The flight from beef to a dairy enterprise
Former IFA livestock chairman Michael Doran explains why he's converting from beef to a 200-cow dairy enterprise
A belief that the tightest margins in dairying are better than the most optimistic returns from beef has convinced one of the top suckler-to-beef producers in the southeast to switch codes.
Former IFA livestock chairman Michael Doran has already completed the first phase of his planned conversion from beef to dairying.
Within months the last of his 120 suckler cows will be gone to make way for a 200-cow dairy herd on his 320ac holding at Duncormack, Co Wexford..
Michael is convinced that the challenge is worth the investment in planning, and hard cash that he has committed to his green field dairy set up.
"As livestock chairman in IFA I saw different systems around the world and the one thing I realised was that I could not compete on beef on the world markets, while we are very well positioned on dairying," he explains.
"A lot of dairy farmers would have thought that 2009 was a difficult year. I know it was. But I know some people who started in dairying that year and they said it was the first time that they had made money from farming even at 20c/l for milk," says Michael.
The Teagasc Beef Monitor farmer, and active member of a beef discussion group, has been producing U grade young bull beef at 16 months from his half- bred Limousin cows. These bulls are 400kg carcass weight and finished at 16 months. He used a Simmental sire and all the progeny not required for herd replacements were finished to beef on the farm.
"I made the decision to get out of beef in June 2013, when I was getting €5/kg for heifers. You could say that it was the top of the beef market, but I found that the cost of keeping the cow was something that I was not able to reduce enough to keep going."
The suckler herd was carried on the 200ac home farm. A further 130ac 18 miles away which is rented from his uncle was used for winter cereal production. The barley is retained for farm feeding and some of the wheat retained, with the balance sold as a cash crop.
On the Teagasc profit monitor analysis he had a gross margin of €800-€1,000/ha which placed him in the top league of monitor suckler-to-beef farmers."My biggest problem was the cost of keeping the cow and without some reasonable support for the cow it was very difficult to maintain her on land that was suitable for doing something else.
"The [partial] flattening of the SFP [single farm payment] was having a big impact on me, as on beef farmers generally. In the past the beef farmer had the Suckler Cow Premium, the 10 and 22 month premiums, and the Slaughter Premium, which formed the basis of keeping the profitability in the system.
"When they were taken away we were able to keep going, but it was getting more difficult and then the 'welfare scheme' went. I could see that milk quota was being abolished. A number of things were coming together at the same time."
So what would have been necessary to influence him to continue as a beef producer?
"I would need to be getting €300/cow. I had seen the situation in France where the suckler farmers were looking at the same figure which would have brought me back to the older situation of €220 plus €80 on extensification. That was there and it was not that I was looking to reinvent the wheel.
"If I was getting that level of support I could have survived at a beef price above €4.50/kg. There is a lot of talk now about the volatility in dairying, but the volatility in beef was killing and the uncertainty on price. There may be only a few sale days in the year on beef and the price could either rise or collapse between sale days.
"That killed me with the 16 month beef because they were all coming in at the same time. This spring if they were over 16 months there was even more interest in them because they [the factories] were getting them for nothing. I could not see a future in it.
"I view myself as a grass farmer basically and the challenge for me is to find the best system that will convert grass into income for me."
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