Stephen Cadogan talks to new dairy farmers’ leader Pat McCormack ahead of tomorrow’ first big test for the ICMSA President
Tomorrow will be a crucial day for new ICMSA President Pat McCormack, and for all farmer leaders in Europe, because agricultural spending will feature prominently in the informal meeting of the 27 EU heads of state, when they discuss the EU’s long term budget after 2020.
McCormack, appointed in early December to head up the dairy farmers’ association, says it’s imperative for Taoiseach Leo Varadkar to very clearly state that any reduction from the current CAP budget is unacceptable for Ireland, and remaining member states must make good any budget deficit resulting from Brexit.
In our interview, the ICMSA leader says guarding the CAP post-2020 is just one of the challenges and problems that keep coming, even if 2017 was a good year for dairy farmers.
Many would expect dairy farmers to have no problems after 2017, when their average family farm income was estimated by Teagasc to have increased by 75%, from €52,054 in 2016 to about €91,000. Does that make it an easy time to take over as ICMSA president?
Certainly 2017 was a much improved year for dairy farmers. but I think it is fair to say that if you asked most dairy farmers. they would confirm that their income was well below the Teagasc estimate and, in any case, averages are always dangerous.
I’d have to disagree with you on this being an easy time to take over as President of ICMSA. There is never an easy time, because the challenges and problems just keep coming.
I’m a relatively positive person, and I always believe that there’s a way through these things, but just take 2018 and what’s already queued up for us to deal with: milk price, farm input price, the massively growing consideration of climate change and environmental impacts, the CAP post-2020, the ongoing efforts to get the beef grid reviewed as was committed to in November 2015 and then the two problems that can keep us awake at night, Mercosur and Brexit.
Our opinion is that Brexit is the biggest challenge to face Irish farming since the BSE crisis in the mid-1990s,.
We still have over 50% of our beef and 60% of our cheese going to the UK, and we will all have to grasp the inescapable fact that no amount of new markets is going to replace those UK markets that we’ve been selling into for centuries, and which we know so well. The most recent reports wouldn’t fill you with confidence, and the optimism that we felt in December has been lowered. All the time, the clock is ticking, and unless the circle can be squared, then we are facing WTO tariffs in March 2019.
ICMSA will keep on repeating our conviction that keeping UK markets open to Irish food is a national strategic imperative on which Ireland cannot compromise, and the other parties, including other member states and the EU itself, have to recognise that.
In May, a peak supply month, the actual average milk price paid to Irish dairy farmers was €32.63 per 100 kg, close to the EU average of €32.89. In December, they got the EU’s top price, except for Malta. With satisfactory prices and their low costs thanks to grass, are Irish dairy farmers the envy of Europe?
According to the EU Milk Market Observatory, Ireland was in 13th place in May 2017, and in sixth place in December, 2017, so the milk price received by Irish farmers is probably mid-table.
It is important to realise that while 2017 was a positive year for dairying, it was preceded by two very destructive years, when Irish dairy farmers received milk prices below the cost of production for 18 months, a situation which clearly is not sustainable. Dairy farming can be very challenging, and if the sector is to develop to its potential, then it must generate incomes comparable with other sectors and proportionate to the skill, investment and workload involved.
That’s the income basis for every other type of occupation, and I don’t accept that it should be any different for dairy farming.
If we’re going to get young people to take up dairying as their career, then they have to see that the kind of hard work it involves is going to be reflected in a decent income, and they won’t be expected to go a year or 18 months, or whatever, earning no income whatsoever from their dairying operation.
Despite the optimism in dairying at present, I’d just remind people that there are more leaving the sector than joining it, and this is another major challenge to add to the list I’ve previously given.
How bad is the dairy labour shortage? Examples?
If you talk to any dairy farmer in the springtime, the non-availability of quality labour is a massive issue.
Farming life has changed, and many farmers now operate as one-person shows, with the spouse working off-farm.
With calving going on at present, it is no exaggeration to say that it is almost a 24-hour job, and this brings huge pressures at this time of year.
There is no doubt that, as individual farmers, we need to be very careful at this time of the year, and we think it is essential that the issue of seasonal labour is addressed, so that farmers can plan their farm tasks in a safe and health-conscious way.
We’ve made specific suggestions on this, and we’re happy that some of them have been taken on board.
As cow numbers increase on farms, the issues around availability of labour are becoming even more pressing, but I would make one more important point. The marketplace will have to generate the kind of returns that will allow farmers to employ labour where and when required.
Is there something that we don’t know about holding up proposed income tax schemes to offset milk price volatility? How far have fixed price schemes gone to reduce volatility?
The availability of voluntary fixed price milk schemes has been a positive step forward, and certainly in 2015 and 2016, they played an important role in boosting cash flow for the farmers who participated in them.
Farmers would be concerned with some add-on conditions being added to these schemes. In our opinion, these kinds of add-on stipulations should be avoided.
In terms of tax schemes to offset volatility, ICMSA is disappointed that such a scheme was not included in Budget 2018. We designed and presented a Farm Management Deposit Scheme that would have greatly alleviated the kind of wild income swings that we saw between, for instance, 2016 and 2017.
We have met with Minister Creed again recently on this matter.
In terms of the hold-up, it may be due to concerns about whether this constitutes state aid, and the cost of such a scheme, but ICMSA sees it as an absolute requirement going forward, if we’re anyway serious about excess price and income volatility and measures to protect the family farm structure which is under threat.
What are the limits to Irish dairy expansion? Could it take over all the lowlands?
I don’t believe that it will take over all the lowlands, and it is important that we maintain a mix of farm enterprises from tillage to beef to sheep to dairy. In terms of how dairy will go, that depends on its profitability, and also the regulation of farming, which is tightening all the time.
How close run was the nitrates derogation approved for Ireland in December? How much would it set back dairying if scrapped?
Compared to other countries, I believe Ireland has a good story to tell on water quality, and the retention of the derogation is justified.
We would certainly have concerns in relation to some of the new conditions attached to the derogation, and we believe they must be implemented in a practical and common-sense fashion.
Without the derogation, approximately 7,000 dairy farmers would have had to reduce stock numbers, or take additional lands, and it would have been a massive and fundamentally unjustified setback for Irish farming.
35% of Dairygold dairy farmers see land availability as a significant constraint to expansion. Is paying too much for land a dangerous trap for dairy farmers?
Land availability and labour are probably the two big constraints at present.
Whatever a farmer pays for rented land must be based on the economic return that can be got for that land. If there isn’t a reasonable return, then they are only fooling themselves. People need to be very cautious on this matter,
because the bill has to be paid whether the milk price is good or bad, and my own feeling is that if scale is the answer, then you’re very often asking the wrong question.