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Dairy Industry prepares to Exploit Growth Opportunities

Growing a farm business can be highly rewarding, however, it is not without risks and not for the faint hearted. That was the advice from James Allen from AgFirst New Zealand who was speaking at the Teagasc National Dairy Conference in Cork today, Tuesday, 15 November.

Addressing the dairy farmers and industry representatives at the conference, James Allen said: “You must be clear on the reason for growing your business. You need a simple plan and this will help you communicate your future direction with all those involved, including family members, staff, adviser, and bank manager. “

He warned that the number one reason for the failure of many business start-ups and expansions is poor cash flow management. “Your business must be cash flow positive in all years, you must have a realistic level of borrowing, and you must take ownership of cash flow management and not leave it to somebody else.”

On the potential for future growth in milk production in Ireland, Head of the Teagasc Animal Production and Grassland Programme, Dr Pat Dillon said: “Following a once off increase in milk solids production when quotas are removed, Ireland should aim for a 5% increase in milk solids production on an annual basis – 3% from increased cow numbers and 2% from increased milk solids yield per cow. He said that the trend in numbers of dairy female calves born in recent years indicates that the increase in cow numbers is on track to be achieved. Increased stocking rate is possible on many farms but grazing management skills will have to be improved.”

Dr Dillon said: “Increased grass utilisation will lead to higher profits – for every one tonne of additional grass utilised on dairy farms, net profit has been shown to increase by €162 per hectare as measured by the Teagasc National Farm Survey.
Increased stocking rate will lead to increased milk solids production per hectare.”

Teagasc Director, Professor Gerry Boyle announced that Teagasc will be rolling out a new professional training course for dairy farm managers in 2012. This is one of the initiatives identified in the Food Harvest 2020 report and arises from the demand from many dairy farmers for a professional dairy managers programme. Information meetings for mangers interested in the course will take place later this month.

Dairy farmer Denis Finnegan, from Coachford told the conference that efficiency must come before expansion and he advised dairy farmers to make sure to have surplus replacements on the ground before expanding. Jim Delahunty, a dairy farmer, from Carrig, Birr stressed the importance of growing more grass to graze more cows. He highlighted the benefits of reseeding and grass budgeting to increasing grass utilisation on his farm.

At the conference there was also a panel discussion on ownership models for dairy businesses. Alternatives to the sole trader business operating model are available. These include farm partnership, incorporation as a farming company and equity partnership. These offer advantages but need to be carefully evaluated for your individual situation.