Farm Ireland

Tuesday 12 December 2017

Winter milk returns barely cover extra costs

Claire McCormack

Only a long-term contract paying close to 40c/l, without any links to manufacturing prices would tempt Peter Farrell to reconsider his decision to exit year-round milk production.

Peter farms with his father David at Kilmessan near the Hill of Tara in Co Meath and supplies liquid milk to Glanbia under contract. David was a member of the Glanbia Board until last year.

However, Peter, who will be among the speakers at the IFA National Liquid Milk Rally which opens in Portlaoise tonight, decided to move away from autumn calving because the returns from winter milk were just about covering the additional costs incurred.

"We are being paid a liquid bonus of 8c/l for the six months from October to March but our costs are working out at 7.53c/l.

"That is leaving me just 0.47c/l for the extra management costs, extra young stock groups, the extra labour costs and all the additional work," Peter explains.

While Peter says he would consider offers to remain in liquid milk, he is adamant that any new deal would have to be both attractive and structured differently to past contracts. "The liquid milk price should not be tied to manufacturing milk, they are two separate businesses," Peter says.

"Any new contract would have to be a long-term one, with an annualised fixed price of around 40c/l," he adds.

Peter and David run 190 cows on the milking platform and while he says the changeover to 100pc spring calving means the workload is more intense for the early months of the year, he says the system is more lifestyle friendly than year-round milking.

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Costs involved in Winter Milk:

• Extra concentrate costs 2.2c/l;

• High quality forage/maize costs 1.73c/l;

• Extra hired labour/milkings costs 2.9c/l;

• Fertility aids costs 0.7c/l.

Ahead of tonight's rally, IFA president Joe Healy warned that liquid milk farmers were voting with their feet and leaving the business.

IFA President Joe Healy Photo: Frank Mc Grath
IFA President Joe Healy Photo: Frank Mc Grath

"In 2015, the number of autumn dairy calf births fell 16pc, while the number of dairy births for the whole year rose 8.5pc. We are seeing this trend continue this autumn, with dairy births for September to mid-October already back 15.8pc on last year," Healy says.

"Fresh milk produced and sold in the Republic is worth €400m to the dairy sector - that's 13pc of our dairy export earnings, and it is worth nurturing. In the context of Brexit, it would be foolish to damage our national capacity to supply our domestic fresh milk market by pushing all producers into export-oriented spring milk production," he maintains.

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