Thinking big: benefits and risks of expansion discussed at Moorepark

I attended last week’s Teagasc open day at Moorepark. The place was resplendent in the sun, with manicured paddocks, no weeds and not a fencer post out of line.

The theme was “Harvesting the Potential”, in the countdown to 2015.

The presentations brought together a host of issues relevant to expansion.

Some of the topics covered were optimal stocking rates, growing more grass, breeding for expansion, herd- health management, increasing the value of milk, reducing energy costs, sustainable intensification, and labour-efficient milking.

The presentations involved key speakers, with separate, smaller, ad hoc presentations, and opportunities to meet speakers one-to-one at ‘villages’ scattered around the grounds.

One of the first speakers that visitors met was Laurence Shalloo, whose topic was “Positioning the Dairy Farm for Expansion”.

This, and many other presentations, drew attention to the fodder shortage of the past winter and spring, and farmers were cautioned about increasing production without a proper evaluation of the risks facing the business.

The presentation by Mr Shalloo covered standard business risk-analysis, a tool commonly adopted in commercial businesses unrelated to dairying.

Farmers were advised that although an extreme weather event, such as was experienced earlier this year, is a rarity, such risks need to be factored into a farmer’s plan for expansion.

Some risks can be avoided by employing preventative strategies, but where a risk cannot be avoided (prevention may not be within your control), such risks can be managed or mitigated with curative strategies.

Employing this analysis with a view on the fodder crisis, a repeat of the fodder crisis can be prevented by ensuring the farm is not overstocked; equally, it can be prevented by having enough silage in stock, which can be achieved by growing additional grass.

The strategies for growing additional grass were covered in many other presentations, such as the ideal post-grazing height, grass (seed) cultivar analysis, grass and clover breeding, and growing more grass with soil fertility management.

Curative strategies for mitigating a fodder shortage include once-a-day milking, feeding additional concentrates, or feeding alternative forages.

Mr Shalloo cautioned farmers who are entering the expansion phase. He said that risks increase with expansion. Disease, mastitis, and other herd-health risks increase as cow numbers increase. This can have an impact on the productivity and profits of the farm.

Pressure on farm finance and cash flow, due to reduced stock sales when increasing the herd, and financing the physical farm infrastructure, pose a risk in terms of the farm’s ability to service debt and provide income for the family.

Although last winter and spring were painful, the likelihood of such extreme weather events is rare compared to the likelihood of a year of low milk prices.

Many dairy farmers experience the same risks, but each farmer should assess what risks exist for his own farm, and should put together his own mitigation strategies.

For example, some farmers will have the option to enter fixed milk-price contracts.

When investing for expansion, farmers should prioritise their expenditure in ways that will deliver the most bang for their buck.

For example, increasing the soil P and K to optimal levels, or improving grass-sward quality through reseeding, will give some of the highest returns on investment.

It’s fair to say that the overall theme of the presentation at Moorepark was that farmers should expand, if it is profitable to do so, and if it will improve their livelihoods (not adding to work hours).

Before expansion is undertaken, a farmer should assess if he is already at optimal productivity.

In this context, it was interesting to see the different levels of profitability between farmers, as extracted from Teagasc farm-profit monitors.

The overall package presented by Teagasc, at Moorepark, was quite comprehensive, and certainly of benefit to all dairy farmers.

* Go online at http://www.agresearch.teagasc.ie/moorepark/for a synopsis of many of the presentations.

Kieran Coughlan Chartered tax advisor

Kieran Coughlan,

Belgooly, Co Cork

(086-8678296)


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