Farm Ireland

Friday 20 April 2018

Four basic principles that will help Irish dairying to prosper

Pat Dillon

Dairy farmers may not be feeling upbeat this week after the latest cut in milk price.

The cut of up to 2c/l is more evidence of the massive increase in volatility that the sector has been exposed to over the last decade.

Prior to 2004, milk price rarely swung either way by more than 2c/l.

However, since then that volatility has increased fourfold to +/-8c/l.

This is just one of the effects of life post quota.

It's a double-edged sword that exposes farmers to the vagaries of the global marketplace more than ever.

But the removal of the protectionism also opens up massive opportunities for everyone to exploit the full potential of Ireland's natural competitive advantages in dairy production.

I really believe that it has been the most fundamental change to the Irish dairy industry in a generation.

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Increasing milk production will increase the value of exports and will result in increased employment and investment in rural areas.

The increased output will be exported, and demand will be driven by changing global demographics: increasing population, greater affluence and urbanisation in developing countries.

But this expansion does not come without risk, with farmers having to face up to the additional infrastructural investment that will be required.

This will put significant additional pressures on the existing dairy farm business and should not be considered without careful consideration of repayment capacity and the impacts on the family unit.

Will the average Irish dairy farmer be able to cope?

The answer is 'Yes', but only if the following principles are followed:

1 Ireland's competitive advantage in milk production is in spring-calving, grass-based systems. We have no competitive advantage in high concentrate-input systems.

2 Efficiency must come before scale, and increasing herd size will not necessarily increase farm profitability. Farmers should not lose sight of the fact that the average sized unit today doesn't need to increase much in size to make a good family living.

3 Farm infrastructure needs to be low cost and labour efficient. The best return on investment is from anything that helps maximise the growth and utilisation of grazed grass. Reseeding may not sound exciting, but it usually pays for itself in less than two year, and continues to return extra profit for many years after.

4 There was a time when a farmer's milk yield per cow was the measure of their skill and profitability.

On the face of it, maximising the six week calving rate and the quantity of grass utilised per hectare may not seem like key determinants of a farm's profitability.

But the target of getting 90pc of cows calving in six weeks is key to getting the most out of your grass.

Soil fertility, productive swards, and weekly grass measurement and budgeting are also vital goals.

All of the key research on these issues, and the people behind it, will be on hand for farmers to engage with at the Moorepark '15 Open Day.

It is an unmissable event for farmers intending to build profitable businesses that will provide themselves and their families a good living for many years to come.

Pat Dillon is Head of Animal and Grassland Research and Innovation Programme at Teagasc Moorepark, Co Cork

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