1st Published in Irish Independent 20 Sept 2022
Agricultural Consultant and managing director at Brady Group: Agricultural Consultants & Land Agents. The Lodge, Lee Road, Cork.
It coming up to 8 years since Irish dairying was liberated with the removal of EU milk quotas on the 31st of March 2015. The question is, are there still opportunities in the sector or has that ship sailed?
In truth it is over 15 years since the EU announced that it was going to remove milk quotas in 2015. Most ambitious Irish dairy farmers started planning a new future for their farm businesses from that time in 2007/2008. Many are now living that dream as plans have been executed, bank debt reduced and healthy profits being harvested.
There is a ‘sweet spot’ number of cows for all dairy farmers, this number ranges from 50 to 2,000 dairy cows in Ireland today. The national herd average recently passed 100 cows per dairy farm, this is a significant number as it is widely regarded as the number of cows for one labour unit to manage without fulltime labour.
They say all got things come to an end, if one listens to media noise these days you would be forgiven for believing that dairy farming was on its last legs with attacks coming from all angles. Climate change, green house gases(GHG), water quality, animal welfare, labour issues not to mention a backlash from fellow farmers jealous of the success of their dairy farming neighbours.
However, the reality on the ground is very very different, the calendar year 2022 will produce record net profit levels for Irish dairy farmers. Yes, input prices have risen but the milk price has risen to levels that were unthinkable just a year ago, resulting in improved profits. Those who took the risk to invest heavily in the farm business between 2007-2015 have been richly rewarded.
I say more luck to them, risk versus reward, this is what life is all about.
So, is it still worth taking the risk? Where are the opportunities in dairying today?
I believe there are and will be huge opportunities for people to have a career as a dairy farmer into the future in Ireland. Those opportunities will not require one inherit a lot of land from family nor will it be the conversion of large tillage farms into dairying.
It will be individuals taking over existing successful dairy businesses.
Let’s be realistic, the national herd of dairy and beef cattle is not going to increased due to the Methane GHG issue and farmers talking and planning about converting to dairying are unlikely to do so at this stage due to the increased cost of construction and uncertainty around future climate action policy.
Many existing dairy farmers have well developed, profitable businesses, but they are finding difficult to get good quality labour and many have no children interested in taking over the dairy farm.
For example; take a 200 cow dairy farmer who owns 200 acres, replacement heifers are contract reared, has no borrowing and is making a net profit of €250,000 per annum. The dairy farmer wants to retire and take life easier but not sell the family farm.
So, what are the options for this dairy farmer:
- Employ a Farm Manger and a labour unit
If this farm was run entirely with employed labour, one would spend between €70,000 and €100,000 per annum on labour. Assume this farm has a good quality second house, the €100,000 per annum salary and quality dwelling house included in the package would be a great opportunity for a husband and wife team starting out on their dairy farming career. There is no saving for a big house deposit and one is immediately on a good salary, All that’s required is experience and knowing how to run a 200 cow dairy farm.
- Partnership or Share Farming
If the husband and wife team in option 1 above have a little cash and/or borrowing capacity they could buy some or all of the livestock and machinery from the retiring farmer. A retiring dairy framer who is cash rich may choose to give an ambitious employee a break in life and be the banker for the new farming couple. A loan arrangement for the livestock and machinery payable over a number of years could be put in place. Now this couple have a salary and are adding to the net worth each year by buying dairy livestock. There is potential here for the new farming couple to earn between €100,00 and €150,000 per annum and have accommodation in the package.
The simple option is for the retiring dairy farmer to sell the livestock / machinery and lease out the farm to the incoming dairy farmer on a long term of say 15 years. This is a tax efficient no responsibility way to to retire from dairy farming. Again there is potential here for the new farming couple to earn €150,000+ per annum and have accommodation in the package.
Even tech firms like Google cannot compete with the above employment packages, especially for dairy farms within commuting distance of good schools and third level colleges. No daily work commute and plenty space for your hammock to chill out, just like Google! Newly married couples starting out in life will be looking at accommodation and good locations to raise a family and plan a career as a dairy farmers.
True, there is education and marketing required to promote dairying as a career choice to our youth today, but all the ingredients are there to have a fulfilling and rewarding career.
The opportunities are only starting in Irish Dairying.