Wake-up call for Irish dairy farmers

The international speakers at Dairy Day sent very clear warning messages to Irish dairy farmers.

Dutch dairy farmer and former FrieslandCampina director Harm Holman said: “Don’t go Dutch. The Dutch are the best farmers in the world, but the only thing is (and it’s rather silly) we don’t make profit.

"Are you going to do the same stupid things we did in the past or are you willing to learn something from the Dutch?”

Harm then went on to explain the drive to increase cow numbers over the last 10 years in Holland that left very little extra money in farmers’ pockets.

He said: “In Holland, we doubled the number of cows, doubled the labour required and still make no money. I’m afraid that will be the same in Ireland.

"In Holland, 10% of farmers have €2 per litre of debt and the average is about €1.20 per litre of debt. That means on average a 10,000-litre cow has €12,000 of debt hanging around her neck.”

Harm went on to qualify that he expects Irish farmers have made money from expansion to date but as stocking rate increases the possibility of making more money goes down.

He said: “We are not allowed to produce more milk now and if we want we have to pay €8,000 per cow for phosphate rights to milk one more cow and then the extra cost of buildings, etc ... it’s nearly not profitable to milk more cows.”

Harm's own farm

Harm explained his own farm situation where he is producing 9,800 litres per cow for 170 cows at 4.35% fat and 3.73% protein and at the moment he is achieving 45c/l.

He explained this is the top of the market and milk price will fall.

His debt repayment is €100,000 per year to Rabobank and he said he was lucky because a lot more Dutch farmers with higher cow numbers have a lot more debt and some are paying as much as €420,000 per year over a 25-year loan period.

Industry level

Harm finished by saying: “If you want to milk more cows then you should do it to make more profit.

"At an industry level, if you really want to be a competitive player then you have to restructure the Irish industry because in your current scale you are too small and too focused on powder.”

He suggested that the price of land could double in five years’ time in Ireland as land was a safe investment and in the Netherlands land was making €50 to €100,000 per hectare.

Later in the session, speaking on Skype from Cork, industry analyst Joe Gill suggested this land price prediction was wide of the mark and wouldn’t happen.

New Zealand

Greg Gent, one of the other international speakers in this session, also sent a clear picture that New Zealand milk production was peaking.

He said: “It is not possible to get rights to milk cows in some parts of New Zealand.”

Figures from New Zealand this week back up the claim that farmers are beginning to reduce cow numbers.

The latest DairyNZ stats show cow numbers are dropping and are down by 136,000 in the 2016/2017 season. This is the lowest cow number since 2012 and the total New Zealand herd is now 4.86m cows with average production 381kg MS/cow (4,259 litres per cow).

The challenge for the New Zealand dairy industry is bringing the public with them as some of the challenges of the sector start to work against the industry.

Greg said: “As an industry, we stopped talking to the public after the merger of Fonterra in 2001. "We acted as if they had disappeared. We should have continued to tell the dairy story and that New Zealand dairy farmers care for the environment, etc.

"As the Irish industry grows, make sure you continue to bring the public with you and tell the story of dairy as it happens.”

On merging dairy companies, Greg said Fonterra was too slow about bringing independence into the board room.

He said: “it took us too long to shed the past and we were too risk averse around people and systems.”

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