Teagasc to aid farmers who want to expand in wake of milk quota

Teagasc is setting up a national service which will offer technical and financial planning advice to farmers who wish to expand following the abolition of milk quotas.

Its director Gerry Boyle said he expected the dairy expansion service would be up and running before the end of May.

“It’s not adequate in terms of the demand that’s there, or that will be there,” he said.

“But I think it will be the catalyst for providing the kind of professional financial and physical planning that farmers have come to us and said they need to support their ambitions.”

Prof Boyle was speaking at a conference in Citywest, Dublin, organised by Teagasc and the Irish Co-operative Organisation Society to mark the abolition of quotas.

He said the natural instinct of farmers was to expand.

“It’s just not in the psychological DNA of farmers to be restrained in terms of their ability to grow their business, but I think we have to be very careful.”

He encouraged farmers to become better before becoming bigger and to improve their skills before scaling up.

“Those are very, very important principles and they will repay those farmers who take them to heart.”

Increase income

Teagasc economist

Thia Hennessy

said dairy farmers would need to continue to expand production if they wished to increase incomes. In a scenario of weak milk prices, farmers would have to expand by at least 20 per cent to maintain current income levels.

They would need to expand by at least 50 per cent to increase incomes by 10 per cent or more. However, that was the worst-case scenario and if prices remained steady, farmers who expanded by 20 per cent or more would increase income by 9 per cent. Between 2007 and 2013, farmers expanded on average by 30 per cent.

Jobs

Teagasc economist

Trevor Donnellan

said research had found that the removal of milk quotas could result in the generation of about 15,000 jobs. Some 4,691 new jobs would be created on farms while a further 2,520 jobs would be created in food processing.

He said estimates suggested 7,337 jobs would be created in other sectors and in the wider economy.

The conference also saw the publication of a Teagasc study on the end of the milk-quota era which found that farmers had spent €1.4 billion trading milk quota since 1995.

It said the system prevented young farmers from getting into dairying, unless they inherited milk quota rights or had money to invest in quota. “This has inhibited the flow of new blood into the farm sector and has resulted in an ageing and possibly less innovative population of dairy farms than would have existed otherwise.”

Minister for Agriculture Simon Coveney told the gathering he was setting up a dairy forum which would encourage "honest and open discussions around how we ensure that this journey is a success for everybody . . . for small farmers and big farmers, farmers who decide not to expand for whatever reason as well as farmers who are looking for dramatic expansion".

He said some non-governmental organisations had been “hugely critical” of him for being enthusiastic about dairy expansion. He had been accused of ignoring the consequences for climate change and emissions. “In fact it’s the opposite,” he said. “We are the first country in the world that actually got our farming bodies to sign up to every dairy farm in the country inviting in a sustainable audit-based system that can actually facilitate incremental improvements.”

Mr Coveney said improvements in feed-conversion efficiency, grazing programmes, breeding programmes and water management would help farmers to be more sustainable and more profitable.