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Winter Milk Producers Operating in a Capped Market in a Growing Industry

Almost 200 dairy farmers attended the Teagasc Winter Milk conference held in Co. Wexford. The event, which was sponsored by AIB, combined an indoor session which focussed on the future for winter milk producers, following milk quota removal, with an afternoon visit to the Teagasc winter milk research farm at Johnstown Castle.

Teagasc winter milk researcher, Joe Patton, started by outlining how winter milk producers are operating in a ‘capped market in a growing industry’ and that each individual winter milk producer should use the removal of milk quotas as ‘an opportunity to re-imagine their farm business’.  While each farmer has a number of options, including staying the same, switching to spring milk production, increasing cow numbers, increasing yield per cow, or improving efficiency, economic analysis showed that it is only by ‘addressing on-farm efficiency that profit and cash flow can be improved’.  In relation to the biggest cost of winter milk producing farms – feed – the Teagasc researcher urged suppliers to ‘take responsibility for on-farm decisions relating to feed by acquiring the necessary knowledge’.

Cathal McAleer, a private agricultural consultant from Co. Tyrone, outlined some of the mistakes which have been made by farmers in Northern Ireland in chasing milk yield per cow, in the absence of effective milk quotas over the last ten years.  While output per cow has increased, it has come at the cost of reduced milk from forage, a decline in grassland management, increases in herd infertility problems and increased inputs.  He reckoned that the main beneficiaries of the increased milk output in Northern Ireland have been the input suppliers who have increased sales.  In the future, he urged the farmers attending the conference to adopt a target of retaining the maximum amount of the milk cheque. He pointed out that expanding your farm profit is a form of expansion and that this need not necessarily involve more cows.

Two winter milk producers, Glenn Forde and Larry Hannon outlined their milk production systems.  Glenn Forde is milking 140 cows supplying Bandon Co-op while Larry Hannon is milking 120 cows supplying GIIL.  Both recognise the importance of having ‘the right cow’ and are focussed on improving their herd genetics with a view to better calving patterns so that they can supply their winter contracts by calving the optimum number of cows in a short period in the autumn.  Both are committed to winter milk production, but would like to see more clarity from their processors in relation to the future for their milk production systems.  Both are also working on improving their soil fertility and grassland management skills with the aim of growing and utilising more grass.

Speaking at the conference Liam Phelan, Agri-Adviser with AIB, told farmers that AIB has strengthened its Agri-Adviser team recently and has a fund of €500 million available to support sustainable farm expansion.  He also urged farmers to structure their borrowings accordingly at the outset and that AIB would consider offering a 12-month moratorium on principal repayments on farm loans.