Maximise efficiency or pay penalty
A Teagasc dairy advisor has told a seminar on "Future Viability in Dairy Farming" in Co Limerick that the average middle income dairy farmer will lose 20% of their current income by 2008, unless measures are taken to secure another source of income, increase production, and maximise efficiency on the farm.
David Cussen told farmers at Adare that spending time planning the financial aspects of their business will be critical. "Figures will become more important than the spade and shovel", he said.
He said that the dairy farmers will have to become super efficient at production, know their cost of producing a gallon of milk (which many producers are unaware of), and plan the business structure that will deliver the most profitable results.
"Every dairy farmer must know what it is costing to produce a gallon of milk. Farmers are asking if they should buy more quota. There is no point in buying more quota if you don't know what it is costing you to produce milk. You could be working for nothing".
A typical farmer with 52 cows and 32 livestock units of cattle in 2004, earning €34,500, will earn only €27,000 in 2008, without action. If the farmer improves efficiency and joins REPS in the meantime, the drop in income from dairying will be avoided, and by improving efficiency, participating in REPS and producing an additional 25,000 gallons of milk, income can be improved to €38,000 by 2008.
Mr Cussen said that a farmer producing 63,000 gallons of milk in 2004, on a low cost base, will need to increase output to 87,000 gallons, with maximum efficiency, to maintain the current income through to 2008.
On efficiency, he advised that investment in re-seeding of pasture is one of the most profitable expenditures. He warned, "It is a waste of time spreading fertiliser on some of the pasture that I see around the country".
