‘Dairy farmers with plans to expand should be spending money on grass growth’
Dairy farmers with plans to expand cow numbers should spend as much money as possible on grass, according to Donal Patton, Dairy Research Technologist with Teagasc.
He said that farmers must take a long hard look at the expenditure on their farm and pay particular attention to financial investments involving the grazing set up.
Patton said that many dairy farmers both expanding and not will prioritise borrowing for machines or equipment and will leave developing grazing infrastructure till last.
Grazing infrastructure is usually the last investment made on many farms, and he added that this is detrimental to the financial viability of many businesses.
“Grazing infrastructure is usually the last investment, and it is usually made after 10 years of high-cost production,” he said.
The traditional method of investing in grazing infrastructure using cash flow is no longer applicable, said the Ballyhaise-based researcher.
“The slow paced development which has happened on Irish farms over the last 20-30 years meant that farmers were doing a little bit every year.
“The sensible thing was to use cash flow to make improvements. This is no longer fit for purpose for anyone expanding at a fairly quick pace.”
However, he added that if farmers want to continue using cash flow to improve their farms they must ensure they have adequate funds to do so.
“If farmers what to reseed out of cash flow they must first identify if they can still met the banks repayments,” he said.
He also recommended borrowing the money for major infrastructure investments, this will allow repayments to be made over a longer period of time and it reduces the pressure placed on cash flow, but he added if farmers are going to borrow it must be sensible.
Patton also discussed the issue of fragmentation, and added that in his opinion it may not be as much of an issue as some dairy farmers believe.
“Fragmentation has also been identified by many farmers as an issue, many farmers say they have fragmented land if they have a 20ac block across the road.
“If you can’t physically walk a cow to the parlour, then it is not part of your grazing block,” he said.