Joe Sheehy: Sensible family farmers will sail through milk price crisis

The farmer protests across Europe against low milk prices reached the island of Ireland when Northern Ireland farmers who fear they will go out of business drove their tractors to Stormont where the agriculture and rural development committee held a special meeting on the dairy crisis.

There has been a significant increase in milk production since April 1 — as expected.

Milk fat and protein are also satisfactory, and most farmers are getting the bonus for top quality milk.

Unfortunately, the milk price drop has taken the shine off the situation, and many farmers — especially new entrants and big expanders with fairly high borrowings — are finding the financial situation fairly tough.

It could be argued that some of them were coerced by banks into establishing much larger enterprises than were within their means, and were taken in by advice on the advantages of size.

The situation has not been helped by the manner in which successive ministers handed out free quota, well in advance of the ending of quotas.

To make matters worse, some over-expanding farmers have paid €300 per acre for grazing land, or may have big super levy bills to pay off.

Most of the increase in milk production is coming from existing dairy farms, which are generally medium-sized family-run farms.

Many of these will sell an extra 15 to 20% milk this year, from a modest increase in cow numbers, and only minor extra costs.

If we get a reasonably good autumn, a lot of milk can be produced mainly from grass, which was not always possible in the quota years.

As a result, the vast majority of these family farmers, sensibly advised, will sail through the current milk price crisis, and will be well prepared for the upturn.

But I am not optimistic about the future of heavily borrowed dairy enterprises, due to likely volatility in milk prices.

The potential for expansion of some family farms is limited by land availability.

However, as surveys have shown, grass production can be increased by 20-50% on most farms by more reseeding and proper fertilisation, together with good grassland management.

This suggests that there is great potential to increase cow numbers, and milk production per cow, on existing dairy farms.

I would suggest that there is the potential for an average increase of around 20% on most farms, with very little increase in cow numbers and very little extra cost, if grass production and utilisation are optimised.

Also there is the possibility for farmers who are limited by land to get heifers reared off the farm, or to buy in fodder from non-dairy farmers.

Scale

Well-run family farms continue to be the most profitable system of dairy farming, but most of the organisations concerned with the development of dairying seem to be focused very much on very large dairy herds.

These organisations include the Department of Agriculture, Teagasc, co-ops, farm organisations.

We have had a few greenfield dairy development units set up with the support of these organisations.

These are large units, far beyond the scope of the vast majority of existing dairy farmers.

These units will definitely provide guidelines to all farmers on what to do — and more importantly, what not to do. But the majority of dairy farmers would also like to see more relevant greenfield developments, that they could reasonably aspire to.

Why don’t the above organisations set up more family-sized greenfield dairy farm? Many farmers would also like to see more work done on dairy farming on difficult land, where a large proportion of our milk is produced.

The wet weather a few years ago, and in some areas this year, really exposed the differences between farming on wet and dry land. 

For decades, the importance of drainage has been ignored by Teagasc, but there seems to be more of an effort being made about drainage techniques in recent years. 

Even minimum drainage could be a huge help, and the sooner that Teagasc do something meaningful about drainage, the better for thousands of farmers in heavy land areas.

New dairy start-ups are very costly, and should not be undertaken without full financial planning and budgeting.

They are unlikely to be viable unless substantial funds and facilities are already available.

Large borrowings are ruining dairy farmers all over the world.

Despite the hype, the majority of New Zealand and Danish farmers are under the control of banks, even before this year’s bad prices.

Before changing from a family-run unit, remember that it will take the profit of at least 60 cows to pay an extra labour unit in an average year.

Family farmers can have a good lifestyle by making good use of relief milkers and contractors.

Luckily for Irish farm families, around 50% of them have substantial off-farm income.

When Minister Simon Coveney came into power his emphasis on the national importance of maintaining family farms gave great hope.

However, he seems to have gone along with the non-family-farm-friendly status quo that he inherited from previous governments.

This was never so obvious as in his decisions on distribution of the Single Farm Payment, and his handling of “greening”.

Both were obviously influenced by farm organisations who support the philosophy of the more you have, the more you get.


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