So it is easy to defer and say 'that's not for me'.
But should the drystock farmer investigate further and see if he can join the dairy boom in a manner which suits his lifestyle, pocket and pride?
There are many ways for a drystock farmer to join the dairy boom (see table below).
Eight ways a drystock farmer can jump on the dairy gravy train
Turn an existing farm to a new dairy unit
Partner with another farmer to milk cows
Enter an arrangement with a dairy farmer
4 Contract Rearing
Rear replacement heifers for a dairy farmer
Lease out your land to a dairy farmer
Sell your land to a dairy farmer
Put some cash into a dairy farm
Get a job full-time or part-time on a dairy farm
These can be divided in high- and low-risk options.
Making the decision convert a drystock farm into a dairy farm is not an easy one. The average drystock farm is around 40hectares; this would equate to milking approximately 100cows and carrying no replacements.
The capital investment required in cows, milking parlour, cubicles, slurry/silage storage and land improvement could amount to over €400,000.
A drystock farmer may have some of the infrastructure already in place, such as silage and slurry storage as well as a significant number of livestock, but the majority will require a significant spend to set up - this is a high-risk investment.
The risk can be reduced by entering into an arrangement with another farmer to reduce the capital investment required. A partnership with a neighbouring dairy farmer is ideal as the drystock farmer can invest in cows, land improvement, maybe some cubicles and avoid the big-ticket investment in a milking parlour.
Share-milking is another variation whereby a young keen dairy farmer with dairy cows teams up on a profit-sharing ratio with a drystock farmer who has converted his farm for dairying.
Contract rearing of dairy heifers is an obvious route for a drystock farmer to dip his toe into dairying: the capital investment needed is minimal. It is important to have an agreement and a dairy farmer of good standing, but this is a low-risk option.
The most basic low-risk way to enter the dairy industry is to lease your farm to a dairy farmer. By leasing for a 20-year term you can get up to €40,000 tax-free rental income per annum as a sole owner.
In addition to the tax-free income all their time is freed to take up new employment. This employment could be off-farm but it could also be on a dairy farm.
The perfect way for an undecided drystock farmer to sample dairying is to work part-time on a dairy farm while continuing to run his own farm. This is a foolproof way to test the water in dairying, learn on the job and earn some additional income all at once. It's a win, win, win scenario for the drystock farmer, the dairy farmer and the industry.
There are more exotic ways of getting involved in dairying, by investing cash or selling all or part of a farm to invest in a dairy farm - this is not for all but it is being considered by some.
In summary, there is a suitable option to enter the dairy industry for every drystock farmer, it just depends on their appetite for risk and reward. The advice is to make an informed decision and not revert to type.
Mike Brady is a Cork-based agricultural consultant and land agent. email: email@example.com
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