Milk will be like gold rush

Many people abandoned their jobs and trades to get rich quick in the 1850 California gold rush.

It is hard to see how the ending of EU milk quotas in 2015 will not have a similar effect in Ireland, but over decades rather than overnight.

As excitement mounts ahead of Ireland’s milk rush, many will already be plotting how they can move from barely profitable cattle farming or volatile grain production to dairy farming.

There will be intense interest in opportunities to convert beef and tillage operations to more profitable dairy operations — with access to land now under crops or cattle seen as the basic requirement to start a new dairy enterprise, or expand an existing one.

In future decades partner-ships, share farming, and cow leasing will become important mechanisms whereby beef and dairy farmers can combine their resources, to allow new entrants into dairy farming.

Only about 14% of all Irish farmers are currently in dairying. And it is likely that that percentage may not change much.

But at this week’s Teagasc National Dairy Conference, the vision of each family dairy farm aspiring to up to 150 cows means that dairying is on course to expand hugely in acreage terms, as more and more landowners chase their share of higher income from milk, with less reliance on direct payments than in beef or tillage.

Teagasc Head of Dairy Knowledge Transfer Tom O’Dwyer said there is potential for income from dairy farming of almost €98,000 for a 100-cow unit, with best practice management.

Or a return on investment in land, labour and capital is envisaged for an efficient existing operator, even with up to €4,000 per additional cow invested.

Teagasc experts at the dairy conference set out a nice aspiration — most of the milk being produced in Ireland in 2020 on farms owned and operated by a family, which makes it own management decisions, and provides most, if not all, of the labour.

The farm produces enough income (including off-farm employment) to pay family and farm operating expenses, pay debts, and maintain the farm.

The picture painted is of a typical family dairy farm of 50-55 hectares with 80-100 dairy cows, 25 replacement units, producing around 530,000 litres at 7.5% fat and protein, from a stocking rate of 2.25-2.5 LU/ha.

One full-time labour unit plus family or casual labour at peak times, plus contractors, will suffice.

Assuming a base milk price of 29.5 cent per litre, milk revenues are almost €190,000. Subtracting total production costs from milk sales leaves a dairy income figure of €54,120 and €82,820 for the ‘good’ and ‘best’ dairy farmers in 2020, respectively.

Larger family dairy farms will manage more than 150 cows with the help of hired labour and contractors, and contract rearing, partner-ships, share farming and other collaborative arrangements to streamline their business.

Dairy farmers will face huge challenges to make the right investment decisions; there will undoubtedly be some financial casualties.

But farmers and the dairy industry are preparing and planning for the off, and will give it their best shot.

Our 14% of existing Irish dairy farmers are well placed. But what about the other 86%, and the industries that depend on them?


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