Urgent change in policies on quota required

Thursday, July 05, 2012

The recent drop in milk prices has shaken confidence in dairying, but the future forecasts for dairy prices are good.

Milk prices — and the weather — will vary widely in the future, and there will be some difficult seasons.

Ask yourself, have you facilities and management techniques in place to minimise losses in difficult situations and optimise performance in good seasons?

In order to be successful, farmers must optimise income from their farms even in difficult situations. Every farmer should have a long and short-term plan, and targets for costs and profits.

These will not always work out as expected, but you must have targets which must be checked regularly and adjusted where necessary.

One of the biggest mistakes being made on farms is cutting down on essential costs. In recent years there is a significant increase in dairy AI usage and milk recording — and this should ensure good quality dairy stock for the future.

There is a big difference every year between the top third and the lowest third as regards profitability, even on similar type land, due to facilities and farm practices.

Typically, in the past, the top third had almost double the profit of the lowest third, even on similar type soils, and 2011 was no different.

Soil type can have a big effect in wet years such as 2008, 2009 and this year, but facilities and management, such as good roadways and a stocking rate which allows for the provision of plenty of good quality winter feed, is very helpful.

Examining your business

Facing into a period of price volatility, it is more important than ever to analyse the farm business and make sure you are doing the best you can under your own circumstances. Examine all available options, on and off farm.

The first step in identifying how efficiently you are farming is to complete a Teagasc profit monitor or similar system.

This will enable you to compare your performance with hundreds of similar farmers, as well as help you to identify strengths, weaknesses and opportunities in your system of farming.

Unfortunately, there are still a lot of farmers who keep no records of any value to help them with the management of their farms. Even basic management tools such as milk recording and adequate AI usage were ignored by the majority of farmers until recent years.

Despite a huge effort by Teagasc over the last decade, only a very small minority of farmers keep a dairy profit monitor or other management account systems.

Preparing for the Future

The outlook for dairying is encouraging and every opportunity should be taken by farmers to put their business on a firm footing and prepare for increasing milk production when quotas end in 2015.

Unfortunately, some farmers had assumed that there will no more super levy and had expanded far beyond their quotas, which will cost them a lot of money to control. However, every farmer who has capacity to expand should make sure to be ready to do so post-quota.

For most farmers, the cheapest and best way to expand will be to increase yields per cow, together with gradually increasing cow numbers as facilities allow, and become more efficient.

This could largely be done by improving grass quality and grassland management and, of course, a healthy herd of well-bred cows.

Symptoms of Success

Successful dairy farmers seem to have everything under control. They are planning their future, assessing performance almost on a daily basis and keeping an eye on profitability. For example, they know their cost/profit ratio, the daily milk yields of their cows, the protein percentage of their milk, the fertility and health status of their herds, the supply and quality of grass available for their cows, and their winter feed situation.

Probably the most noticeable aspect of their farms is good grass type due to regular reseeding — plus healthy, well conditioned stock, and everything clean and tidy around the farm. And they operate a strict herd health control programme.

Very often they have joined a discussion group where they share their views, not only on day-to-day management practices, but on long-term strategies for optimising incomes from their farms.

They place great importance on adequate social and leisure activities for themselves and their families and are generally very involved in community activities.





Most dairy farmers are making great improvements.

They are becoming very efficient in many aspects of their farming, particularly grassland management and breeding better cows.

They are tidying up their farming activities and seem to be enjoying farming. However, a minority have grown their dairy enterprises too quickly (sometimes without adequate quota) and will have a stressful few years.

Over the years, many of the smaller quota-holders have been seriously curtailed in their dairy farming activities due to insufficient milk quotas. The miserly allocation from the national quota increases to small or medium producers for the past number of years must be very discouraging for such farmers, while new entrants and large conglomerates are getting very generous treatment.

There is no doubt but that the vast majority of existing family farmers have the potential to expand into viable units without significant additional costs. But there should be an urgent change in policy regarding quota rules by the Department of Agriculture and farm organisations.

Average-sized family dairy farmers must be allowed to expand and succeed. Home