Milk price is key to dairy expansion – Donie Cashman
Milk price will be key for dairy farmers once quotas are removed, former IFA President Donie Cashman told the Teagasc Dairy Expansion seminar in Mullingar today.
He said that quota curtailed his plans to expand to milking 500 cows in the past, but price will be key in the future. He also said that when planning farmers must ensure they can ride out the bumps financially.
The founder of IFAC Accountants outlined his previous attempt to expand his dairy farm. He is a liquid milk supplier to Dairygold and currently milks 132 cows, with an average of 9,000 litres. On the farm there are 2.5 labour units. He expanded the farm from the late 1970s and was milking 140 cows in 1983.
“We had planned to expand up to 500 cows, but this was stopped by buying a neighbouring farm. Interest rates went to 18% in 1982.” Days after he became IFA President, Brucellosis testing saw the farm with 154 cows down. A dispersal sale allowed them to buy a herd of cows and allowed them to hold the quota. But, quotas stopped all expansion and was the icing on the cake that stopped his plans to expand to 500 cows. By 1986 they were back to 186 cows and by 2013 143 cows produced the same amount of milk. “Our secondary enterprise was rearing animals for sale, which has stood us well.”
Now, we have an opportunity to increase cows again. We plan to go to 180 cows and rear our own replacements. We want nothing calving after March 1 that is black and white.
His key advice was:
- Milk price is vital. Quota stopped us before, but price is key in the future.
- Interest rates are low but they can only go one way from now on.
- When expanding, do it in stages and be on top of cash flow management.
- Keep up-to-date on technical issues – be part of a discussion group.
- Budgeting and financial planning is essential. Make your mistakes on paper – if it doesn’t work on paper, it won’t work in reality. `
Answering questions from Padraig Gibbons, Aurivo Chairman, he said a spring-calving herd is vital. “The liquid milk side of the business is only going to get smaller, so you need fats and proteins at a level that will give you a decent income.
“A 7,000-8,000L producing tidy, solid cow that can walk well and will last for five or six years is the ideal cow. Keep that in mind when you are selecting bulls.” The ideal cow, he said, should be producing milk with 4% fat and 3.75 protein.
There is a lot of potential in cows that is not being exploited in cows and there are good genetics in the country already. Cows need to calve that bit earlier and that bit tidier. They are all factors that add to the profitability.
According to Frank O’Mara, Teagasc Director of Research, three quarters of Ireland’s time in the EU has been spent in a quota regime, and most people don’t remember a dairy industry without quota.
“It will be a new phenomena but there rare lessons we can learn from the past. It’s a great opportunity for individual farms and for our industry and country. the importance of agriculture in our economy is well recognised now and this is bound to have a positive impact on our economy. But we have to enter into expansion with our eyes open. From our perspective and from ICOS’ expansion must take place in a sustainable way that is viable for the farmers, co-ops and industry as a whole. Expansion won’t be the right option for many farms. On many farms they should look at and improved the efficiency of the farm.”