The Irish dairy sector has experienced substantial growth since the removal of milk quotas in 2015, with many drystock and tillage farmers switching to dairy and existing dairy farmers increasing cow numbers.
This expansion has levelled off in recent years, but growth is expected to continue at a slower rate.
Challenges
The recently released draft Common Agricultural Policy (CAP) has thrown a spanner in the works.
With the Irish agricultural sector’s emission levels coming under the microscope, the majority of the new draft CAP focuses on reducing emissions from the sector.
Also, under the draft CAP, dairy equipment is expected to be removed from the Targeted Agricultural Modernisation Scheme (TAMS), meaning new entrants and existing dairy farmers will not be able to avail of grants on dairy equipment.
This means that existing farmers will not be able to avail of grant aid if updating their current milking parlour; similarly, new entrants will not be able to avail of grant aid on new milking parlours.
Derogation and slurry storage is also a concern for many farmers, with the proposed changes under the new CAP meaning changes will be required on nearly every farm in the country.
Earlier this year, dairy farmers supplying Glanbia received news that peak milk measures were being introduced, as the Belview plant saga continues.
Suppliers are set to be hit with peak milk supply management from January 2022, meaning expansion for Glanbia suppliers will have to stall or be hit with penalties.
It is important to note that these measures will also impact herds that are not expanding, with many herds’ production improving year on year. These herds will most likely be impacted by these measures.
So, does this mean that the dairy sector’s expansion is over?
Stock demand
To obtain some insight into the outlook of the dairy sector Agriland spoke with David Clarke from Cows.ie.
We firstly asked David about the current demand for heifers, he said: “Demand for spring-calving heifers is as good, if not better than last year.
“Farmers are beginning to enquire about purchasing stock; it is still quite early and there are not many heifers currently available.
“The scanning of cows is only starting on farms and once that is complete, farmers are able to determine if they will have heifers to sell.
“But, we do have quite a few people on the books looking for stock when they become available. Prices so far are probably €100 ahead of last year, but it is early days yet.”
We then asked David about who is enquiring about heifers, he stated: “We are seeing a mix of both new entrants and existing farmers.
“There are a lot of new entrants still enquiring about heifers. The recent announcements do not seem to be affecting new entrants yet.
“There are also a lot of existing farmers in the southern part of country in counties such as Wexford looking for stock.
“The cull cow price is quite good at the minute so existing dairy farmers seem to be happy replaying older or problem cows, with heifers.”
Finally, we asked David about what kind of stock farmers are looking for; commenting on this he said: “The enquiries we are receiving are mainly for high economic breeding index (EBI), black and white heifers.
“Farmers are looking to frontload with as many February-calvers as possible, with black and white heifers in higher demand than crossbred heifers.”
Dairy sector outlook
Although – as David said – it is still early days and the demand for heifers is only starting, early indications show expansion within the sector might not be over yet.
While there is a lot of negativity regarding the sector from government and climate groups, many former drystock and tillage farmers are still taking the plunge into dairying.
Nearly every farmer accepts that climate change is an issue and the challenges it poses must be faced head on – and that this may involve some changes to current farming practices.
However, the dairy sector offers the best financial rewards for the effort put in and the demand for dairy products internationally is expected to continue.
The implications of the new CAP are not fully known on farms yet, so new entrants and existing dairy farmers seem happy to expand or enter the sector.