The Greenfield dairy farm in Kilkenny is a most interesting initiative. This project started in 2009 with the aim of converting a 117ha (290ac) tillage farm into an intensive, grass-based dairy unit which would eventually carry 350 cows.
The challenge, under the project's 15-year business plan, is that from a greenfield start this herd will generate an income capable of paying for all running costs. These include labour and land rental (€450/ha), plus repaying a €750,000 bank loan and €350,000 investor start-up capital. Nationally, the project is a blueprint for investing in low-cost milk production in a post-milk-quota era.
Fair dues to Teagasc who undertook to manage and operate the project based on best practice from their dairy research. This was putting their money where their mouth was with full transparency. They had the theory from Moorepark. Now was the chance to implement the theory into a real-life project.
In establishing a unit based on low-cost grass-based farming, Teagasc was tackling the challenges of weather, animal health and the market, any one of which could jeopardise the project. But then again these are the same challenges that confront every family farm.
Last week, Teagasc held an open day on the Greenfield farm. Along with a progress report for the first three years, the event addressed the theme of expansion in dairying.
In terms of achieving public credibility for the Greenfield project and accepting that we learn from mistakes as well as success, it is vital that the Teagasc reportage covers warts and all.
The overall impression from Greenfield is one of competent management. As in most start-up projects there were cost over-runs and some targets are not being met. But equally other targets have been exceeded. Backed by the spike in milk price, 2011 returned a net cash flow of €103,000 versus the €4,400 budgeted on a milk price of 24c/litre. Mindful of the drop in milk prices this season, and the expected volatility of future milk price, the open day speakers urged that some profit be put by into a reserve or 'rainy day' fund. With milk sales of 1.5m litres every 1c/l changes the bottom line by €15,000.
Greenfield has a very clear target. To produce grass as cheaply as possible to be able to survive low milk price and maximise profit per litre when the price lifts. Milk output will be dictated by the volume of grass grown and harvested.
Figures given at the open day showed that even on a grass-based farm, dairy start-up costs are formidable and that overheads and fixed costs greatly outweigh day-to-day running costs.
Variable costs for 2011 totalled €170,512. These included €48,375 for fertiliser, lime and reseeding; €39,404 for contractors; veterinary charges, AI and medicine came to €36,836; while the concentrate feed bill totalled €24,615.
Fixed costs totalled €367,128. Wages came to €90,600; contract rearing of replacements cost €65,000; depreciation was €73,700; land lease was €52,800; while interest came in at €29,000. Given the high fixed costs, would an expanding dairy farmer not be better to push up yield per cow and spread the overheads over more litres of milk?
Not so, stressed Padraig French, one of the architects of the project. He argued that costs must be controlled.
"If you wanted to push up cow yield then you would have to change cow genotype and such cows would not be suited to a grazing regime," he maintained.
Interestingly, as I walked from stand to stand at the open day, I fell into step with a Waterford dairy farmer whose approach was almost the total opposite to the Greenfield one. He concentrated on cow yield and cow comfort and last year averaged 9,900l (730kg milk solids) per cow on 2.8t of concentrates. He calves in the autumn, feeds a lot of farm-grown feed and forage and only puts the cows to grass when cow yield drops to 34l/day and heifer yield to 30l/day.
As a result, 70, or almost half the cows, are still indoors averaging 44.5l/day. He reckons that installing spacious, comfortable cubicles added 4l/day to cow yield. This farmer said that once quota goes he is ready to jump 1m litres, with the slight modification in that he will go for an 8,500l rather than a 9,500l cow.
On the day previous to the Greenfield event, the Irish Holstein Friesian Association held an open day on another Kilkenny dairy farm. This was also a high yield herd (8,449l) but margins and profit levels were not revealed.
Mr French is adamant that Ireland should continue to base its milk future on grass rather than imported concentrates where we have no natural advantage. However, even a grass system involves major capital investment. In Greenfield, based on 350 cows, this worked out at €570/cow for grass management (paddocks, roads, water, etc), €911/cow for milking package and €819 for housing/slurry, etc. Cows had to be purchased as well. The Greenfield Teagasc speakers said that only the most efficient dairy farmers should borrow to this level for expansion.
Things that have worked well at Greenfield to date include:
nGrass yield being ahead of budget allowing faster than planned build up of cow numbers;
nTaking steps to buy in animals free of BVD, Johnes, IBR and Lepto and vaccinating thereafter;
nOff farm rearing of replacements and using contractors for feeding, spreading fertiliser as well as silage, etc.
Some of the disappointments include:
nLow conception rates (34pc to first AI), which resulted in a 394-day calving interval and too few cows in milk in the spring. Conception rates in 2012 look more promising.
nThe outdoor wintering pad is giving problems with the mulch costing €14,578 last year as against a budgeted €4,428. A different design and longer feeding face would have helped but the jury is out on pads according to some of the lads at Teagasc.
nThere is an ongoing irritation on somatic cell counts which is also adding to the cull rate.
If this were a family farm there would also be inevitable glitches. Overall, however, I doubt if research scientists anywhere else in the world would have made as good a fist of the Greenfield venture as have the Irish lads.