Grass rich system can protect farmers from volatility

Irish dairy farmers are in a great position to benefit from milk quota abolition, but need to maximise use of grazed grass and avoid building up excessive debt.

That’s the view of Michael Murphy, a Cork farmer with dairy interests in New Zealand and the US. The organiser of the annual Positive Farmers Conference described himself as “extraordinarily positive” about the new dairy era, but cautioned that there will be “a sorting-out period in the world market”.

“I think prices in 2015 and 2016 will be lower than we would like, but there is a still a great opportunity ahead for efficient farmers,” he said.

“By focusing on the factors that you can control, farmers with low costs will do very well over time,” he said. He urged farmers to have a written target to maximise the proportion of high-quality grass in their herd’s diet.

“The grass-rich system protects you from factors outside your control – it means that you make some profit even in rotten years. The focus should now be on output and profit per hectare and not per cow,” he said.

“The key is to grow and utilise as much high-quality grass as possible with a compactly calved herd,” he maintained. “Compact calving is absolutely essential,” he added.“You need to know how much grass you are growing and match that with an appropriate stocking rate.”

Farmers need to focus on basics such as drainage and soil fertility in order to drive grass yields and utilisation. “It does not make sense to invest a lot of money in seed and fertilizer if drainage is not right.”

Dairy farmers also need to become accustomed to running monthly budgets. “Once you start expanding, you have to be very disciplined. Farming will always be cyclical, so you need to have a good relationship with your bank manager.

“Dairy farmers should remember that they are not in a race to expand – over time put all cows on the milking platform and look at long-term leasing options with your neighbours,” he said.

He said that taking on a second dairy farm should only be considered where the home unit is performing to a very high level. “Develop a cash cow first – this greatly reduces the risk.

“You also have to have a very capable team of staff in place and you need to be able to communicate the key skills effectively.

“There are a lot of good young people in the system now but they lack experience. Caution is needed – finding people who are capable of milking 200-500 cows is going to be quite difficult for a few years.”

Michael Murphy also cautioned that the current period of “extraordinarily low interest rates” cannot last forever.