The quote of the day at the 2018 Positive Farmers Conference came from Dr Pat Dillon, head of the animal and grassland research and innovation programme in Teagasc Moorepark: “You can’t build a business on high cost.”
As always, infectiously enthusiastic, Pat pounded out the facts, concluding that there has been a massive increase in overall efficiency. We are producing 35% more milk today, over when quotas came in, with 17% less cows and the composition value of that milk has increased significantly. But he insisted that the cost base of the business is critical, asserting:
Margin is everything.
In farmers’ language that’s profit. Generating profit is what the business has to be about and then what we do with that profit is also critical. A key message throughout the day was that the base business must be at peak efficiency and profitability before expansion is entertained. This is a major point of contention between the young and not so young farmers.
It has to be resolved on each individual farm. Delaying expansion may seem a disastrous strategy for the young enthusiastic farmer, but might just be prudent for the business. There is only one way to know for sure and that is by measurement and knowing exactly the farm’s cost base.
Pat also highlighted the need for recognising the challenges facing the industry, not least among them sustainability and being cognisant of protecting the environment.
REACTING TO STIMULUS
The conference serves to stimulate action with refined focus. We find that year on year. Hot from the conference, Philip was weighing the heifers to make sure they were on target for breeding. He found that only four of the 45 animals were slightly below target. The target weight now for our crossbred heifers is 240kg.
The average weight of the group is 265kg. He has weighed and measured them consistently since they were weaned last April/May. The four under will be given TLC to bring them up. It’s about equalising the group before breeding.
The day after, Tim and Colm were in front of the computer finalising the budget for the year. Then it was hands on deck to bring home the bulls from Kilcorney for a herd test.
Padraig Collins told us that the first thing he did when he moved from West Cork to a bigger farm in Co Tipperary was to make a list of all the salesmen who called to his farm and then to remove one third of them. They quickly got the message and stopped coming. The policy of buying a bit from everyone might keep a lot of salesmen happy but how is it helping the business?
There was another quote that was noteworthy because we didn’t like the message. Jim Woulfe, Dairygold CEO, told us that Dairygold
will struggle to put a three in front of the milk price as an average to the year’s (2018) end.
That is a serious note of caution and another reason to keep our costs down. We must also be profitable when the milk price drops. Many of the positive messages that Jim outlined for the co-op strategy can be applied at farm level. He emphasised focussing on business stability and sustainability, excelling at the basics, focussing on partnerships and being modern, efficient and the best in class.
I have been to quite a few of these conferences over the years and it is a must on the agenda for our farm. On the way there I was thinking of the late Paddy O’Keeffe and his energy and enthusiasm for change. I was thinking of Michael Murphy and his team who have ploughed the furrow of the grass-based system for lifetimes. You may not always agree with their strategies, but their grit and determination have to be applauded.
The guard has changed in the dairy industry. This was evidenced by the sea of young farmers in attendance. Among 400 participants there was dynamism and enthusiasm.
The presentation that stood out for me on day one was the ‘Living the Dream’ session on different pathways to being your own boss. It featured the Shared Vision Discussion Group with Joe Deane, Diarmuid Scannell and Jerry Murphy.
It also highlighted opportunities for farmers who don’t have a successor. There are possibilities and bringing a young farmer on board might be the way to generate income for both parties while embracing change. A point of note for parents was that these lads regarded travel and working away from home for a time a must. Jerry also advised that "you should always be in year one of a five year plan."
YOU MUST EARN THE RIGHT TO GROW
John Moloney, chair of DCC Plc, brought big business strategy to the table. He advised that “you must earn the right to grow”, which ties in with the Moorepark mantra. You must not move beyond that core without performance at top notch. In order to execute the plan, the key people must know what they need to do differently.
We have to get it at farm level that people matter. We are facing into a busy period and it is important to focus on the needs and roles of the people we work with.
Being agreeable will help everyone to cope with and enjoy their work. CL