Dairy farming the Danish way

The statistics on dairy farming in Denmark are fascinating. The number of dairy cows have halved over the last 40 years, yet overall milk production has increased. There are now a little under 600,000 dairy cows in Denmark and they produce almost six billion litres of milk annually, and 10,660kg of energy-corrected milk per cow.

Danish dairy farmers are focused on producing high yields of milk per cow. Ninety per cent of Danish cows are milk recorded, compared to 50% of cows in Ireland.Feed efficiency has increased by 25% over the last 50 years- and for every kilo of feed offered, an extra 0.25kg of milk is produced. This was achieved through improved genetics and growing higher-quality feeds.

While they farm to a very high standard, their debt levels are also high. Indeed, this is probably the most striking aspect of dairy farming in Denmark. The average debt level is around €20,000 per cow, and the average herd size is 207 cows, meaning an ordinary dairy farm could carry a debt of €4.14 m. This is, by far, the highest debt level of any dairy exporting country. In comparison, the typical debt level in Holland is over €10,000/cow, New Zealand is €5,000/cow, and just €911/cow or €71,000 per dairy farm in Ireland (40% of dairy farms in Ireland have no debt).

Another key element of farming in Denmark is its co-operative nature. Arla is one of the largest milk processors in Europe and was formed by the amalgamation of several Danish dairy co-ops. Viking Genetics, the dominant bovine breeding company in Denmark, is owned by a group of farmers, as is Landbosyd – the Danish agricultural advisory and farm accounts co-op, which serves 32,000 Danish farmers. Most of the meat processing in Denmark is also controlled by farmer-owned co-ops .

All of these entities work hard to make sure Danish dairy farming survives the high debt structure. Two thirds of all dairy produced in Denmark is exported, with Arla owning well-known brands such as Lurpak and Anchor in the UK. The value of dairy exports from Denmark have increased from €2.1bn in 2013 to €2.84bn in 2017.

Dairy farms

The average dairy farm in Denmark milks 207 cows and farms a total of 185 ha. The majority of cows are fully housed all year round, but some farmers graze cows for short periods to get a premium price for their milk. How long they have to graze for to qualify for the price increase depends on what region they are in, with farmers in southern Denmark required to graze for more days than those in the north.

However, indoor systems dominate, with cows eating TMR diets of maize and grass silage, along with various different types of straight concentrate feeds. Around 70% of the cows in Denmark are Holstein Friesian and 13% are purebred Jersey. The percentage of purebred Jersey herds are increasing, as research suggests that Jersey herds are more profitable.

The Irish Farmers Journal visited Denmark as part of the European Dairy Farmers (EDF) annual congress. The EDF is an organisation made up of 325 dairy farmers, mostly from the EU, who share their costs of production and milk price figures in a standardised format. Every year, the annual congress is held in a different country, and consists of conference-style seminars, workshops and farm visits to EDF members in the host nation.

One of the most striking aspects of the farms visited in Denmark was the relative simplicity of farming operations. On Peter Timmerman’s farm, the 400-odd cows were milked and fed twice a day. There are three full time employees, along with Peter and his son Mark,currently working on the farm. The milking cow diet consists of maize, and a grass silage and corn cob mix, along with 7.56kg of pre-mix. The pre-mix is composed of 0.1kg straw, 0.3kg hay, 0.4kg molasses, 0.3kg beet pulp, 3kg soya bean meal, 3kg rapeseed meal and 0.46kg of minerals and vitamins. No meal is fed in the parlour and the cows’ produce 11,251kg of energy-corrected milk per year.

In terms of capital employed, the cows are housed in a large shed built in 2006 with sand bedded cubicles. There is one main tractor on the farm that drives the diet feeder, while it is loaded by a big Volvo loader. The feed yard occupies as much area as the cow sheds, with at least one acre of land under concrete silage pits. Contractors do the field work on the farm’s 355ha of land.

However, the Timmerman’s are not typical Danish dairy farmers. In fact, they are not Danish at all, having emigrated from Holland in 1989. They’re not alone; all bar one of the farmers in the Danish EDF grouping are orginally from Holland. The last time the EDF visited Denmark in 2006, the theme of the conference was ‘Debt is good’. Incidentally, none of the dairy farmers that were in the EDF in 2006 are still milking cows.

The price of land has fallen in Denmark in recent years, with average prices ranging between €15,000 and €18,000 per hectare. With such high levels of debt on Danish farms, it’s little wonder that the banks are very interested in on-farm performance. Anecdotal evidence suggests that the banks decide who they think is viable and find a buyer for the farms that they think are not. The number of dairy farmers in Denmark continues to decline, while average herd size has increased from 154 cows in 2015, to 207 cows in 2018.

Some Danish farmers have expanded rapidly. Jac Broeders milked 200 cows in 2005 and is now milking 1,200 cows across two units – the home farm which he bought in 1992 when he moved from Holland, and another farm that he purchased from bankruptcy in 2012. He has been expanding steadily since and now owns 850ha. All of his land is within a 10km radius of Rangstrup in central Denmark.

“I’ve had the same contractor since 1996. Back then he had 25 farmer customers, now there are only four left.” he said.

The Danish government have pledged that it’s agriculture sector will achieve carbon neutrality by 2050. Sixty two per cent of the land in Denmark is cultivated for crops, and unlike in Ireland, there is no recording or measurement of carbon emissions from individual dairy farms. At the recent Moorepark Open Day in Cork, it was stated that the average CO2/kg of fat and protein corrected milk in Denmark is 1.6kg, while it is only 1kg in Ireland.

Morten Hoyer, director of the Danish Agriculture and Food Council said at the EDF congress that Denmark will not be importing soya by 2050. Instead, protein will be derived from grass.

Costs

Figure 1 outlines the average breakeven milk price and the range for each country in the EDF. This is not the average for countries in Europe, rather it is the average for the members of EDF. Breakeven price is calculated as the total farm costs, including a lease value on the land, and interest charged on capital owned by the farm, less dairy related non-milk income (e.g. calf sales) and subsidies. Milk is measured in kilos of energy-corrected milk at standardised fat and protein.

The Irish members of the EDF have a break-even milk price of 30c/kg, a tight range compared to others such as France, whose members have a range of 20c/kg to almost 50c/kg. Over the last three years, the cost of production on Irish farms has increased by 6.4c/kg, likely as a result of last year’s dry spell.

The next EDF congress is taking place in Cork in June 2020. The event is run over three days and will involve visits to member farms.

If interested in joining the Irish EDF group, contact their adviser Micheal O’Leary at Teagasc Moorepark.

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