The message was clear: the best strategy to overcome the low milk prices we have had for the last two to three years is to develop a cost-efficient model that can ride the storms. So went the Teagasc Dairy Conference on Wednesday, where Dr Pat Dillon outlined why he believes that Irish dairy farming is well set up for the future. Focusing on matters inside the farm gate, he suggested that Irish dairy farmers have outperformed other countries for the last two years and effectively maintained a higher margin than many high-cost producing countries.

He threw down the challenge that in the future, cost-comparison systems should compare on a cost per kilo milk solids basis, as this better reflects how we pay for milk.

However, it is fair to say, as many farmers highlight to us on a weekly basis, across the border in Northern Ireland dairy farmers are still not even getting direction from milk processors that it is milk solids that is required, let alone to compare costs in milk solids.

Pat Dillon did mention that challenges exists and that there is a requirement for more skilled staff, but similarly there is a requirement for farmers to upskill themselves as employers of staff. Labour will be more and more of an issue on dairy farms in the future.

So, is he right? The argument often used to counter the grass-based model is the consistent US dairy confinement system. Yes, this is a completely different model but there are clear and significant climatic and business differences. They have brought a level of stability and security to their production system and that is the challenge the Irish grass-based model also needs to develop.

We see at first-hand the challenges of trying to replicate these confinement models in other European countries where there is simply not enough land, as is the case in the Netherlands. All of a sudden, a Dutch industry that was pointed towards growth has been capped and the Dutch must find new solutions if they are to be successful in dairying in the coming years.

The US has locked in and future-proofed their system, especially on feed and milk price, and that offers great security. The net effect is supply doesn’t go up and down to the same extent as it will in Europe or New Zealand. Labour is cheaper and more easily available compared to a country such as Ireland that is returning towards full employment. New Zealand offers scale that many parts of Ireland simply can’t handle.

We must play the cards we are dealt and two key words must be resilience and debt – the capacity of a farm or business to survive various risks and the solvency of the dairy business must also be looked at.

National Farm Survey data suggests average borrowing on dairy farms at €100,000 – just over €1,000 per cow. Of course, averages mean nothing but this does allow us to compare ourselves with other European countries; we see debt levels on average close to €900,000 per farm in the Netherlands (€10,000 per cow) and €2.8m in Denmark (over €20,000 per cow).

It is fair to say the last two years have tested the grass-based, high-output-of-milk-solids-per-hectare model and the Irish dairy industry seems more resilient than most.

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