Family farming under pressure in Germany

The last report on Germany looked at the large farms in the northeast of the country. There, average herd size is around 350 cows and there are many farms of over 1,000 cows. But you would be mistaken for thinking this is the norm in Germany.

The state of Bavaria is the largest region in Germany, with a land area the same size as Ireland. There are 19,000 dairy farms and 965,000 dairy cows in the region, which is in the south eastern corner of the country. Average herd size in Bavaria is 50 cows per farm, smaller than the Irish average of 70 and much smaller than the big corporate farms in the east.

I stayed in the town of Wasserburg, about an hour east of Munich. This is family farming country. Herd sizes greater than 100 cows are very scarce. Most cows calve all year round, supplying fresh milk to dairy companies for processing mostly into liquid milk and soft dairy products. Most farms have their cows housed in old-style barns or cubicle sheds all year round.

But grazing is gaining some momentum, driven by a higher milk price (extra 1c/l) for herds that have access to pasture. Driving through the countryside, the skyline is dominated by the Austrian Alps. Farmers close to the Alps move some or all of their herd up to graze the slopes during the summer.

Some of these arrangements involve leasing cows to farmers up in the mountains who milk them for the summer and also make and sell cheese. The farmers grow crops and cut silage on the land around their farms.

Thirty-six per cent of the cows in Bavaria are kept in tie-up stalls. The rest are kept in more modern free-stall cubicle sheds. Big grants are available from the state to convert from tie-up to free-stall barns. There is also pressure on farmers to change as some milk processors collect milk from tie-up barns separately. Of the 19,000 dairy farms in Bavaria, 1,732 (9%) are milking with robots.

Cow type

The overwhelming majority of cows in Bavaria are Fleckvieh. The breed is extremely popular in this part of Germany, and also in Austria and the Czech Republic. Of the 965,000 cows in Bavaria, about 750,000 are purebred Fleckvieh. According to milk recording data, average lactation yield is 7,595kg at 4.17% fat and 3.53% protein.

The red and white cows look like Simmentals, but with good udder conformation and lots of milk. There is a common Fleckvieh breeding programme across the three countries. The total merit index is similar to EBI but the weightings on production and fertility are different. There is a lesser weighting on milk solids and fertility as these countries are not seasonal calving.

One of the big selling points for Fleckvieh is their better fertility and higher beef sales. According to official data, average non-return rate (percentage of cows not returning to heat) after eight weeks is 63%. Calving interval is 396 days on average in Bavaria.

On-farm

I visited the farm of Uwe and Waltraud Hoerl. The Hoerls are milking 50 cows. They have 13ha around the farmyard, 11ha for rearing their 37 heifers and another 25ha for growing winter feed. They are farming 49ha in total and about half of this is rented.

Land values are cripplingly high. One hectare costs between €100,000 and €150,000, while it costs about €800/ha to rent land. The Hoerls are debt-free and they plan to sign over the farm in a few years’ time to their son, who is currently working as a builder.

They are unusual for the area in that they are seasonal calving, with most of the herd calving between October and December. The move to a block-calving system came about from a desire to produce more milk from grass. After returning from a trip to Ireland, they started grazing properly about eight years ago. Then in 2011 they decided to turn organic.

The big difference in being organic producers is that they can’t use fertilisers and can only purchase organic feed. Cows go to grass in mid-March and usually stay out day and night until early October.

When I visited at the end of January, all cows were inside eating a diet of grass silage, maize silage and sugar beet pulp along with barley, granola and grass pellets, mixed in an old Keenan diet feeder.

The cows are milked in a five-unit double-up parlour twice a day. The cows produce about 7,500l per year, at 3.35% protein and 4% fat.

The base price for organic milk is 48.85c/l, which Uwe said is about 10c/l above the conventional price. When they started organic in 2011, the price was about 6c/l above the conventional price.

Uwe said there is no demand for more organic milk in Germany and is fearful of a price drop. He said that if he was supplying milk all year round they would be getting a 0.3c/l top up on all milk. He has joined forces with two other organic farmers in the area to sell their milk to an organic milk processor.

As is the case with a lot of dairy farmers in the region, stock sales are a big part of the farm’s income. Stock sales on the Hoerl farm were hit over the past year because of an outbreak of lungworm in youngstock. Bull calves are sold at four to six weeks old for €500/hd. There is no premium for organic calves.

Calved heifers suitable for organic are sold for €1,950/head. They normally sell 12 heifers but only sold five this winter. Cull cows are sold directly from the parlour, averaging 380kg carcase weight, which explains how big the cows are.

Before I left I asked the Hoerls if they or their son had any interest in expanding and they started laughing.

“Why expand? The barn is full and land is limiting. If we had more cows we would need to build another barn and find more land. Plus, young people are scarce. Most farms here don’t have labour and can’t get labour so we have contractors doing a lot of the machinery work to replace labour.” Uwe said.

While the Hoerls are unusual in that they are organic producers and grazing grass, their mindset is similar to most farmers in Bavaria. They have no interest in taking on extra cows or expansion. Family labour, stock sales and decent single farm payments make a huge contribution to cashflow. Many farms in Bavaria also have a renewable energy business, using biogas or solar panels to feed power back to the grid at attractive feed-in tariffs.

One thing is clear, though, while the land they are on might be worth millions, very few of the farmers are driving Ferraris. Margins are tight and free cash is scarce even after a high milk price year.

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Good profit monitor results for 2017