‘If you don’t have a plan, don’t plan expanding’
No dairy farmer without a plan and budget should be planning on expanding, according to Laurence Shalloo, Teagasc Senior Research Officer.
“We’re all expanding as an industry, but few have a business plan and know what profit will be there. We should only expand if we have a plan in place and it tells us we will make more money and will be sustainable. For many, they are only increasing numbers because they can.”
He said the Irish dairy industry has known since 2008 that milk quotas were going to go in 2015 and since then cow numbers have been building. “Dairy heifer calf numbers are beginning to increase from 250,000 in 2006/’07 to 380,000 today. So there is a trend to greater numbers and to expand.”
However, every farmer, he says should ask themselves: ‘Where do I want to go as a farmer?’ and ‘What is the profitable expansion potential from my farm?’
The other questions that dairy farmers need to ask is how much more money will you make from the expansion and will expansion increase profitability?
One key to farm potential, he says, lie in grass production. Based on 30c/L milk price, he said profitability increases up to 2.5LU/ha up to 13t DM/ha of grass being grown. “Matching the grass supply will be where maximum profitability will be achieved. Feeding extra supplement reduces profitability at all stocking rates. The response is not good enough to justify the cost.”
However, he also warned that anyone expanding can expect to see a reduction in efficiency and productivity on farm. “If we put in a new milking parlour today, it will be a couple of years before cows are up to speed. Increased heifer numbers will cost massively on farm. We don’t expect this from the herd when we expand.”