Opinion

Dale Farm announcement widens North-South dairy split

Confirmation of the two new production incentives announced last week by Dale Farm is further evidence of the growing production divide that now exists between the dairy industries on the island of Ireland.

The aforementioned measures, one targeting new entrants and the other encouraging the production of milk the year-round, confirm yet again that processors north of the border are committed to securing milk 12 months of the year.

And, what’s more, they are prepared to pay for this commitment on the part of farmers.

Meanwhile, the southern co-ops and Teagasc remain totally wedded to the principle of getting as much milk as possible from grazed grass. At one level, this makes perfect sense. Irish dairy farmers should be getting as much milk from the cheapest source of feed available to them – grazed grass.

But the downside to all of this is the fact that southern processors have invested in capacity based solely on a strategy that allows them deal with their peak milk supply.

As a result, large swathes of stainless steel are left in moth balls for most of the year.

It strikes me that such an arrangement is a very inefficient way of running a dairy business. Surely it makes sense to have a milk processing site running at optimal efficiency levels the year-round.

One way of doing this would be to offer dairy farmers in the Republic a decent winter milk price. But, of course, events may come around which will force the hands of Glanbia, Dairygold et al on this matter.

If milk growth in the South continues on at current levels, dairy farmers will soon run out of grazing land.

In such circumstances, they will have no option but to start putting up ‘real sheds’, making ultra high-quality silage and committing to keep cows indoors for longer periods of time.

Once this scenario starts to appear on the horizon, producer payments systems that reflect such a reality will have to become the norm.

And this would be no bad thing. Producing milk from silage and meals can be every bit as efficient as that produced from grazed grass.

This assertion comes with the proviso that the forage conserved is of sufficient quality and there is total control in place over the meal feeding strategy employed.

I also hold strongly to the view that a focus on high-quality silage making in no way dilutes the image of Ireland having a grass-based dairy industry. Problems will only arise when the silage made is not up to scratch.

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