and milking has been reduced to once-a-day since July, the experience of dairying to date has been good.
The herd has produced 300kg of solids on 150kg concentrates.
The 6pc butterfat and 4.6pc protein is now returning a premium over base of 11c/l on once-a-day milking.
His target for the herd in 2015 is 450kgs solids on 400kgs concentrates at a stocking rate of 3.5Lu/ha.
The changeover from the of routine of suckler farming to dairying has also gone very smoothly; although he admits that any thought of ever becoming a dairy farmer was very far from his mind in the past.
"I never milked a full herd of cows until I started this year. There were some little teething problems, but it is gone very smoothly," he says.
"I went through Rockwell College for a year and never milked a cow there.
"I was proud of myself at the time that I managed to get through the year without having to milk a cow, but in hindsight it might not have been a good idea if I knew at that time where the future was going to take me."
Any intention to enter dairying was very quickly killed during his college days.
"When I was in college I remember writing to a co-op about the prospect of producing milk.
"They told me that I would have to apply in writing and 1,500 gallons of a quota is what would have been available. That was not a foundation to base a living on and I closed it off as an option.
His intention is that the planned 200 cows can be handled by himself and a full-time employee who has been with him since his time as IFA livestock chairman when he was missing from home a lot. When extra help is need a neighbour will help out.
The facilities to handle 200 cows are being established from a green field base on the Doran farm with the emphasis on practical requirements and value for money.
Michael hopes to have carefully planned, excellent facilities in operation for an investment of €750-€800 per cow, in addition to his own input in plumbing and some of the concrete work.
The cubicles used for the suckler herd will convert for the dairy cows, with further conversions of existing housing as necessary.
Sixteen units are in operation in the Dairymaster milking parlour, with a further eight to be added in 2015, and provision in place to extend the parlour by a further six units with the minimum of additions.
"Every shed that I ever built was thought to be big enough, but turned out to be too small over time. I am not making that mistake again. I am leaving enough room for expansion," he insists.
The unit has been planned as a straight through with a circular collection yard with the motorised backing gate fitted with washing jets. There is no front wall to maximise the use of natural lighting in the parlour which should be sufficient throughout most of the year.
The breast rail is adjustable by up to 13 inches - operated by a very simple mechanism - and cluster removers fitted, but no meal feeding bins or milk meters.
"I went for a very simple parlour without bells and jingles - installing as many units as I could afford. I could have spent the same money on 10 units with all the mod cons, but it is planned that they can be added later.
"I did not put in meters. I can pay for milk recording for 10 for less than the meters would cost me and I can install meal bins later if I want to," he maintains.
"We did not put in a dump line as it can be easy to end up with dumped milk ending up in the tank with the wrong flick of a switch."
A standard cattle crush and a batch crush is being built beside the parlour and the €3,000 spent on sewer pipes includes an arrangement to divert clean water from the yard during the dry period.
Water is supplied from two wells on the farm. Minerals will be fed through the water system. Water heating is provided by an oil-fired system as the most cost efficient with recycling of heated water.
The heavy demand on electricity would have justified three-phase supply, but the €30,000 price tag ruled it out. However, a three-phase control board - at a cost of €15,000 - was installed, because reports of burn-out in single phase board were a concern.
Because of the proximity to the coast, all steel has been galvanised.
The refrigerated milk storage tanks has 16,500 litre capacity to facilitate every third day collection and allow for further increase in herd size or production without additional capacity being required.
"The cost of changes - at a later stage - is always greater than making provision initially," Michael says.
Everything has been fitted, as far as possible, under the one roof. Apart from the milking facilities, the central control for pumps, heating, power supply, medicine store and office are conveniently linked.