Cause for New Year optimism in dairying
What worries most dairy farmers isn’t what needs to happen at farm level, it’s the apparent lack of progress in preparing for efficient processing and marketing of the extra milk, in order to give farmers the best possible price and to minimise periods of relatively low prices.
Most experts predict strong growth in demand for dairy products, mainly driven by developing markets.
Studies show that the relative cost of milk production in Ireland is low compared to other EU countries, except Poland. They estimate that the cost of milk production in Ireland is about 25% lower than in Britain, Holland, Germany or France, and more than 33% lower than in Denmark, Sweden or Finland. This should give the Irish dairy industry a significant competitive advantage.
There has been matching optimism at the last two Teagasc dairy conferences, Entering a Decade of Opportunity, and The Irish Dairy Industry: To 2015 and Beyond.
The proceedings of the latter conference lived up to its title, with a generally an upbeat atmosphere at the conference which dealt largely with expansion at farm level.
Head of Moorepark, Pat Dillon, outlined the challenges and opportunities that will arise with the abolition of quotas in 2015. He emphasised the vast potential for increased production that can be got by making better use of our grassland. For example, average utilisation of grass on dairy farms, according to the National Farm Survey is 6.6 tonnes of dry matter per hectare, while the current utilisation in Moorepark is 11 to 12 tonnes per hectare.
Utilisation close to this figure is also being achieved on some top farms. Obviously, it may not be possible on heavy land, especially in wet years. But most farmers could increase grass production and utilisation by more than 50%, through reseeding, proper fertilisation, better facilities, and appropriate stocking rates. When the opportunity for increasing cow numbers arises, we are likely to see a vast improvement in stocking rates and grass utilisation.
Analysis of the National Farm Survey data shows that, given the infrastructure on farms and expected gains in productivity per cow, the existing population of dairy farmers could increase national milk production by 72% by 2020. There are also the 220 or so stand-alone newcomers to dairying who have received about 44,000 gallons of free milk quota from the new entrants scheme, in the past three years.
However, when anticipated farm exits from milk production and costs of expansion are considered, the projected figure for the milk supply increase falls to between 10 and 50%, largely depending on milk price.
We could maintain the vast majority of our present family dairy farms with a fairer distribution of quota between now and 2015. Unfortunately, this is unlikely to happen, because of pressure on the Department of Agriculture to opt for less and bigger dairy farms.
