Getting to Grips With Dairy Expansion

dairyexpansion_main

Hightlights

  • The country’s dairy farmers have benefited from the scrapping of EU milk quotas, which had restricted output
  • The national herd now tops 1.35m, and the export value of dairy products and ingredients is worth an estimated €3.4bn a year
  • New entrants can rely on Teagasc’s Dairy Expansion Service to help them make the most of opportunities in the dairy sector

 

The dairy-farming sector is growing, but how can farmers best milk the opportunities?

Sarah Kehoe is looking forward to a cold, dark morning in February 2018. For that’s when the farm on her Rosegarland Estate in Wellingtonbridge, County Wexford, will milk its first ever cow.

Kehoe, alongside husband Willie John, hopes converting its tillage operation to a dairy farm with 360 cows will help take advantage of the sector’s stunning growth.

“The return on tillage in Ireland is poor, but the move to dairy is not one we’ve made lightly,” she says. “It’s a huge step for us, but with the ending of the quotas we’re confident we’re making the right decision. Dairy farming is very sustainable and it will provide a strong future for both the place and our two sons.”

Sean O’Leary, a dairy farmer in Mournabbey, near Mallow, County Cork, is also optimistic. “We began expanding our dairy herd in 2012 in advance of the quota change,” he says. “We had about 70 cows then; now we have 140.”

Quotas

The EU milk quotas, which were abolished in 2015, had restricted Irish milk output to 5.5bn litres a year.

Now, according to Teagasc, total milk output for 2017 is tipped to top 7bn litres, which is only just shy of the government’s 2020 goal of 7.5bn. Indeed, that level is expected to be reached as soon as 2018.

Teagasc, in its recent People In Dairy Project, stated that the average herd size has increased from 54 cows in 2005 to 76 in 2016, while dairy farmer numbers have remained relatively static since 2010.

The national herd now tops 1.35m, with the proportion of dairy cows in herds of 100 or greater up from 13% in 2005 to 47% in 2016.

The expansion is helping both farmers and the national economy. As a result of increased milk production, the export value of Irish dairy products and ingredients has increased from about €2.3bn in 2010 to €3.4bn in 2016.

Teagasc anticipates further strong growth in the years ahead, helped by the “improved genetic merit” of cows, declining debt levels on Irish dairy farms and improved land availability following new long-term leasing tax incentives.

Swapping

“The ending of the quotas has opened up opportunities for both existing and new dairy farmers,” says Patrick Gowing, specialist dairy adviser at Teagasc’s Dairy Expansion Service (DES). “Farmers from sectors with low margins are swapping to dairy because they see the chance to bring in more cash for their families.”

The DES helps farmers make the most of the opportunity. It recognises that a move into dairy should be considered carefully, given the infrastructure investment required, repayment capacity and the need for specialist skills.

Business plan

Teagasc’s DES creates tailored six-year business plans and looks at farmyard layout and design, capital costing and expansion timeline, cash-flow projections and grazing infrastructure design.

“Before they expand or begin, we walk the farm with them, develop a capital budget and look at issues such as having an adequate road network to get the milk distributed,” Gowing explains. “We ensure their business plan is viable and sustainable and can handle fluctuations in milk prices. They need to realise that it’s a commodity product and there will be highs and lows, so investing in the right stock and grass to give you a high return will help them be resilient. You also need to look at efficiencies such as a cow’s genetics, to ensure a longer-lasting herd, and better fertility performance.”

 

As the economy picks up, dairy farming is another alternative for young people to make money”

 

Patrick Gowing, specialist dairy adviser,

Teagasc’s Dairy Expansion Service

 

 

Discussion groups

Teagasc’s discussion groups, where dairy farmers meet regularly to debate technical issues, share information and solve problems, have also proved pivotal to growth.

Gowing says: “We ensure that we have experienced dairy farmers in there who new entrants can lean on for extra help. In fact, we put them into one of these groups about a year before they make the move to milking, and we run training courses for new entrants.”

Dairy farmers are also being encouraged to look at different farming models such as farm partnerships, share farming and long-term land leasing.

“There are lots of different models to access land. We make sure that the one chosen works for everyone,” Gowing says.

However, Sean O’Leary, who is also chairman of the Irish Farmers’ Association (IFA) dairy committee, says his biggest constraint to expansion is land. “We’ve got 62 hectares and that’s as far as it goes for the size of our herd,” he says. “Another challenge is finding the export markets as most of Ireland’s milk goes abroad.”

Kehoe says her biggest challenge has been the time it has taken to move from tillage to grass.

“That took quite a while to get the organic matter right,” she explains. “We’ve also invested in equipment and machinery, including a 50-unit rotary parlour which we hope will take the hardship out of milking for our workers. We’re keen not to overwork them.”

Staff shortage

Indeed, labour is probably the biggest question mark over the pace of dairy expansion.

Teagasc, in its dairy project, stated that the industry is facing a severe shortage of new young recruits. With the average dairy farmer currently 58 years old, Teagasc believes Ireland will need about 6,000 new entrants over the next decade to replace retirees and meet the requirements of expanding herds. That’s both in management and seasonal labour positions.

“As the economy picks up, dairy farming is another alternative for young people to make money,” says Gowing. “Look at your own farm. Is it labour efficient? Are your facilities up to scratch? Can you improve the design of the milking parlour, which will be easier for both man and beast? We’ll also give extra training for farmers who are not used to handling labour, so they can be a better employer.”

O’Leary adds: “It’s about farmers paying workers the going rate and giving them adequate time off. Farmers expect others to work 24/7 like they do. It’s all a learning experience.”

Farmers and the industry should also be more open about career progression, offering equity shares and partnerships, and to be better at marketing the industry to students, non-EU workers and those on benefits.

 

 

 

 

Comments 3

Ailish Byrne on Thursday, 30 November 2017 10:15

The ending of milk quotas has opened up opportunities for existing and potential new entrants to dairy farming. However, there are also some challenges ahead that we all need to be aware of including milk price volatility and labour issues. This article provides some practical insights into both these opportunities and challenges.

The ending of milk quotas has opened up opportunities for existing and potential new entrants to dairy farming. However, there are also some challenges ahead that we all need to be aware of including milk price volatility and labour issues. This article provides some practical insights into both these opportunities and challenges.
Tara De Buitlear on Thursday, 30 November 2017 10:55

A good read for anyone considering converting or expanding into dairying.

A good read for anyone considering converting or expanding into dairying.
Anne-Marie Butler on Monday, 04 December 2017 10:42

The article highlights the importance of planning and the key elements of efficient dairy production. Valuable read for all concerned with the dairy industry. Great to hear directly from dairy farmers and their experiences.

The article highlights the importance of planning and the key elements of efficient dairy production. Valuable read for all concerned with the dairy industry. Great to hear directly from dairy farmers and their experiences.
Already Registered? Login Here
Guest
Sunday, 27 May 2018
If you'd like to register, please fill in the username, password and name fields.

Member Login

Upcoming Events

Agile for Business Leaders | Dublin |
  1.   General
  2.   21st May, 2018
CIPD Ireland Annual Conference 2018
  1.   General
  2.   22nd May, 2018
Enterprise Excellence Ireland
  1.   General
  2.   23rd May, 2018
Shellfish Regional Information Events - Molluscan Shellfish Safety Updates
  1.   Start-up
  2.   23rd May, 2018
Amplify Digital Marketing Conference 2018
  1.   General
  2.   24th May, 2018