Dairy farmers urged to lock in prices for milk
He said this can help them prepare for price volatility.
“At present, dairy consumption is increasing by approximately 2% per year and dairy production is increasing by between 1% and 1.5% per year. That suggests that in the longer term we will see strong pricing for milk.
“However, there will be ups and downs, depending on seasons, how much milk is in storage, Fonterra auctions in the US, how much milk powder is put on the market, and at what time and so forth.
“People should not panic when they see the milk price dropping by 2c per litre, although one does not like to see that.
It will be up and down, and we must plan for that financially.” He said he has met all the key banks in Ireland, and there is a very clear understanding of the banking responsibility.
“Dairy farmers need capital to invest in expansion and growth, some of which will be grant-aid assisted through the new targeted agricultural modernisation scheme, TAMS.
“But the banking system must be cautious as well and insist on proper business plans and efficiently run dairy farms.”
On the cost of inputs for dairy farming, Mr Coveney pointed to the Carbery greener farm initiative.
“Over a one-year period, 20 farmers, by measuring inputs such as fertiliser, water, energy, and feed costs, have saved an average of €5,000 per farm. The highest earner is over €10,000, while the lowest was approximately €3,000.
“There are significant things we can do in terms of efficiencies in running farms and managing more efficiently, both from an emissions point of view and also from an efficiency point of view in respect of inputs and outputs.”
He said there were about 1.2m milking cows in Ireland. “We anticipate that the figure will grow by approximately 300,000 between now and 2020, an increase of 20% to 25%. That means we will need 3,000 extra people physically milking cows.
“The rule of thumb is one person is required per 100 cows.
“That is the reason we are developing new courses for people who wish to go into the dairy industry, who do not have any land or herds, but who wish to work with expanding farmers and their families in terms of increasing herd size and so forth.
“This is doable, but it must be planned and managed. However, regardless of whether we do that, there will be price volatility, and what Ireland contributes to a global milk pool will not determine milk prices one way or the other. New Zealand over the last 30 years is a good example of that.”
