“Northern Ireland dairy farmers are considerably more reliant on feed than their counterparts in the South.” This is according to Teagasc researcher Patrick Gillespie who outlined the extensive research it has done into the dairy sectors on both sides of the border.
Speaking at this week’s Teagasc dairy expansion seminar, Gillespie said: “There has been a 38 per cent increase in milk output in Northern Ireland since 1996 with no change in cow numbers. The increase in milk output has taken place due to an increase of almost 2,000 litres per cow in milk yield, largely driven by a doubling in the level of concentrates used to 2,400 kg per cow.”
He commented: “As a consequence, Northern Ireland milk production is considerably more reliant on concentrate feed than milk production in the Republic of Ireland and more exposed to feed price risk.”
He said: “This is important when we talk about building a resilient dairy sector. We are entering a new era of price volatility. Feed prices are already volatile, dairy prices becoming more so. This has to be taken into consideration when looking at the systems in both countries.”
Gillespie outlined the research was a comparison of dairy production systems the North and the South, where the work was motivated by the end of milk quota in 2015. “What is interesting about Northern Ireland in particular is that its quota has not been a binding constraint since 1985. This makes it a useful comparison to farmers in the Republic. To see what Irish dairying make look like in the future when quotas are abolished.”
However he noted: “There are important differences between the systems in the two regions. Quota is not the only policy where there are differences, there are farm structure differences and agronomic differences but key is that the systems in both countries are grass based.”
Among the key messages coming from the research is that while there have been many changes in the Northern Irish dairy industry, the returns generated by both Northern Ireland and dairy farmers in the South are similar (on a per hectare basis) and that Northern Ireland dairy farmers are not generating any additional reward to cover the increased risks associated with their system of milk production.
He discovered that expansion in Northern Ireland is associated with higher fixed costs and liabilities than found on Irish farms. “Any advantage in output that Northern Ireland had in comparison to farms in the Republic was completely wiped away by the extra input costs incurred.”
In terms of net margins, he outlined: “Net margin per hour on average is higher in the South than in the North, but individual farms will vary.”
Interestingly Gillespie found that the Border Midlands and West region and Northern Ireland are similar in terms of net margin per hour. He said this is despite a less intensive system in BMW.