Current Edition: 30 August 2003
Farm Management
Dairy farmers told how to lift their incomes
The only way for dairy farmers in the West to increase farm incomes is to either expand in milk or to sell off the cows altogether, according to figures produced by Thia Hennessy this week. Either course of action will give higher income than continuing to farm as at present, the Teagasc researcher said.
Paul Mooney reports
She was speaking at Tuesday's IFA meeting in Roscommon which examined how dairy farmers and processors should react to the CAP deal. Her comments caught the attention of the audience.
She was examining the options for a typical Connacht Gold supplier with 30,000 gallons of quota, 98 acres, 30 cows plus replacements and 55 bullocks, all giving income of €25,000 in 2003. If that farmer continues as at present, farm income will fall to €22,500 by 2008. This is the net effect of lower milk price plus partial compensation. He will need less cows and therefore have some more beef animals.
If the farmer expands his quota to 48,000 gallons from 40 cows, his income will be €30,000 by 2008. This assumes no investment beyond 10 extra cows and quota at 25c per litre (113c per gallon). "This increase more than offsets the effect of inflation," Thia said.
If the farmer chooses to exit in 2008, farm income will be €28,000. This is made up of a decoupled farm payment of €14,700 per year, profit of €9,000 from 130 bullocks, with the balance from REPS. "This exceeds the status quo."
She also examined the positive points in the reforms for dairy farmers. On the one hand, Agenda 2000 was giving a price cost squeeze and would have kept the dairy premium and current livestock premia fully coupled.
On the other hand, Fischler's reforms will make exiting milk more financially rewarding for smaller dairy farmers. This will, in turn, make quota more available for those staying. There will also be some subsidy of their expansion through the decoupled payment.
However, she warned that the delay of dairy decoupling until 2007 would stagnate quota restructuring and force out 2,500 marginal producers who would otherwise expand. Alternately, the restructuring scheme could be changed to free up quota movement.
Call for IDB to lead way
Co-ops were unwilling to tackle restructuring and product development in recent years despite a clear need to do so, IFA president John Dillon said.
However, Connacht Gold chairman Padraig Gibbons said his co-op and Lakeland were still in talks and that he hoped other, neighbouring co-ops would join.
Lakeland vice-chairman Mike Magan said that these talks would yield results. Arrabawn, Lakeland and Connacht Gold would be one entity eventually, he predicted.
The IDB would have to play a lead role in a restructuring of Irish milk processing and in funding product development, he said.
This point was supported by other speakers, including IFA's Michael Murphy and John Mannion and Teagasc's Dr Liam Donnelly.
