Managing costs key to success in farming

JAMES WALSH went from 80 to 275 cows, and shared his experiences with about 400 of the country’s top dairy farmers, at the Positive Farmers Annual Conference at Limerick — citing what he would do better the next time, differently, or not at all.

Farming 140 ha (72 ha owned) at Kilmurry Lodge, between Clonmel and Carrick-on-Suir, he now milks 275 cows with a stocking rate of 3.7 cows/ha, producing just over 1,200 kg of milk solids per hectare from grass, with 250kg of concentrates.

When he took over in 2008, a few years after returning from a year working on a dairy farm in New Zealand, the farm was carrying 80 cows plus a beef operation. One of the two commercial farmers in the Teagasc greenfield dairy programme, James has described the transition as an experience of success and pitfalls, challenging although enjoyable.

James and Sinead have three children, aged four (James); two (Emily); and two months (Rachel).

He advised farmers at the Limerick conference that careful planning of the essentials, and proper financing, cannot be over-stressed. “Pretty does not make profit,” he said. In a cost-effective expansion, the concentration should be on “the must-have” rather than the “like-to-have” or the “nice-to-have”. They can be added on at later, if desired.

He told his fellow farmers to expect year one of such an exercise to be full of big surprises, but maybe only one big surprise in year two.

Having moved rapidly from the base herd of 80 cows to 130 cows in 2009, he purchased 70 NZ-bred in-calf heifers from one herd, and milked 210 cows the following year, reaching 275 cows in 2012.

At the end of a demanding and challenging phase, he says: “We are far better-off having made the changes and taken the opportunity of expanding the dairy business. We now have a well-invested, expanding business set up for the future. The system is much simpler to manage than previously, more enjoyable, more profitable and more sustainable.

“The dairy sector is facing a period of change not experienced in Ireland for over 30 years. To progress, there is a need to question the way we do things and very often to radically change our systems and embrace the change. When changing from a traditional mixed system to a larger scale, low-input dairy system, there is definitely a need to change the way things are done and how you think.”

Lessons which were learned during the process included the requirement to make provision for additional demands on time, careful selection of a competent contractor, and a clearly-defined written operational programme.

He warned: “Whatever the budget is, reduce it by 10% before you start, and keep that 10% as a contingency fund. There is a good chance that some unexpected costs will be incurred along the way.”

He said: “The importance of monitoring costs very closely cannot be stressed strongly enough. There is a serious headache waiting for you at the end of the development stage if this monitoring is not done well, and those couple of late bills come in bigger than you thought, and there are another couple that you forgot about.”

He advised to keep the budget for year one very conservative, because performance will not be as good as historically, and very often, problems will arise which are very big and very costly.

He stressed the need to have any expansion programme properly costed, water-tight provision made with financiers for the investment needed, good communication with the bankers, and regular monitoring.

“Know your business and know what you are trying to achieve. Listen to the advice from others, but make your own decisions based on the best information you can get. It must be your own plan, because you have to live with the consequences.”

His concluding advice: “We still have a long way to go and there is plenty of room for improvement. By no means are we getting everything right or is our plan suitable for everyone else. I can only say that taking the big step has been very enjoyable so far, looks promising for the future, and has been the right option for us”.

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