Compliance costing dairy farmers €16,300 per year

Over the last decade, Irish dairy farmers have put their shoulder to the wheel when it comes to improving the sustainability of their enterprises. The actions taken by farmers is a response to the biodiversity crisis and climate emergency facing the planet.

It is also a response to the demands from Government, NGOs and marketing bodies like Bord Bia to maintain and improve the good image of Irish dairy farming.

Change has taken place and the dialogue on-farm has changed from that of purely technical in the sense of productivity or profit towards sustainability. The phrases socially responsible farming, or the licence to farm are now common parlance.

If regulation and enforcement are at one end of the spectrum, social acceptance is at the other. Both can be powerful drivers of change. Think of drink driving, it was illegal in Ireland to drink over the limit for many years, but behaviour only really changed when it became socially unacceptable to do so.

In the same way, selling male calves at 10 days of age is not illegal, but it is now socially unacceptable to do so. I think most farmers would view most of the farm practice changes that have taken place on Irish dairy farms over the last decade as being progressive and positive.

However, they have come at a cost and this article highlights some of the costs associated with the changes.

Low emission slurry €750

With Low Emission Slurry Spreading (LESS) now mandatory for almost all livestock farmers, all farmers are bearing the extra costs involved. Initially, it was just dairy farmers in a derogation that had to use LESS.

The extra costs are in the purchase of LESS tankers plus larger tractors to pull them and higher running costs with more wear and maintenance on macerators. As a result, contractors charge more for spreading using LESS.

Contractors charge around €15/hr more to spread slurry using LESS. On a typical dairy farm with 50 hours of slurry spreading per year, the extra cost of using LESS by contractor is €750. It is a significantly higher cost for those that have purchased LESS equipment themselves. These costs exclude the impact of inflation or the extra costs associated with gathering and spreading more soiled water/slurry.

Stocking rate €6,000

The reduction in maximum stocking rate from 250kg N/ha to 220kg N/ha in 2024 as a result of changes introduced after the mid-term review of the Nitrates Action Programme has impacted thousands of farmers.

Combined with the introduction of banding, it has meant that thousands of farmers have had to either reduce cow numbers, export slurry or lease extra land in order to comply with the new measures.

Ten years ago, a farmer with 100 cows needed 34 hectares and a nitrates derogation to be compliant. The same farmer with the same number of cows would need 42 hectares and a derogation to be compliant. This is presuming that the herd is in the middle band for nitrates. The additional cost of leasing the extra 8ha would be €6,000 per year.

Nitrogen rates €6,800

A 2023 Teagasc report found that reducing chemical nitrogen application rates by 10% from 250kg to 225kg N/ha would reduce farm profit by €116/ha or 5%. A 20% reduction in chemical nitrogen fertiliser rates reduced farm profit by 10% or €224/ha while a 30% reduction in nitrogen reduced profit by €322/ha or 13%.

The maximum permissible nitrogen fertiliser rate was reduced by 10% in 2023 and the plan is to reduce this by a further 5% in 2025 for farmers operating above 170kg N/ha.

Through inference from the Teagasc report, we can say that a 15% reduction in nitrogen spreading rates will reduce farm profit by 7.5% or €170/ha.

Across a typical 40ha that is a cost of €6,800. What has happened in practice is that nitrogen fertiliser rates have decreased by over 30% nationally since 2021.

Based on the Teagasc analysis, this would be costing farmers €322/ha or €12,880 across a 40ha farm. The increased costs are as a result of increased meal and purchased forage. These are very real costs for many farmers in 2024.

Keeping calves for longer €12,000

As the debate on calf welfare and calf exports continues, farmers are taking action on the ground to improve their calf crop. One of the key steps is to hold on to non-dairy replacement calves for longer on the farm of their birth in order to sell an older and stronger calf. To keep calves for an extra 10 days requires extra housing and extra feeding.

For a typical 100-cow farm that is keeping 25% of calves as dairy replacements and selling the rest, there will be 75 calves to be fed for an extra 10 days. That works out as an extra 750 calf feeds over the course of the spring.

At a daily cost of €2/day to keep a calf between milk or milk replacer, meal and straw the total cost of keeping calves for an extra 10 days is €1,500. It is presumed that there is no additional price premium for selling older calves.

The next thing to look at is the cost of providing housing for the extra calves. According to my calculations, if selling non-replacement calves at two-weeks of age, the maximum number of calf spaces required per 100 calves is 51. If keeping calves for an extra 10 days, that requirement increases to 65 spaces, an extra 15.

While the capital costs of calf houses vary depending on spec, for a basic new shed with concrete floors and penning the capital costs are around €700 per calf space excluding VAT. So, the capital cost for 15 calves is €10,500 bringing the total cost for keeping calves for longer to €12,000.

Sexed semen €1,250

Sticking with the calf theme, the use of sexed semen has increased dramatically over the last four years as farmers try to reduce the numbers of lower-value male dairy x dairy calves. There are a couple of costs to this approach; firstly, there is the higher cost of AI straws with sexed semen straws about €25 more expensive than conventional straws.

Then there is the slightly lower conception rate with sexed straws and finally there is the impact on fertility if using longer gestation length and harder calving beef bulls.

The latter points are difficult to quantify, but many farmers have observed increases in total AI costs since going down the sexed semen route.

For a typical herd with 100 cows practising 100% sexed semen, as a rule of thumb they would require 50 sexed straws in order to generate 25 heifer calves on the ground. At €25 more per straw, the additional cost is €1,250.

It can be pointed that the cost of sexed semen can be offset by having more high value beef x dairy calves to sell.

National Genotyping Programme (NGP) €600

While the NGP has been welcomed as the world’s first national programme genotyping the entire herd, it does come at a cost to farmers, albeit at a much reduced cost compared to if farmers were paying the full amount excluding government and industry contribution.

The cost to the farmer is €6 per cow per year, so for a 100-cow herd the cost of participation in the NGP is €600 per year. The advantage of participation is more accurate information on parentage, the availability of commercial beef value data and the ability to make better decisions on breeding replacements.

Soiled water €7,560

Regulations around soiled water storage requirements have changed and farmers are required to provide storage now for one month, up from the previous requirement of 10 days’ storage.

Based on the provisional estimate of 30l of soiled water produced per cow per day, that is an extra 630l of soiled water storage per cow required on dairy farms.

Across a 100-cow herd, there is a requirement for an extra 63m3 of soiled water storage. At a cost of €120/m3 to build a tank, the extra storage requirement will cost farmers €7,560 in capital costs for every 100 cows.

Total

Based on the criteria above, the typical 100-cow dairy farm has had to invest an extra €19,560 of capital in extra soiled water storage and extra calf housing. On top of this, they are incurring extra costs annually of €16,300 for complying with new regulations and expectations placed on them.