‘Massive variation between the profitability of top and average dairy farms’

There is massive variation in the profitability levels of the top and average Irish dairy farms, Dairy Consultant Matt Ryan has said.

Speaking at an Elanco launch in Portlaoise today, Ryan said that there is a €206 cost difference per cow between the top and average Irish dairy farms.

Given the volatility seen in dairy markets in recent times, Ryan said that low cost systems of production are key to the future of the Irish dairy herd.

There is massive variation in the profits produced at farm level, he said, but farmers operating high costs systems of production should copy what the better low-cost farmers are doing.

He said that Irish dairy farms have massive potential and this will be helped by land type, suitable weather conditions, educated farmers and the research that is being carried out at a national level.

The Dairy Consultant added that given the decline in milk prices recently, it is not surprising that dairy farmers have responded by reducing costs.

“From 2014 to 2015 they did so by 0.5c/L.

In 2015 there was a 5.9c/L difference, or €206 per cow, between the top 25% of dairy farmers and the average dairy farmer.

“This indicates the huge potential there is in the Irish dairy industry.

“The top farmers also produce 43kg of Milk Solids (MS) per cow more than Mr. Average due to their fat and protein percentage being 4.21% and 3.61% compared with 4.17% and 3.57%”, he said.

Irish dairy farmers in an unique position

Ryan also said that Irish dairy farmers are in an unique position as in 2015, Ireland had the lowest cash costs per kilogram of milk solids at €2.90/kg compared with an average of €3.70/kg at European level.

“And in the non-European zone on the world scene we have the second lowest costs as a percentage of dairy output”, he said.

He also pointed out to make the most of this unique advantage, dairy farmers should focus on two Key Performance Indicators (KPIs).

These are grass production and six week calving rate.

Key performance indicators for Irish dairy farmers: 
  • 11-14t of grass Dry Matter utilised per hectare
  • Target 90% of the herd to calve over a six-week period

“As many farmers are already reaching those targets we know they can be achieved.

“However, on average nationally at present we achieve approximately 7t DM/ha, and the six-week calving rate nationally is 58% – but improving by 1-2% per year.

“So overall, there is great potential for improvement.

But financial management and financial planning are seriously deficient in the sector at present.

“And with tighter margins prevailing these will be essential prerequisites for successful dairy farming in Ireland in the future”, he said.