'Nonsensical' plans bad for dairy sector

Thu, Nov 22, 2012, 00:00

Dairy farmers have been cautioned against engaging in “nonsensical” talk about expanding their farms as they prepare for the ending of milk quotas in 2015.

Up to 400 farmers gathered at the Teagasc national dairy conference in Mullingar yesterday to hear speakers address the question: “Is Ireland ready for more milk?”

When the EU dismantles the milk quota system, it will be the first time in more than 30 years that farmers have the freedom to produce as much milk as they like without being penalised. Many are already gearing up for expansion, according to Teagasc researcher Dr Laurence Shalloo, who said 100,000 additional dairy replacement heifers were born this year, compared with 2008. This indicated that farmers were preparing to increase their milk production substantially.

However, Teagasc director Prof Gerry Boyle warned farmers to consider the risks when planning ahead. “There’s a lot of talk, in my view, about expansion, which is often, unfortunately, nonsensical,” he said. There was a view that the only thing farmers needed to do to be successful was to increase the scale of their business. “But every farmer here knows that the only sensible and safe strategy on your farm is to do whatever it takes to make more money for yourselves and your families, but at minimum risk.”

Borrowed money

He said if a farmer was not efficient to begin with, then borrowing money to expand the farm was not going to change this. “More importantly, if efficiency isn’t right, a strategy of expansion could be highly risky and could put the farmer into severe financial difficulty.”

International dairy consultant Mark Voorbergen said consumers should prepare themselves for higher dairy product prices in the coming years. He said there would be market turbulence after milk quotas ended but ultimately prices would continue to increase because of the growing world population and increasing global demand for dairy products. Dairy products have increased in popularity in countries such as China, India and Japan as their diets have become more westernised.

“I think consumers around the world will have to get used to paying more for their dairy products,” Mr Voorbergen said. Higher prices might encourage people who had recently introduced dairy products to their diets to return to their original diets, he said, or manufacturers might start using non-dairy substitutes in their products.

On the land: Who's milking it

18,000

Number of dairy farmers

1.1million

Number of dairy cows

2015

Milk quotas ending

€133 million

Total penalty paid by Irish farmers for producing too much milk

€68,570

Average dairy farmer income