Dairy focus: Achieving a lifelong ambition on a greenfield site in Co. Offaly
Hailing from a 60ac farm near Rathangan, Co. Wexford – an area synonymous with the Bannow & Rathangan Show – Ciaran Kavanagh is a shining example of what can be achieved with hard work, dedication and the courage of your convictions.
At the point of finishing school, and with a brother in line to take over the family’s farm, he quickly realised that he would have to look elsewhere to make his lifelong ambition of becoming a dairy farmer a reality.
Last week, Ciaran and his wife Kathy mapped their journey to a group of 525 agricultural science students at the Irish Grassland Association’s student conference. The husband-and-wife team now milk a herd of 190 crossbred cows on a 81ha farm in Rathdrum, Tullamore, Co. Offaly.
Ciaran began: “When I finished school, I joined the Farm Apprenticeship Scheme and qualified as a farm manager. That was a three-year training course, which included practical, on-farm experience.
“I qualified as a farm manager in 1984. From there, I started working as a herdsman before moving up to assistant manager and manager on large-scale, grass-based dairy farms.
“In 1995, I subsequently moved to manage a 280-cow herd on Michael Murphy’s farm in Oldcastle, Co. Meath. After five years as a farm manager there, I resigned and hung up my milking apron on December 24, 1999.”
Two years prior to departing this post, Ciaran and Kathy had become husband and wife – a coming together that focused their minds on looking at opportunities to milk cows in their own right.
“We wanted to do something, but the opportunities weren’t there at the time due to quotas. We also didn’t have sufficient capital to fund the venture.”
In 2000, the Kavanaghs made a decision that would inevitability allow them to achieve their goal of owning and operating their very own dairy farm.
“We were driving through Enniscorthy in 2000 and we passed a small shop with a ‘For Sale’ sign in the window. Further down the road, we spotted a new housing development under construction. We felt there was a business opportunity there and, without any retail experience whatsoever, we purchased the shop.
“That was supposed to be a five-year plan, but it went on longer. We still own the shop and we have a full-time management team running it on our behalf,” Ciaran explained.
Finding a farm with potential
In 2007, Ciaran and Kathy began to look for a farm with the potential to develop into a commercially-viable dairy business.
Kathy explained: “We looked at Ireland, Scotland and Estonia; but, with the sterling difference and the price of land with the ‘Celtic Tiger’, it just didn’t work out.
The farm had to be large enough to be commercially viable. It also had to have the ability to generate enough money to pay a considerable amount of debt, employ labour and to give us a lifestyle.
“I used to find 100-150ac farms for sale and they wouldn’t have been the right shape or size,” she told the crowd in attendance.
Eventually in 2013, after a period of searching, Kathy stumbled across the 81ha holding in Rathdrum. She said: “I saw the farm come up for sale and Ciaran wasn’t too keen on where the farm was located.
“On the way up to view the farm, he said: ‘If I see one rush, I’m going home’. Of course, we did see a couple of rushes on the way over; but the minute we saw the farm, we knew it was the right farm for us.
“It was all in one block. Even though everything was in its sins when we came here, we could just see the potential. We had spent so long looking at farms that we knew the right one when we saw it,” she added.
Ciaran continued: “I saw the potential. A lot of my contemporaries viewed the farm and thought it was too wet.
“I didn’t get too hung up on that; with the right skills and infrastructure, it wasn’t really going to be a big issue. I had seen other people do it in the past and there was no reason why we could’t do it.”
At the time of purchase, the holding was in its sins. The dwelling house, located on the property, had become derelict. In addition, the farm – adjacent to a Bord na Mona bog – had been rented out for a number of years.
At a cost of approximately €7,000/ac, Ciaran admitted that the farm came at value. “A lot of people didn’t see the potential and didn’t open their eyes to the bigger picture,” he added.
Putting their stamp on the property
The Kavanaghs were quick to put their stamp on the property. On the Monday after taking ownership, a local contractor was on site to plough and reseed.
Before the end of 2013, 50% of the farm was reseeded. We also completed the majority of the farm roadways in our first year.
“We also secured 200,000L of milk quota from the National Reserve under the Dairy New Entrant Scheme. This was important, as it allowed us to sell all of the milk produced in our start up year of 2015 without and super levy fears,” Ciaran added.
Along with reseeding the entire farm, a large body of work was required to improve soil fertility. At the time of purchase, the entire farm was either index 1 or index 2 for both phosphorous and potassium.
“Since 2013, we have used a large amount of 10:10:20 and 0:7:30 fertilisers to lift both of these macro nutrients.
“Thankfully, only 10% of the farm is now index 1 for phosphorous and potassium. 90% of the farm is index 2 or 3 today,” he said. In addition, over 310t of lime has been applied to the entire farm over the past three years.
Focusing on soil fertility has paid dividends for the husband-and-wife team. Last year, the farm grew over 14t/ha (dry matter) and 11.2t/ha of grass was estimated to have been utilised by the dairy herd.
Investments in infrastructure
Along with purchasing the farm, the Kavanaghs have invested heavily in infrastructure; all of these investments were made with the view of milking 200 cows on the holding.
The best part of €800,000, over €4,000/cow, has been spent to date. Investments include: the development of 240 cubicles (€110,000); milking parlour and equipment (€221,000); fencing and farm roadways (€52,000); calf rearing facilities (€56,000); silage pits (€42,000); and other costs (€301,000).
Although the investment per cow is rather high when compared to other greenfield dairy units, the Kavanaghs feel that it is a realistic figure to budget for when converting a drystock farm to a dairy operation.
Ciaran stressed that cow comfort was to the fore of their minds when they were planning and budgeting for the investment. In addition, he said that this level of spending was necessary from a sustainable labour point of view.
He said: “It’s designed for one fit and active person to milk the cows on their own. If you want to get production from your cows, they have to be comfortable and that’s reflected in the output we are achieving here.
My plan is to semi-retire when I’m 60 , but still be involved in the business. We want to put a business in place that’s up there at the top level of production and financially solid.
“It will basically facilitate a return for us and give an optimistic young person the opportunity to grow their own business and provide a decent income down the road,” he said.
Performance and fertility
After purchasing 215 crossbred heifer calves in 2013, the husband-and-wife team milked the first batch of heifers in Rathdrum in the spring of 2015.
2016 was the second full year of milk production; 80% of the cows were in their second lactation and 20% were first-parity animals.
Last year, the Kavanaghs milked 191 cows. On average, 469kg of milk solids were sold from each individual cow in the herd; leaving the milk solids sold per hectare at 1,396kg.
Now milking a herd of 190 crossbred cows, they’re on target to sell 500kg of milk solids per cow. This level of production will be achieved from a concentrate input of approximately 900kg/cow.
Ciaran also touched on why crossbred genetics were chosen, saying: “You need the right animal for the system.
If you are looking at a grass-based system, you need a cow that’s able to go out and graze grass and turn it into fat and protein.
“We chose the crossbred cow because she is a good little worker; you have the benefits of hybrid vigour and they’re a lighter cow for heavier soils.
“You’re looking at a 450-500kg cow instead of a 600-650kg cow – they are not going to do as much soil damage.”
Along with producing the goods in terms of milk and solids, the herd is also ticking all of the boxes when it comes to fertility.
Currently, the herd is ranked just inside the top 10% of herds for EBI; the herd EBI is €99 (top 10% = €95). This spring, 90% of the cows calved within six weeks and 50% of the herd calved inside 14 days.
The herd’s calving interval currently stands at 383 days. However, over recent years, the calving start date has been pushed back by 26 days; cows started calving on January 15 in 2015 and calving began on the farm on February 10 this year.
On why the calving date was delayed, Ciaran said: “We wanted to utilise grass as much as possible and we tried to match the calving date with the start of grass growth.
“We calved in January for the first year because of new entrants quota; one of the conditions was that we had to supply milk in January. We then pulled it back to suit grass growth; it worked really well this spring.”
The financial nuts and bolts
Last year, the farm generated a gross output of 31c/L; 29.1c/L of this was generated through milk sales and the remainder was from calf and cull sales.
Variable costs stood at €2,223/ha or 13.4c/L. Feed and fertilisers accounted for over 50% of this, at 4.64c/L and 3.81c/L respectively. When compared to other farms, the feed costs are relatively high. This comes as 50% of the winter silage requirement has to be purchased in from outside of the farm.
Common costs, a parameter used to measure performance without hired labour, interest and land lease costs, stood at 19.51c/L. The Kavanaghs currently have one part-time employee working on the farm and if this – along with interest charges – were accounted for, it would add another 3-4c/L on to their costs.
The common profit generated on the farm last year stood at 11.48c/L or €1,904/ha. However, it must be noted that these costs are primarily focused on the milking herd and exclude the costs of rearing replacement heifers on the farm.
Plans for the future
Given the relative success of the business in such a short space of time, the Kavanaghs are already beginning to look to the future.
We are currently examining a farm partnership with the view to increasing cow numbers to approximately 220 cows on the home block.
“We would like to purchase an additional block of 50-60ac to rear replacements and to meet some of our winter silage requirements – thereby reducing the need to purchase as much winter silage.
“We are currently at the stage where we wish to semi-retire within the next 10 years, but still be exposed to dairy farming.
“We are open to a future possibility of a partnership or share farming arrangement with a suitable candidate. If that doesn’t materialise, then as an alternative, we would need to consider a full-time, salaried farm manager,” Ciaran concluded.