Farm Ireland

Monday 11 December 2017

Milk boom will give rural Ireland a massive economic boost

Farmers could be billed on the double for water, it has emerged.
Farmers could be billed on the double for water, it has emerged.
Darragh McCullough

Darragh McCullough

'The growth in dairying here is going to do more for rural Ireland than any multinational ever has."

Tom Clinton is what's known in the sector as a "strong" farmer.

In addition to his large milking herd outside Kells in Co Meath, he has bought and sold shares in dairy farms in the US and currently owns four farms milking 2,800 cows just outside Invercargill in southern New Zealand.

Now in his late 60s, he has spent a lifetime trying to grow his dairy business within the confines of the EU's milk quota regime. Indeed, it was one reason that he decided to invest in New Zealand 14 years ago.

But the Meathman believes that the dismantling of milk quotas next April will not only increase national milk output by 50pc by 2020, but that it will double in many parts of the country that don't have strong traditions of dairying at the moment.

"Parts of north Waterford, Tipperary and Kilkenny, along with huge chunks of Wexford, Meath, Offaly, Laois and Kildare would all be prime areas for dairy development," he told the Irish Grassland dairy conference in Kilkenny this week.

"I've seen how massive development in dairying can happen several times during my lifetime. The first was during the first decade that Ireland was a member of the EEC. But I also saw a large part of the 1,600pc increase in milk output from New Zealand's South Island that has taken place in the last 20 years," he said.

Mr Clinton believes that the fact that turnover from dairying is double that of any of the other main farm enterprises will drive the shift. "Don't be fooled into thinking that tradition will trump the hard facts of profitability. The vast majority of farmers around my farms in New Zealand were all dedicated sheep farmers and sure that they were never for turning, but they did."

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There is also a widespread confidence in the dairy sector that there will be profitable homes for all this extra milk output, even among the financial backers that are bank-rolling the imminent expansion.

"We're confident that the inherent competitiveness of dairying here combined with the strong growth in global demand over the last 20 years bodes well for the sector," said Bank of Ireland's head of agri-business, Sean Farrell.

Bank of Ireland has aggressively pursued farmers for business over the last 12 months, accounting for over 50pc of all lending to the sector in 2013.

"We took on three agri-specialists last year and are looking at the possibility of expanding that team further. We can't make money unless we are lending money and it's no secret that the agri sector is very good for us at the moment," he said.

But it's not just dairy farmers who will benefit from this milk boom, according to Mr Clinton. "I reckon that a dairy farm provides about five times the level of employment compared to a similar sized sheep farm," he said.

"As farms get bigger the farmer has less time to do anything other than keep the cows fed and milked. In New Zealand farmers know nothing about how to fix a tractor or milking machine. Everything is contracted out, from fence maintenance to fertiliser spreading."

Niall McGuaran is a good example of the indirect employment already being created in the sector. Along with his partner, he took on the franchise for Connacht and north Leinster with robotic milking machine supplier, Lely. In his first year in business he installed 17 new machines. This year he expects to install over 60.

"Robots have been working on Irish farms for more than 10 years but it's only now that we're seeing a big jump in interest. We've seven people working full-time with us now along with three part-timers. One is a vet that helps new clients settle their cows into the new regime," he said.

It is clear that if international dairy markets stay strong, the sector has massive potential to give parts of rural Ireland a massive economic injection. But more so than any multinational?

"Ireland has a competitive advantage globally in dairying, so this is a sustainable business," said Mr Clinton. "Not only that but it is a locally owned business [through the farmer-owned co-ops], so the profits, jobs and reinvestment is going to stay local. Is there any multinational that's going to top that?"

Only time will tell.

Irish Independent