Dairy expansion – Why planning is essential
The process of expansion is a stressful time for new entrant dairy farmers, said Patrick Gowing of the Teagasc Dairy Expansion Service.
“New entrants are under severe pressure for the first two-three years especially with cash flow.”
Farmers must plan effectively before expanding or entering dairying.
The abolition of quota presents great opportunities for dairy farmers to expand. However he added that the process of expansion can have a negative impact if it is not planned for correctly.
“In a lot of cases expansion is not planned. There is no money in expansion, there is only money when you have expanded.”
The amount of investment needed on each farm varies. Expansion costs are very individual.
“Borrowings of €2,000/cow are simply a guide and farmers should look at their individual circumstances before considering expansion.”
“An inefficient farmer will be crippled by borrowings of €2,000/cow but other more efficient new entrants will be able to carry a lot more debt.”
According to Gowing, a one size fits all plan will not work for expansion or new entrants. Each individual farm and farmer are different.
“Some beef farmers are able to replace one beef animal with 1.5 dairy stock and convert their existing buildings, while new entrant dairy farmers coming from a tillage base have no existing slurry storage facilities.”
Michael Doran, a new entrant dairy farmer from Wexford highlighted his experiences while speaking at Moorepark’15.
“The problem with converting is that you are not going to milk the number of cows you want on day one.”
“Next year I will be looking at borrowing €2,000/cow over 200 cows. I would never have dreamed of borrowing to this extent without my business plan.”