Farm Ireland

Friday 20 July 2018

Written agreement is the key to contract rearing's whats and ifs

John Shirley

There's a lot of talk about contract rearing of replacement heifers for dairy herds, but in reality not a huge amount is happening.

It will take off if we get this predicted 30-to-40pc expansion in dairy cow numbers after 2015, according to Teagasc. They have looked at New Zealand, where 90pc of the replacements are reared away from the dairy farm.

The attraction for the dairy farmer is straightforward. He or she can keep more high-margin cows if the replacement heifers are removed from the milking platform.

There are also attractions for the heifer rearer, including:

* A regular monthly income;

* Not having to carry the cost of stocking the farm;

* Not having to face into the bearpit of marts trying to buy store cattle.

However, I imagine that a farmer who always farmed his or her own cattle would suffer a dent of pride by taking in other people's stock. A more common alternative is to set the farm.

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Against this background, I was interested in a Teagasc open day last week on the farm of Billy Phelan in Kilmacow in south Kilkenny.

For the past five years, Billy has contract-reared heifers for two neighbouring dairy farmers.

He currently has 52 heifer calves and 39 16-month-old heifers alongside calves to two-year-old beef cattle of his own on his 83ac farm.

The initiative for this contract-rearing operation came from the dairy farmer.

How is it going?

"I like the system," said Billy. "Having the regular monthly income is great. I find it a more profitable business than rearing bulls. If you are interested in dairy stock, you can get a buzz out of it."

Having an interest in and knowledge of dairy stock was a recurring theme. Billy was in dairy farming himself up till 2000, and his farm is well serviced with paddocks, roadways and drinking troughs. Working on his own and approaching three score and ten years, he still seemed relaxed with the challenges of the job.

The heifer calves arrive at the start of May and head back to the dairy farmer on December 1 of the following year.

Pat Moylan, of Teagasc, was called in to draw up a contract that would satisfy both owner and rearer and this was available to all at the farm walk.

Basically, Pat costed grass at 7c/kg dry matter (DM), silage at 15c/kg and meals this year at 32c/kg, and calculated the inputs for the 19 months of contract rearing. This amounted to about €326 per head in feed.

Added to this, per head, was €150 for labour, €50 for the car, ESB, phone and water, €45 for depreciation and €50 for insurance and machinery. A few other sundry items totalled the payments at €645 per animal put through the system. This amounts to about €1.11 per head per day.

Teagasc's George Ramsbottom told the open day visitors that good grassland management was the key to leaving profit for the rearer. Billy Phelan operated a leader-follower system with the calves in front.

The owner paid for AI and vet bills and transport but Billy had the job of heat recording and getting the heifers in for AI.

In anticipation of massive dairy expansion, Teagasc has worked on contract rearing. They have drawn up sample contracts which are readily available.

Much of the talk at the open day concerned the matching of rearer and dairy farmer. As in any good marriage, both parties have to want to make the deal work.

Austin Flavin, of Teagasc, advised that a contract be drawn up. If nothing else, this clarified any possible roadblocks.

The first question from the audience was what would happen if there was a TB outbreak among the heifers being reared?

Mark Fitzgerald, from the local DVO, was on hand to reply.

He said: "In this case, all three herds would be locked up. However, provided there was a bone-fide contract, in-calf heifers can be moved on welfare grounds and normal TB compensation would be payable."

In their booklet, Guidelines for the Contract Rearing of Replacement Heifers, Teagasc claimed that the return to land and labour for the rearer ranged from a high of €418/ac for a low-cost, tightly stocked producer (€1.20/hd/day) to a loss of €55/ac for a high-cost, lowly stocked rearer (€0.90/hd/day).

As with all farm enterprises, good operators will make the best profit. George Ramsbottom reckoned that a return of €300 to €500 per hectare for labour and land could be expected with average-to-good management. If a person gets the name of being a good rearer, dairy farmers will seek him or her out. Even within Teagasc, the farm at Oakpark Carlow is contract-rearing replacement heifers for the Moorepark herds.

Teagasc is planning to establish a database of potential contract rearers and dairy farmers wanting to use the service. Names will not be published but Teagasc will act as a kind of dating agency and introducing the parties.

At the Billy Phelan farm walk there were many 'what if' questions from the audience. What if an animal dies? What if weight targets are not met? What if the summer is too wet, or even too dry, and the grass doesn't grow?

The answer to these questions was to have these issues addressed in the initial contract.

Irish Independent

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