A recent report from New Zealand indicated that many farmers there blamed the introduction if supplementary feeding, in order to improve output per cow, for the precarious financial position that they now find themselves in.
Bank lending to the dairy sector is €24bn, 10% of total bank lending.
After a slump in milk prices from 2013 to 2016, followed by a record high milk price, farmers are coming under pressure now from banks to pay debts.
Dairy sector debt is estimated by the central bank to be more than three times income.
The traditional NZ practice of drying off cows when feed was scarce, and low output per cow, would have them in even worse trouble. It was massive borrowing for rapid expansion, with the size of many farms and herds doubling and trebling in a few decades.
Alongside this are borrowings which many farmers cannot afford to pay back (over 22c per litre), and a very serious deterioration in water and river quality.
Irish farmers must be very careful not to fall into the trap of over-expansion. Some have already done so.
Thankfully, most Irish farmers responded very well to the difficult weather in 2018.
They fed extra supplementary concentrates.
This of course increased costs, but instead of a disaster due to under-feeding, it resulted in reasonably good output per cow, and cows were generally in good shape facing into the new year.
Cows that were fed properly during the spring and autumn produced very well, thanks to the excellent autumn flush of grass and adequate supplementation.
I attended one of the Teagasc grass open days in November where a Holstein-Friesian herd was producing 24 litres of high solids milk. The cows were being fed a limited amount of high quality grass plus 5kg of concentrates. The stocking rate on the farm was 2.5 cows per ha, and the end of season (mid-December) milk solids production per ha was over 1,300kg (about 7,000 L/cow). Concentrate use for the season was around two tonnes, more than a tonne above a normal year.
However with this level of production, there was still a decent profit.
The lesson is that in a difficult year, very good management is very important.
As for New Zealand, many international experts forecast that there will have to be a dramatic change in dairying in the very near future in order to protect water quality and the general environment.
The government has indicated they will act very quickly to protect the environment, including forcing farmers to reduce cow numbers and control pollution. This is not surprising because New Zealand is a long way behind Ireland regarding the control of slurry and other environmental matters.
At a recent international pasture summit in New Zealand, a prominent farmer with thousands of cows spoke of his change from a system which involved feeding some palm kernel to an almost complete grass diet. He has 3,000 cows and feeds no supplements. His farms are stocked at 3.25 cows per ha and milk solids production is targeted at 1,000 kg per ha.
I really can’t see this type of system being successful.
Optimise use of grass
For Ireland, by far the best way to overcome high costs is to make best use of our natural resources, such as our potential to grow grass and have healthy cows that are capable of efficiently converting this grass into milk.
While we have made great strides in developing efficient cows with good production, our efforts at making best use of our grassland, and at adequate supplementation, fall well short.
Surveys indicate the vast potential for increased production that can be got by making better use of our grassland. For example, the average utilisation of grass on Irish dairy farms, according to the National Farm Survey is about seven tonnes of dry matter per hectare, while the utilisation in Moorepark is 12 to 14 tonnes per hectare.
Utilisation close to or even exceeding this figure is also being achieved on many top farms.
Utilisation of 12 tonnes of grass DM (worth €2,500) may not be achieved on all types of land.
But the majority of farmers have the potential to increase grass production and utilisation by as much as 50% through reseeding, proper fertilisation, good facilities and appropriate stocking rates.
Over 50% of dairy land is seriously deficient in lime, P or K. Lime deficiency is reducing the effectiveness of P, K and N by over 50% on some farms.
Many farmers find it difficult to afford to bring their soil fertility up to proper levels, but neither can they afford not to do so.
That is why it is essential for farmers to plan their financial situation carefully for 2019.
With the opportunity for increasing milk production, we are likely to see a vast improvement in grass management and growth with appropriate stocking rates to best utilise the extra grass.
Borrowing, if necessary, for reseeding and proper fertiliser use is a very good investments.
Clover based pastures will make a big breakthrough in 2019 and will improve profitability by over €160 per cow.