While welcoming the demise of EU milk quotas, IFA National Dairy Committee chairman and North Cork dairy farmer Sean O’Leary is urging dairy farmers to thread carefully and not to set unrealistic goals for themselves.
March 31 last was a red-letter day for the country’s estimated 18,000 dairy farmers as it marked the lifting of the milk quotas after 30 years in which they were restricted on the amount of milk they could produce. Now, new rules mean they can produce as much milk as possible.
With world demand expected to grow significantly over the next few years, the end of the milk quotas provides Irish farmers with a golden opportunity to substantially increase their milk output. Indeed, many producers and dairy processing co-operatives have invested heavily in preparation for what is an exciting new era for dairy production in this country.
Sean O’Leary is optimistic about what the future holds for the sector, but stresses the need for good business planning, allied to support from banks and processors, for farmers.
“These are exciting and interesting times,” says Sean, who has increased his own dairy herd by 50 per cent from 80 to 120 cows.
“It’s the first time in three decades that there has been an incentive for dairy farmers to grow their business. But it’s going to mean a lot of extra work, especially during the calving season, and how farmers allocate their time will be crucial. For farmers who are expanding, there is a lot of investment involved, but hopefully it will pay off in the long-term for them and the co-ops.
“What I would say to farmers who are expanding is to be realistic and not to take on more than they can handle. There is a mad burst of enthusiasm at the moment, but there will be many ups and downs – and I’m not just referring to milk prices – which they must be prepared for.
“Producers need to have their cash-flow right and a bank that’s prepared to support them. The banks seem to be showing a bit more flexibility now, which has to be welcomed. It gets tough once you go over 100 cows, but I believe young people coming into dairy are better at organising their time than previous generations and won’t be ‘tied’ to the milking parlour to the same extent.”
Sean, who supplies to Dairygold, is confident that dairy farmers will proceed cautiously in developing their business.
“Facts would suggest that Irish dairy farmers are well-placed to capitalise on the end of quotas and, in doing so, help develop the dairy and agribusiness sector with major increases in direct and indirect employment, which an IFA study estimated at 9,500 extra jobs, and upwards of €1.3 billion annual additional export revenue,” he continues.
“According to research carried out by Ipsos MRBI for AIB Bank, the average level of indebtedness of Irish dairy farms is €62,000. This compares with over €800,000 on the average Dutch farm and €1.4 million on the average Danish farm.
“The same study suggests that 63 per cent of Irish dairy farmers are planning to grow their milk output by 2020, but of these, only eight per cent will increase production by more than a third. Expanding farmers intend to increase yields per cow (44 per cent), improve grass management (14 per cent) with no than 45 per cent planning to increase cow numbers. Hence, most who plan to expand will proceed with moderate, cautious and sustainable growth.”
The burgeoning US, Chinese and African markets are among those that are set to be targeted by Ireland, which already exports around 90 per cent of the milk it produces.
“We farmers and our co-ops have been planning for the end of quotas for a number of years now,” Sean explains.
“Co-ops like Glanbia, Dairygold, Kerry, Lakeland and others have made major investment in additional processing capacity. The Irish Dairy Board has identified new markets for existing and new products, and has already started new routes to export markets for growing Irish milk supplies. Farmers have increased their young stock and invested in extending and improving their on-farm facilities.
“Farmers are undoubtedly excited at the prospect of being able not only to grow their milk production, but also to better run their farms without the counter-productive management impositions quotas had created on them over the years. However, we have already for some time operated in a global market, increasingly influenced by weather factors, economic shocks and geopolitical events anywhere on the planet, which result in challenging volatile prices.
“Together with co-ops and other stakeholders, and with supportive taxation policies, I am quite confident that Irish dairy farmers will deliver fully on the Food Harvest 2020 targets for the greater good of the Irish rural economy.”
Sean is in his second year of a four-year term as chairman of the IFA National Dairy Committee, whose members meet roughly every six weeks. Previously vice-chair, he has held numerous senior IFA positions, although acknowledges that none were as challenging as his current role which is hugely time-consuming and involves regular treks up to the M8 to IFA headquarters in Bluebell on Dublin’s Naas Road.
From 2001 to 2004, Sean was IFA North Cork chairman, and from 2005 to 2009, he was Munster vice-president of IFA and chairman of the IFA Project Team on Climate Change. In the latter position, he was the voice of IFA in Brussels on climate change issues. He has also built up considerable expertise in animal health issues in his capacity as North Cork and National Dairy Committee representative on animal health within IFA.
Sean lives on a 160-acre farm with his wife Fidelma and their children, Daniel (17), Orla (14) and Valerie (11) at Mourneabbey, near Mallow. He admits he would not be able to run the farm without the help of his brother Barry, who spends just as much time in the milking parlour as Sean does himself these days!
Taken from Irish Tractor & Agri magazine Vol 3 No 4, May 2015
