Farm Ireland
Independent.ie

Saturday 18 November 2017

Traditional versus low cost accommodation

Caitriona Murphy

Caitriona Murphy

With dairy cow numbers expected to increase considerably from 2015, many farmers are already planning the infrastructure needed to cater for a larger milking herd.

The type of housing chosen for a herd is usually decided by the cost of capital and annual running costs, as well as the availability of credit.

Farmers deciding whether to go down the conventional route or the alternative of out-wintering pads (OWP) or roofless cubicles should look to Teagasc's Greenfield farm in Kilkenny to answer some of their questions.

options

OWPs are cheaper to install but have higher annual running costs and a shorter lifespan, while traditional cubicle sheds have much higher capital costs, lower running costs and a longer lifespan.

Some farmers are also turning to unroofed cubicles, combined with lagoon slurry storage and outdoor feeding areas.

Below, Dr Padraig French and Laurence Shalloo from Teagasc outline some of the advantages and disadvantages of OWPs.

OWP advantages:

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• Over-wintering facilities on farms can be greatly increased at low capital cost

• Improved animal performance and welfare when managed properly

• Costs are spread over the lifetime of the structure rather than all up front in conventional structures, reducing business risk

• More adaptable to a range of animal types than conventional housing

OWP disadvantages:

• Farmers need expert site analysis and assessment skills prior to construction

• Annual requirement for bedding material, so OWPs have a higher running cost than conventional housing

• Unsuitable for lactating cows over a prolonged period without intensive maintenance

• Solid waste (spent woodchips) and liquid waste (OWP effluent, classified as slurry) must be managed according to Department of Agriculture rules

• Farmer is exposed to the weather during animal management.

When planning for the Greenfield conversion took place in early 2009, investment in farm infrastructure was dictated by a number of key objectives.

Chief among them was that the Greenfield farm should have minimal capital outlay in depreciating assets such as buildings, so that more of the limited capital budget could be spent on productive assets such as stock and high-performing pastures.

The other objectives were to provide a labour-efficient, environmentally compliant construction with good cow welfare and low running costs.

The capital costs of farm buildings have fallen significantly over the past three years. However, access to capital through bank loans has become much more difficult.

Table 1 (above) outlines the capital and operating costs of three possible alternative winter accommodation systems for Greenfield, using 2011 construction costs.

It examines the cost of:

1. A conventional cubicle shed with slatted slurry storage;

2. An earth-lined OWP and slurry lagoon and;

3. A low-cost cubicle system with the slurry stored in a plastic-lined lagoon.

In the Greenfield project, capital investment depreciated over 15 years and was financed with borrowed money at 6pc interest. Woodchip was costed at €12/m3. Table 1 shows the total annual housing costs and evaluates sensitivity to interest rates and woodchip price.

Looking at the table, the conventional shed had the highest capital (€1,218/cow) and annual housing cost (€142/cow/yr), whereas the OWP had the lowest capital cost (€371/cow), and the low cost cubicle system the lowest annual housing cost (€93/cow/yr).

Cubicle systems are more sensitive to interest rate variations, whereas OWPs are most sensitive to changes in woodchip price.

The results revealed that if the capital cost of a cubicle system was less than €850/cow, it was more profitable than an OWP over a businesses lifetime.

In this scenario, the low-cost cubicle system had the lowest annual cost at €93/cow/yr, and would have been the most profitable option for Greenfield.

However, Dr French pointed out that it would also have required an extra initial capital investment of €117,950, which was not affordable at the time.

Indo Farming