Cork dairy farmers detail cautious expansion goals

Dairy farmers in Cork are on track to deliver a 30%-50% increase in milk output by 2020, with the growth to come from greater efficiency more than from extra livestock, industry experts told an AIB event in Vienna Woods Hotel, Cork.
Cork dairy farmers detail cautious expansion goals

Agri consultant Michael Keane said Cork is already home to Ireland’s strongest dairy region, with its 1.4bn litres of milk annually representing 25% of Ireland’s total output. The county’s 70-cow herd size is higher than the national average of 65 cows. The county’s growth ambitions are likely to create 10,000 jobs, predicated on cow numbers rising from 306,000 to 400,000 and output rising from 1.4bn to 2.1bn litres annually by 2020.

“This is the first time in 31 years that farmers can produce as much milk as they want,” said Dr Keane, recently retired from UCC and author, with CIT’s Declan O’Connor, of an extensive survey of Cork’s dairy sector. “Ireland is the best placed country in Europe to expand in the post-quota era, and Cork has the longest grass-feeding season.

“Some European countries are saying their output will either be zero or 1%. After 31 years of near stagnation, Ireland generally and Cork in particular looks set to exploit its competitive edge in terms of climate and grass feeding, and may become the world’s most rapidly developing region for dairy production.

“In the 18th and 19th centuries, Cork Butter Mart was a world leading dairy hub, and it may be set to return to similar global fame once again.”

The report, conducted for Cork County Council, also found caution among farmers, who cited concerns as regards global price volatility, uncertainty about the impact of EU policy on income, local water quality, and transport infrastructure.

The study predicts Cork roads will see 28,000 extra milk loads each year, as well as new, larger milk tankers. This traffic surge will require an urgent investment in road infrastructure in the county.

Of equal concern to farmers is their dependence on EU farm payments. In 2014, farm income averaged at €65,000. In 2009, it was €25,00; without EU income supports, most farmers would have had zero income for the year.

The Cork dairy report amalgamated farmer surveys conducted by Cork’s main co-ops in the previous 12 months. As such, Dr Keane noted that Cork farmers’ average forecasts of a 50% boost in milk output may have slipped in the interim, thus explaining the 30% forecast in AIB’s latest dairy sector survey.

AIB agri advisor Tadhg Buckley said two thirds of Cork’s dairy farmers plan to increase their milk output, but half of these farmers will only boost volumes by 10% this year. Of those expanding, 42% will increase livestock numbers, but 44% will boost their yield per cow, with 14% aiming to boost volumes through improved grass use.

“Peak lending to this sector was in 2009, when farm lending stood at €5.5bn,” said Mr Buckley. “That figure now stands at around €3.7bn to €3.8bn. That reflects a significant payback by farmers, and shows that Irish farming is trading well.

“Substantial investments will be made in the sector, which is now much stronger than it was five years ago. A survey of AIB’s farmers shows that about two thirds are planning to increase their milk output, but most of them are planning to do so by being more efficient with their existing family farms, and only expanding by very modest amounts.”

AIB has a team of 14 agri advisors nationally, and it has set aside a €500m fund for the sector, but farmers also qualify as Ireland’s most vibrant SME category for funds covering energy, export finance, and property.

AIB regional director for Cork, John O’Doherty, outlined facilities such as the bank’s farmer credit line, farmers’ options for SCBI loans, and a range of short-, mid-, and long-term loan options.

Mr O’Doherty said AIB is Ireland’s largest provider of seed capital to new startups, early stage companies and the agri-food sector. He said 2014 was a significant year for the bank, with its return to profitability helping the bank in its lending commitments to business and agriculture.

He said AIB often views Cork as a bellwether for its performance, due to the depth of its services in the county, and he urged farmers to talk to their local AIB agri advisor.

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