Five actions that can help us survive milk price volatility
This time last year we were busily preparing to co-host the Irish Grassland Association summer dairy tour. The focus was across a number of areas including low cost expansion, cow type and growing the maximum tonnes of grass per hectare every year.
This year is not just a serious test of every dairy farmer's cash flow situation but also an extreme test of farmers expanding cow numbers. If the expansion is based on purchasing extra cows and growing extra grass on the milking platform through the application of lime, phosphorus (P) and potassium (K) then the expansion should be sustainable.
However, if the expansion also involves borrowings for concrete or machinery, along with additional concentrate usage per cow, then it's not sustainable at current milk prices.
At a time like this, these five actions that can help:
Lock the cheque book for discretionary spending in the drawer
Start a rainy day fund
Visit your bank manager with a well prepared cashflow budget to back up a request for a repayments 'holiday'
Grow more grass for the next four months and let the cows convert it into milk, because this is the only product bringing money in the farm gate
Sell surplus stock, even if at a slight loss or a price you may not be happy with.
We are all in survival mode now following the relentless price cuts over the last 18 months that have led to the current disastrous milk price. Volatility is the elephant in the room and we must figure out how to manage it to survive as dairy farmers. We need to be innovative.
The fixed milk price being offered by some co-ops is a good place to start. Predictability of supply and price is attractive for everyone in the food chain. As farmers we need to instruct our farm leaders and board representatives to push for this.
We see the share prices of global and Irish-based food companies trading at or near record price levels.
Why is that so at a time when milk prices are so low? Most share prices trade on a multiple of profits and on looking a little deeper we see a trading margin of about 8pc which remains fairly constant.
The primary milk producer on the other hand is the price taker, the sponge ball, the victim of volatility.
Back on our farm, grass is growing very well again after, believe it or not, a mini drought. In general I have found this year wildly fluctuating growth rates difficult to manage.
The pit silage is completed and we will spread two bags of 18-6-12 plus sulphur on some of the silage ground as we need some more high quality milking bales for the cows and we may not get them from surplus on the milking platform.
The remainder of the silage ground and the heifer rearing land will get no fertiliser until we start building covers on August 15.
We have now finished AI and the bulls are running with the herd. It is great to be finished with heat detection and AI, but I am never comfortable from a safety point with the bulls as invariably they are noisy and most of them have a bad attitude. We always bring the quad for the cows to give some level of safety.
The cows are currently producing 22 litres at 4.35pc fat and 3.65pc protein or 1.8kg milk solids per day on 1.5kg ration.
Protein levels are back from last year by 0.1pc so I am hoping they will start to climb from here on and we can reduce meal feeding a bit more in the next few days.
I am actively clearing outstanding bills with contractors and merchants who in my experience have been very patient collecting money owed.
It is in everyone's interest to get control now and not to be chasing our tails in the autumn.
I would like to congratulate Damien McGrath from Tuam on winning the Teagasc student of the year. Damien and his dad Francis came to visit me on the farm when they were considering going back into dairy and I was hugely impressed by his drive and resolve.
I also want to congratulate Bryan Hynes, my neighbour and fellow Galway Grazers discussion group member on coming joint second. Some of you will know Bryan as chairman of the IGA tour on our farm last year and he was also chairman of the Macra Ag Affairs committee.
Henry and Patricia Walsh farm in Oranmore, Co Galway along with their son Enda and neighbour and outfarm owner John Moran
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