Dairy expansion – get big or get out? Or is there a third option?

Dairy expansion came to mind recently and I began to compile a list of families I know who had went into dairy expansion mode and expanded their herds over the past 15-20 years but have now ceased milk production.

I was quickly into double figures of those who had tackled dairy expansion on their farm. Dairy expansion hadn’t saved them, it merely gave them a few extra years in business until their profits and spirits succumbed to the combined forces of rising costs and weather/price volatility.

It is easy for me and others to blithely dismiss these guys as begin inefficient during their dairy expansion, as if it is some sort of crime. Dairy farmers are repeatedly told to get more efficient or risk business failure. Those who respond quickly realise that, overtime, inflation will erode their efficiency gains.

To counteract this, they are then advised to get bigger while, at the same time, retaining their efficiency gains (not easy) in order to stay ahead of inflation again for another few years. If they fail to add scale or retain efficiency, they are once again at risk of business failure. And so the cycle continues.

All the while, so-described inefficient dairy farming families fall off the cliff. In effect they are jumping from the frying pan of dairying to the fire of drystock farming in the majority of cases.

The reality is, that despite 60 years of focused dairy research and extension, 90% of the current dairy farmers apparently don’t measure up to the Teagasc efficiency benchmarks. Perhaps we need to accept this is as a normal statistical distribution.

The efficiency benchmarks are raised still higher every few years. It seems that there will always be 90% of farmers below it. However the ‘get better, get bigger or get out message’ seems to be constant.

Our dairy industry – from our Minister down – seems to be hell bent on producing more milk, turning most of it into commodity-type products and then exposing this product to the vagaries of world market prices. It appears that everybody in the industry is being herded into thinking and acting the same way.

The expectation is that global dairy demand will – most years anyway – continue to outstrip supply.  This may of course be correct, but what if it is wrong or the outcomes only suits a minority? What then?

After how many years of ‘getting bigger or getting out’ dairy expansion will we have only 100 very large dairy farms? Of which, 10 will be held up as a model of efficiency, which the other 90 have to rapidly match or risk business failure. A fanciful notion perhaps, but I don’t see much evidence to the contrary.

Dairy Expansion Impact

Have we given full consideration to the economic and social implications of ‘get big or get out’ thinking for towns, villages and farming families throughout rural Ireland?

Throwing on the boots for a couple of hours each weekend to count a few cattle doesn’t qualify one as a farmer

I observe that the majority of those promoting the current thinking of ‘bigger and more’ have never farmed. Throwing on the boots for a couple of hours each weekend to count a few cattle doesn’t qualify one as a farmer. Thankfully, those at the coalface have a much more realistic view of the risks, and it is my observation, display much less hysteria around either milk quota removal or Food Harvest 2020.

Surely it is time we imagined a ‘third way’ for our current and incoming dairy farmers? An alternative to the ‘get big or get out’ options. We need fresh, independent thinking. An emphasis on product quality and diversification rather than quantity.

Surely from within the ranks of our Department of Agriculture, our various farm organisations, our Nuffield scholars and, in particular Teagasc, there is someone with the imagination and visionary leadership to visualise and implement ‘a third way’?

If so, a thriving well populated, dairy dominated rural economy will be their legacy. However, if we continue as we are- doing what we’ve always done – how will the history books measure the impact of some of these groups on our rural areas?

Read Brian’s previous article ‘Farming for Profit? Profit for Loss? here.

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