Yep, it's cool to be a farmer again

Not long ago farming seemed doomed. Now it is one of the few thriving areas of the economy, and hopes are high, especially for the busy dairy sector. In the first of a three-part series, KATHY SHERIDANmeets farming families that kept the faith

THE FUTURE OF FARMING is written in the breadth of Bill Keane’s grin. “At least we’re being looked at again in nightclubs,” says the 22-year-old, with a chortle. He begins milking his father’s 148 cows as the sun is rising in an azure sky over the Comeragh Mountains in Co Waterford. By 7.45am, ablaze with energy, he is leading the way to a nearby yard where the €120,000 milking enterprise he has built for himself is almost ready for business. The 45 cows and precious 200,000-litre quota are only a start. His architect’s plans have built in capacity for double those amounts.

The year 2015 glitters in the future. That’s when the EU milk quota, a dead hand on the industry since 1984, will be lifted. Keane has been salting away money working for Waterford Farm Relief Services – while also putting in a distinguished showing at agricultural college – and during a couple of tough, eye-opening stints on vast, ruthless New Zealand farms.

For young farmers such as him, bursting with confidence, a love of the land, savings and a leg-up from the parents in the form of bank guarantees and land leasing, 2015 spells liberation. Now they’re lining up like Formula-1 racers, revving the engines, preparing to start. Appreciative looks in nightclubs will be the least of the fringe benefits. Yep, it’s cool to be a farmer again.

“It’s only a few years since Mary Coughlan was saying that financial services were the way forward and that farming was a sunset industry,” says Michael, Bill’s father. “In 2008, when agriculture leaders were flying to Brussels for the final stage of the World Trade Organisation talks, they were even being told on the plane that agriculture was to be put aside: ‘You’re only meant to be caretakers out there; just keep it looking nice.’ ”

Vindication is sweet. With whiplash speed, the agri-food industry has morphed into the economy’s best hope. A few weeks ago, at Cabinet, Minister for Finance Michael Noonan described food and agriculture as the most important driver of “growth, jobs and the creation of wealth over the next few years”.

Headlines in the fat, advertisement-heavy Irish Farmers Journal – itself bucking the trend of falling newspaper circulation – confirm the feelgood vibe: “Bright autumn for beef”, “Cereal sector on rollercoaster”, “Farm incomes expected to rise by 5 per cent in 2011 – AIB”.

A combination of the collapse in the construction industry, the general economic downturn, buoyancy in most agricultural prices, a good harvest and the imminent removal of dairy quotas “has transformed Irish young people’s attitude to farming and the sector”, writes the Journal’s editor, Matt Dempsey.

Irish lads and lassies are betting the future on the farm. Teagasc training colleges have seen an 80 per cent increase in enrolments in the past five years and had to turn away 250 people last year. The points for agricultural science at University College Dublin have rocketed from 315 to 430 since 2007.

The positivity is fizzing through a recent survey of Macra na Feirme, the organisation for 17- to 35-year-olds. Nearly 85 per cent of its members believe that the outlook for Irish agriculture is good or very good. Eighty-six per cent of young dairy farmers intend to expand in the coming years.

Bill Keane is doing pretty well already. He still lives at home and there’s no evidence of fancy jeeps, but he gets a salary of €25,000 from the family farm. Last Sunday at 6.30am he “dropped home” from a 21st-birthday party to do the morning milking and cattle feeding, kept himself awake to go to 9am Mass in Faha, caught up on sleep before the evening milking, then did a few hours’ work on the trench for his new milking parlour.

"I love it, loveit . . . Farmers are the best in the world for moaning, and it gets them there, but then they can't get out of it," he says, wolfing into muesli in the kitchen of his parents' fine new-build home. "They've nothingto complain about at the moment. Enjoy it while we have it."

We happen to be sitting across from his father, a stalwart of the Irish Farmers’ Association (IFA), an organisation whose raison d’etre, some would allege, is moaning. Michael, a mild-mannered 47-year-old nursing a new hip, smiles wryly. “I wouldn’t call it moaning; I’d call it good lobbying. In fairness, most of the time over the years, incomes were on the floor.”

His challenge is to communicate a complex truth, a sort of nervous optimism, without appearing to whinge. The fortunes of different agricultural sectors, such as dairy, tillage or livestock, can be wildly at variance, which partly explains the continuous ominous rumble from farm organisations. Farmers bristle at the notion that they get subsidy cheques for doing nothing (while admitting quietly that the system is cockeyed), but are notoriously reluctant to discuss their true income.

What is indisputable is that Michael and Breda Keane built their inherited 40 hectares into a 150-hectare holding (55 hectares of it leased) with hard labour and slow, prudent purchases and borrowings. “All private deals; no mad auctions,” says Breda, the woman who keeps a tight rein on the farm budget. She worked with the ESB for 23 years, while Michael was ploughing until midnight.

During the boom her native caution kicked in at a presentation by a now notorious property-investment guru in a packed hall in Horse and Jockey, to which “people seen to have a few pounds” were invited. The minimum investment was €250,000, and investors would pay interest only. She was the only one to ask, “What about the capital?”, and was dismissed as a pessimist. The two main banks were at the door ready to do business that night.

“I think there’s a massive Pandora’s box to be opened about that,” says Michael, who believes the fallout is already visible. A once-strong local farmer is making ends meet working for Farm Relief Services. Some hopeful sons and daughters are returning to family farms strangled with debt.

But even for the cautious, there were the “horrendous” years such as 2009, when milk prices collapsed and producers were being paid, on average, 21c a litre, four or five cent below the cost of producing the milk. Volatility is becoming a huge issue. In 2009 the average farm income was €12,000, and the income of those classed as the top third of full-time farmers was averaging just €24,000. Now the respective figures are €18,000 and €43,000.

“We were on our knees back then,” says Breda. “But nobody paid any attention.” Consumers had no reason to notice. While farmers’ incomes collapsed, milk prices never wavered in the shops.

“That period seemed to show evidence that consumers didn’t benefit from the fall at the farm gate,” says Cathal O’Donoghue, head of research on Teagasc’s rural economy and development programme, and a scientist who uses careful language.

Meanwhile the cost of energy, fertilisers and plastic was soaring, says Michael Keane. “But we’re going to have to get used to that. It’s usual that when oil prices are good, milk prices are good, because oil-production states buy our stuff, big time.”

“But all through the boom, no one even noticed we existed,” says Breda.

DID IT MATTER? Not to some farmers. For those without direct involvement, the continuous ominous rumble of complaint can obscure the fact that there are as many types of personality in farming as there are public servants. There are farmers such as William Kingston, for example.

“Nobody owes a farmer a living,” he says. “Farmers are whingeing permanently, but there’s a new generation coming.”

On a perfect September day the 40-year-old stands on a hill high above his beautiful farm a few kilometres from Skibbereen, in west Cork, gazing at his herd of 250 “easy-care” little cows – Holstein Friesians crossed with New Zealand Jerseys – grazing in a field below.

“On this farm we’re as close to New Zealand [farming] as there is in Ireland,” he says. “It’s low-cost, basically turning grass into money. That means calving the cows when the grass starts growing, and going dry in December when the growth slows down.” It’s simple, he says.

He acknowledges, though, that there is “massive science”, planning and vigilance behind the breeding, feeding and reseeding of cattle and grass. His cows eat 2.5 hectares of grass a day. A field is recycled every 21 days. The trick is to plan for grass to be available into the winter. “You have two things to mind: the cows and the grass. That’s it. It’s about building an industry that will bounce without breaking, one that’ll survive in a bad year.”

So his “simple” system meant that, even in 2009, his milk was earning an average of five cent a litre above the creamery average. “And we sold 50 heifers to the UK to make sure everything went right. It’s interesting how things work out. If we’d held on to that 50 we could be over quota now.”

Happily, he’s not. The penalties for going repeatedly over quota can decimate a farm, and many are now down to once-a-day milking as a result. The interdependence of agriculture and business was brought home to his wife, Siobhán, last week, when both a butcher and a man in the shoe shop asked if they were “on the once-a-day”.

“In a bad year, every shopkeeper in Skibbereen will know exactly what’s happening on the farms,” Kingston says. But, for him, farming is a business like any other. “It’s a nonsense that you’ll go out and buy a few bullocks and it doesn’t matter whether you make money . . . The one thing farmers haven’t realised is that we’re producing a commodity, and commodities go up and down.”

But isn’t he happy to take the cheques that flow from Brussels? “We’re getting €43,000 a year [from Brussels],” he says frankly. “The turnover on our sales of milk and livestock is €350,000 on average. Going forward, would I live in a restricted environment and get that €43,000 or would I maximise the production capacity of the farm without the quota situation? I’d be going for option B.”

Hang on. Did he say €350,000? Do the maths, he says. If one of his cows produces 4,500 litres a year – and that’s a low yield – at roughly 30c a litre, that’s €1,350 in milk sales. The average cost of outputs is 50 per cent, which leaves about €675 a cow. If prices collapse to, say, 20c a litre, then it’s down to about €320 a cow, net of outputs. But with 250 cows on the go, that still sounds pretty good.

It’s not that straightforward, of course. He inherited about 50 hectares and 50 cows; now he owns about 120 hectares and leases another 20 (because, in this system, cows need vast tracts of grass). He has built up a million-litre milk quota and milks 250 cows, with facilities for another 110. Crucially, and unusually, all the land is in one block, so he does not have to deal with the fragmentation that is the primary challenge facing Irish agriculture.

But these hilly, jewel-like green swards were carved out of stony ground and tiny divisions of about a hectare, and they require constant maintenance. The 70 or so hectares acquired in the past 10 years entailed borrowings of about €1.8 million. The 2.2-kilometre roadway through the farm – essential for the welfare of the cows, which walk up to seven kilometres a day – cost more than €30,000. There are no shiny new cars or jeeps or trailers. The only shiny object outside is a fancy €15,000 quad bike, complete with seat belts and radio. “Physically, you couldn’t do all the moving and checking that has to be done without it. That’s the most used thing on the farm,” Kingston says.

Some locals don’t believe Kingston’s farm alone can underpin all this investment and suspect that his quarter share in Kedco, a renewable-energy company listed on the AIM index in London, has been a cash cow.

“Far from it. It’s in the toilet and we’ve had zero returns from it so far,” he says ruefully.

Siobhán, a primary teacher, confesses to some trepidation about the borrowings. “It’s been a big adjustment,” she says. “All we had before our marriage was a car loan.” But she’s firmly on board and happy to see where it takes them.

Kingston is acutely alert to the PR traps that farmers have dug for themselves. “I won’t even talk about the hard work that farmers go on about, because everybody that makes it in this world works hard,” he says. “None of them sat on their arse. Stupid work, unproductive work, is a big problem in farming.”

But he gives praise where it is due: to the Department of Agriculture, for example, for the retirement scheme that brought on young farmers and re-energised the entire area; to good Teagasc advisers; to the frank, efficient food-discussion groups that “lift the siege” for a farmer when things are going wrong; to Carbery co-op’s ability to find new markets.

Like everyone with an interest in Irish farming, he is also concerned about the lack of mobility of both land and farmers. Despite the headlines about expensive land sales, there is astonishingly little movement in land ownership. According to Irish Farmers’ Journal research, just 17,000 hectares were offered for sale last year, less than 0.3 per cent of farmland. Meanwhile, 19 per cent is transferred by rental, most of it in conacre (11-month rentals), a system of little value to a progressive farmer working to a business plan. “There’s going to be a lot more leasing – it’s the way to go,” says Bill Keane.

“The agricultural colleges are full, but what do we do with all those young farmers ?” asks Kingston. “Where do we send them around the world to be the best farmers? Then how do we get those guys back here to make the land rock? In the last 20 years, we’ve been training lads who’ve left the country, because what do you do unless you’ve married into it or inherited or you’re one of the exceptional 2 to 3 per cent who’ve made it though renting? Apart from that, I’d love to see brains from outside farming coming in – like, say, the best engineers.”

That sort of mobility rarely happens in Ireland, partly because 25 per cent of farmers are over-65s and inseparable from the land.

“We have some pile of baggage from Famine times,” says Michael Keane.

The Keanes, father and son, note that the opposite applies in New Zealand, where commerce rules. In 1984 Michael worked for 11 different farmers in New Zealand. It was the year subsidies were abolished there, and “it was like a wake”. When he returned to New Zealand nine years later, just one of the 11 farmers was still farming, and he had trebled the size of his farm.

Bill noticed during his travels that many farmers were not from farming backgrounds at all. A month after returning to Ireland he was amazed to hear that one 43-year-old had abruptly sold his 25 per cent stake in the farm, packed up and moved 40 minutes away to convert a tillage farm into a 700-cow enterprise, with borrowings of €8.5 million. “He has no interest in paying off the debt. He’ll just pay the interest, and the plan is that he’ll sell it off in his 50s.”

The presumption, of course, is that land and commodity prices will soar.

Meanwhile, back in Ireland, the Keanes are getting, on average, 34c a litre for milk, a far cry from 2009. “One year you’re on your knees, the next you’re off to Australia on your holidays,” says Michael. “This year, a lot will have big tax bills.”

There is anecdotal evidence that big farmers are opting to turn their farms into companies to reduce tax liabilities.

William Kingston is unstoppable. “My vision is fill the country with dairy cows. Everyone gets a buck out of it. If Europe can get out of the way of the quota, the country is home and hosed.” At what number of hectares or cows will he stop? “In the next 10 years it will take more bravery for farmers to say: ‘I have enough.’ ”

Rich harvest: Farming in numbers

€8bn

Ireland’s annual food exports, more than 60 per cent of Irish-made exports.

€12bn

Amount yearly Irish food and beverage exports will grow to by 2020, if the national strategy goes to plan.

70%

The increase in food production required if, as expected, the global population grows to nine billion by 2050.

15%

The amount of the world’s baby formula made in Ireland – the world’s top exporter of it.

1 in 7

The proportion of children around the world who drink products manufactured in Ireland by Danone, Pfizer and Abbott. That could be one in five when Danone finishes a €50 million investment in Co Cork.

36m

The number of people Ireland can feed with the food it produces annually. By 2020 it is hoped this figure will have reached 50 million.

8%

The proportion of our GDP accounted for by agriculture, food and drink.

308,000

The estimated maximum number of jobs provided by agriculture and the food industry,making up between 14 and 15 per  cent of total employment.

€73

The additional output generated by every €100 of agricultural output, contributing a total of €9.25 billion to the Irish economy.