Teagasc experts urge producers with high cost structures to cut spending

TEAGASC experts, who are predicting a dramatic decline in milk price this year, are urging producers with a high cost structure to cut spending.

The experts are warning that the projected milk price this spring could equal or exceed milk production costs on many farms.

Teagasc is advising milk producers to develop a financial plan now that establishes gross output, determines the income required by the farm family to live for the year and ascertains debt repayments.

It points out that the remaining balance is what is available to meet milk production costs in the current year.

Teagasc dairy researcher Padraig French said its programme at Moorepark is focused on developing low-cost robust milk production systems.

“This is not the year to worry about filling quota, fill it only if it pays to do so. For some producers their cost structure is such that it may not be economic to fill quota.

“Postpone all non-essential costs this season and examine every cost ruthlessly.

“Prepare a financial budget and stick to it,” he advises.

Teagasc dairy specialist George Ramsbottom said some production costs, particularly variable ones, can be reduced quickly while others will take longer to decrease.

“Feed, fertiliser and contractor costs account for almost three-quarters of the total variable costs on the typical farm,”, he said.

Mr Ramsbottom urges producers to put milking cows to grass immediately and reduce or eliminate concentrates.

In difficult grazing conditions, three-hour on-off grazing can be used.

All the protein the herd needs is in the grass.

Agriculture Minister Brendan Smith, replying to Dáil questions, said the activation of measures that were recently introduced by the European Commission to support the dairy sector will take some time to influence commercial markets and stimulate demand for dairy products.

Mr Smith said: “I will continue to monitor developments in the dairy sector closely and intervene again with the commissioner as the market situation evolves.”