The greatest immediate challenge for Irish dairy farms will be to secure an adequate household income against the backdrop of two consecutive years of agricultural input price hyperinflation (9% and 33% in 2021 and 2022, respectively).

The strong performance of the sector in 2022 won’t be repeated this year, as milk prices have already reduced close to 2021 levels.

Feed costs in particular have remained at stubbornly high levels during 2023 (+75% of 2020 levels) and, together with rising interest rates, will likely contribute to a continuation of inflationary pressures and tightening cashflows on dairy farms for much of 2023.

The average net margin per litre of milk is expected to fall to under €1.35/kg fat plus protein (10-12c/litre) in 2023.

Hence, 2023 will be more typical of medium-term norms, but it is essential for farmers to now create a financial budget to reappraise capital expenditure plans and maintain family farm income in this high-cost environment. Reducing feed costs, as well as costs related to pasture and forage production, are an essential objective to constrain total production costs in 2023. Decreasing fertiliser costs associated with falling prices and declining use due to increased use of clover in swards will contribute to reduced overall costs.

As purchased feed costs have markedly increased during the last decade, the relative cost competitiveness of grazed pasture has been enhanced. Grazed pasture and pasture white clover systems have increased in cost by €30/t DM over the last decade, silage has increased by €65/t DM during the same period and purchased concentrates have increased by €213/t DM. On a relative energy corrected basis, silage is currently 2.5 times and purchased concentrate is five times the relative cost of grazed pasture.

Setting the optimum farm stocking rate

Whether the objective is minimising external feed and capital costs, reducing workload, or minimising environmental impacts, having the correct stocking rate (SR) has always been a cornerstone of efficient and profitable pasture-based milk production systems. Recent trends for SR on Irish dairy farms reveal that overall SR has increased only modestly during the last decade, from 1.9 to 2.1 livestock units per hectare. But there has been a significant rise in SR on the milking platform area, from 2.0 to 2.7 LU/ha. The result is that milking platform SR has increased to levels beyond that required to maximise pasture utilisation. Consequently, there are additional cows on these platforms that are effectively increasing total purchased feed requirements, labour and capital costs, and reducing the duration of the grazing season for the entire dairy herd. In addition, where SR on the available area exceeds the pasture production capability of that area, this results in bigger total costs, that correspond to approximately 1.6 times the increase in feed costs alone.

So what should be the optimum overall and milking platform SR for efficient dairy farms in 2023? In defining the optimum SR, it must first be acknowledged that farms differ in terms of land quality and usability, cow type/size, milking platform area, availability of outside land blocks, etc.

Nonetheless, pasture production and pasture utilisation are the primary considerations that define the optimum SR to allow both high animal performance and high pasture utilisation to be achieved.

For the milking platform, the specific SR can be increased to improve grazed pasture utilisation, while the additional winter feed requirements can be provided on an area away from the platform. In this situation, the additional cows on the milking platform are considered ‘marginal cows’, as the system is no longer forage self-sufficient and part of the diet is supplied by feeds (both concentrate and silage) from outside the milking platform.

Farmers should exercise caution with marginal SR increases, as additional pasture utilisation is not guaranteed (depending on growing conditions) and the overall economic benefit relies on favourable economic conditions (milk price and input costs, capital and labour requirements). Previous studies in pasture-based systems in Ireland and internationally have reported a linear decline in profitability with increasing feed importation.