A 50pc increase in milk production will not increase on-farm income and the end of quotas could be a calamity for the dairy sector, a leading Irish dairy scientist working in New Zealand has warned.
Dr John Roche of DairyNZ told Irish Grassland Association conference in Cork last week that expansion was not the cure for falling incomes and that farmers should focus on improving efficiency rather than increasing cow numbers.
Dr Roche described the scrapping of quotas this year as a possible calamity for Irish dairy farmers and argued that increasing milk production in line with the Food Harvest 2020 targets would not leave Irish farmers better off.
The principal scientist with DairyNZ, Dr Roche told delegates that expansion and intensification in New Zealand since 2006 had not resulted in increased farm incomes.
He explained that the average New Zealand herd increased from 275 to 400 cows (37pc increase), with a 53pc lift in milk solids since 2006. However, he said the average New Zealand dairy farmer was now producing 38pc more milk without making any additional income.
The UCD graduate blamed the fall-off in profit margins on a significant increase in concentrate feed usage. Prior to 2006, 75pc of farmers fed less than 500kgs of concentrates, now more than 75pc of Kiwi dairy are feeding greater than 500kgs, Dr Roche said.
Increased supplementation also had a negative impact on farm profitability as a result of reduced grass utilisation. Dr Roche explained that grass utilisation reduced by 1.2t DM for every one tonne of supplements used. Irish data suggests that each additional tonne of concentrate used per hectare reduced farm profit by €80/ha.
However, Dr Roche accepted that supplements had a place in grass based dairying, with a recommendation that concentrates account for 10pc of the cow's total diet or 500kg DM/cow/year.
In terms of expansion, Dr Roche made it very clear that extra cows might not result in extra income and expansion would not necessarily increase profit.
He said only farmers capable of producing profit levels of €750/cow at a milk price of 30c/l should consider expansion. The average farmer in Ireland is currently making a profit margin of €300/cow.
The gap between average producers and the top 20pc was also identified in his presentation. Dr Roche stressed that average farmers should not double cow numbers to deliver a desired farm income but, instead, focus on driving efficiency.
For an average farmer to generate an income of €45,000 post 2015 they would need to milk 135 cows, while a farmer in the top 20pc would only need to milk 55 cows, he pointed out.
"Irish farmers can expand but should we? How many cows do you need to milk, you've only one family to feed. You don't have to achieve your goals in 2015; it's your decision not the government's," Dr Roche told the conference.