To think a young farmer could work his way from owning little or nothing to 10 years later owning 480 cows in a 50/50 share-farming arrangement is but a dream for most young Irish farmers.
Monaghan farmer Olin Greenan started out in New Zealand in 2001 with only a rucksack on his back and is now into the second year of a three-year share-milking arrangement, milking 480 cows in the North Island of New Zealand.
Olin always had an interest in milking cows.
“One of my mentors once said if you have any interest in dairy farming then you need to get some experience of New Zealand, so I decided I needed that stamp on the passport,” he says.
Olin travelled to New Zealand in 2001 and started off as a farm assistant on a 550-cow dairy farm. Having just completed a degree in agriculture in Essex, dairy farming in New Zealand was a steep learning curve, but Olin loved it all.
His next move was to manage a 270-cow unit before he moved into a contract-milking arrangement where he was paid per kilo of milk solids produced plus 15 heifer calves per year. As you can see from Figure 1, this was when Olin’s equity (NZ$) and cow numbers started to lift.
Olin met his future wife, Anna, in New Zealand. This newly formed relationship probably forced him to discuss long-term farming arrangements in New Zealand and move into share-milking.
Saving up surplus cash and 15 heifer calves each year for three years allowed Olin the opportunity to apply for his first share-milking arrangement in New Zealand with 75 cows of his own (45 owned and 30 purchased) in a 300-cow share-milking operation.
The Dutch landowner in that operation was looking to step back from the day-to-day milking business. Olin stayed with this share-milking farm for four years and then got the opportunity to apply for a new share-milking operation with 480 cows.
This step up from share-milking a 300-cow herd to 480 cows allowed Olin to go back to the bank and remortgage his stock. Effectively he took on more debt and leveraged the larger number of cows.
Unlike in Ireland, the New Zealand banks will allow you use 65% of the value of your stock and 25% of the value of machinery as security when borrowing.
“The bank will sit down and assess your share-milking arrangement and decide to back you or not, depending on your track record and if you have enough cash reserves and experience. We very much work as a team and I call it my dream team – first of all I work with my wife, but very close to our business are our bankers, our accountants and our landowners. We need all stakeholders to believe in our business,” he says.
Asked about his next step towards land ownership, he says: “We could either go share-milking a 1,000-cow herd in the South Island or we can use the equity we have built up already and join up with other equity partners that want to buy a farm. We could potentially own a part of that farm.”
Olin’s story
Olin Greenan is from a farming background near Newbliss, Co Monaghan. Olin’s father Eugene still runs a small dairy herd in Newbliss, supplying Town of Monaghan Co-op. Olin left Ireland owning little more than a rucksack on his back. His long-term objective is to own some land in New Zealand. The information for this article formed the bulk of Olin’s presentation at the Irish Farmers Journal dairy meetings around the country this week.
Olin said, “We saw an advert from a landowner looking for a share-milker. We enquired and asked about the farm to see if it was a good farm to grow grass and what facilities were available. Then Anna and myself drove down to the farm and drove around it. The landowner wanted someone to take over running the farm while he stepped back. He wanted us to buy the cows on the farm and then split the milk cheque, 50% to him and 50% to us.
“We would have to pay the variable costs like parlour detergents, half the urea bill, transport on the farm and labour. We drove away from the farm and drew up our pros and cons of this opportunity and decided it was too good to turn down.”
Comment
Olin gave a very frank and open presentation at the Irish Farmers Journal dairy meetings on how his business has evolved. A number of clear messages came through. One of the main points was his understanding of financial farm management and the value of cashflow budgeting and how that is used to drive his decision-making and analysis of opportunities.
Olin spoke about the cashflow budget as if it was second nature. “I do our budget because you have to own it and know it inside out. My bank needs to be repaid. I need to put bread on the table and I need to pay my share of the farm expenses. I want to be sure I can do all these, so they are the first things I put into my budget. We do a provisional budget when the cows are dry and then we keep it active. One of the hardest steps is to do the first one, because after that all you are doing is tweaking the cashflow sheet.”
The majority of dairy farmers don’t do a cashflow budget. Many end up paying high interest rates on overdraft or merchant credit. Is the poor milk price forecast a real wake-up call for all those talking about creating a cashflow budget? You can learn from doing the cashflow exercise and it forces you to question your costs. Do it this week before you get really busy if you haven’t done it already.
In terms of cost-cutting, Olin explained it is not rocket science if you have the system right – if you have a high-input system, then in times of low milk prices you have to see if there is a margin left for you. Olin said: “One of my friends has cut his feed bill by $110,000 over 250 cows and he hasn’t seen any major drop in production.
“Our system is grass-based milk, producing 1,000kg of milk solids per hectare from cows stocked at 2.6 cows per hectare. We will cut our breeding costs this year by two thirds by switching from using proven sires to young genomic sires. We will only do minor repairs and maintenance and potentially we will take a holiday on our principal loan repayments. We will continue to pay interest on the loan. We will also try to move output up by getting more quality grass into cows and potentially culling cows early once I find out when they are not in calf.”
Take-home message
I put it to Olin that the goalposts were changing and Irish farmers have the opportunity to produce a lot more milk from the same land base. I asked him what lessons he would take from New Zealand. He said: “Work to live, not live to work. Ireland has the opportunity to win the Rugby World Cup and become the world leader in grass farming if they want it. I’ve seen many farmers in New Zealand working harder for nothing and I know if Irish farmers can stay focused, then they can be as good if not better than New Zealand dairy farmers.”
To think a young farmer could work his way from owning little or nothing to 10 years later owning 480 cows in a 50/50 share-farming arrangement is but a dream for most young Irish farmers.
Monaghan farmer Olin Greenan started out in New Zealand in 2001 with only a rucksack on his back and is now into the second year of a three-year share-milking arrangement, milking 480 cows in the North Island of New Zealand.
Olin always had an interest in milking cows.
“One of my mentors once said if you have any interest in dairy farming then you need to get some experience of New Zealand, so I decided I needed that stamp on the passport,” he says.
Olin travelled to New Zealand in 2001 and started off as a farm assistant on a 550-cow dairy farm. Having just completed a degree in agriculture in Essex, dairy farming in New Zealand was a steep learning curve, but Olin loved it all.
His next move was to manage a 270-cow unit before he moved into a contract-milking arrangement where he was paid per kilo of milk solids produced plus 15 heifer calves per year. As you can see from Figure 1, this was when Olin’s equity (NZ$) and cow numbers started to lift.
Olin met his future wife, Anna, in New Zealand. This newly formed relationship probably forced him to discuss long-term farming arrangements in New Zealand and move into share-milking.
Saving up surplus cash and 15 heifer calves each year for three years allowed Olin the opportunity to apply for his first share-milking arrangement in New Zealand with 75 cows of his own (45 owned and 30 purchased) in a 300-cow share-milking operation.
The Dutch landowner in that operation was looking to step back from the day-to-day milking business. Olin stayed with this share-milking farm for four years and then got the opportunity to apply for a new share-milking operation with 480 cows.
This step up from share-milking a 300-cow herd to 480 cows allowed Olin to go back to the bank and remortgage his stock. Effectively he took on more debt and leveraged the larger number of cows.
Unlike in Ireland, the New Zealand banks will allow you use 65% of the value of your stock and 25% of the value of machinery as security when borrowing.
“The bank will sit down and assess your share-milking arrangement and decide to back you or not, depending on your track record and if you have enough cash reserves and experience. We very much work as a team and I call it my dream team – first of all I work with my wife, but very close to our business are our bankers, our accountants and our landowners. We need all stakeholders to believe in our business,” he says.
Asked about his next step towards land ownership, he says: “We could either go share-milking a 1,000-cow herd in the South Island or we can use the equity we have built up already and join up with other equity partners that want to buy a farm. We could potentially own a part of that farm.”
Olin’s story
Olin Greenan is from a farming background near Newbliss, Co Monaghan. Olin’s father Eugene still runs a small dairy herd in Newbliss, supplying Town of Monaghan Co-op. Olin left Ireland owning little more than a rucksack on his back. His long-term objective is to own some land in New Zealand. The information for this article formed the bulk of Olin’s presentation at the Irish Farmers Journal dairy meetings around the country this week.
Olin said, “We saw an advert from a landowner looking for a share-milker. We enquired and asked about the farm to see if it was a good farm to grow grass and what facilities were available. Then Anna and myself drove down to the farm and drove around it. The landowner wanted someone to take over running the farm while he stepped back. He wanted us to buy the cows on the farm and then split the milk cheque, 50% to him and 50% to us.
“We would have to pay the variable costs like parlour detergents, half the urea bill, transport on the farm and labour. We drove away from the farm and drew up our pros and cons of this opportunity and decided it was too good to turn down.”
Comment
Olin gave a very frank and open presentation at the Irish Farmers Journal dairy meetings on how his business has evolved. A number of clear messages came through. One of the main points was his understanding of financial farm management and the value of cashflow budgeting and how that is used to drive his decision-making and analysis of opportunities.
Olin spoke about the cashflow budget as if it was second nature. “I do our budget because you have to own it and know it inside out. My bank needs to be repaid. I need to put bread on the table and I need to pay my share of the farm expenses. I want to be sure I can do all these, so they are the first things I put into my budget. We do a provisional budget when the cows are dry and then we keep it active. One of the hardest steps is to do the first one, because after that all you are doing is tweaking the cashflow sheet.”
The majority of dairy farmers don’t do a cashflow budget. Many end up paying high interest rates on overdraft or merchant credit. Is the poor milk price forecast a real wake-up call for all those talking about creating a cashflow budget? You can learn from doing the cashflow exercise and it forces you to question your costs. Do it this week before you get really busy if you haven’t done it already.
In terms of cost-cutting, Olin explained it is not rocket science if you have the system right – if you have a high-input system, then in times of low milk prices you have to see if there is a margin left for you. Olin said: “One of my friends has cut his feed bill by $110,000 over 250 cows and he hasn’t seen any major drop in production.
“Our system is grass-based milk, producing 1,000kg of milk solids per hectare from cows stocked at 2.6 cows per hectare. We will cut our breeding costs this year by two thirds by switching from using proven sires to young genomic sires. We will only do minor repairs and maintenance and potentially we will take a holiday on our principal loan repayments. We will continue to pay interest on the loan. We will also try to move output up by getting more quality grass into cows and potentially culling cows early once I find out when they are not in calf.”
Take-home message
I put it to Olin that the goalposts were changing and Irish farmers have the opportunity to produce a lot more milk from the same land base. I asked him what lessons he would take from New Zealand. He said: “Work to live, not live to work. Ireland has the opportunity to win the Rugby World Cup and become the world leader in grass farming if they want it. I’ve seen many farmers in New Zealand working harder for nothing and I know if Irish farmers can stay focused, then they can be as good if not better than New Zealand dairy farmers.”
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