A range of actions designed to address current challenges in the dairy sector were outlined by dairy farm consultant Jason McMinn at a NI Institute of Agricultural Science (NIIAS) breakfast event, sponsored by First Trust bank and Siemens, and held before the Winter Fair last Thursday.

Describing feed as the biggest cost on dairy farms, McMinn said that the most efficient farmers optimise grass and silage in diets, and target concentrates by feeding more to yield in the parlour and less through the mixer wagon.

The most efficient are also aware of feed waste, which can be minimised by accurate measuring of what is being fed, minimising operator error and not storing feed on floors. In total, a saving can equate to between 1p/l and 2p/l on some farms, said McMinn.

He also highlighted the importance of reducing cow mortality by culling cows earlier and addressing underlying health problems in time, which can achieve a saving equating to 1p/l for a 3% reduction in the mortality rate.

Processors

On milk pricing, McMinn said that processors in the Republic of Ireland had a more joined-up approach and that a clearer direction is needed by processors in NI regarding any changes to the current system. In particular, he mentioned a move towards payments based on milk solids (A+B-C).

“In Northern Ireland, if we are going to get an A+B-C system, then we need to know well in advance, as time is needed to change milk solids on farms,” he said.

McMinn is a consultant to around 90 dairy farms across NI. The average herd size of the group is around 220 cows, and yield on farms varies from 6,000 to 11,000 litres.

Quoting farm data from his clients, McMinn said that there is no correlation between the total yield per cow and the average cost of production on a per-litre basis. The average cost of production on the farms is around 24p/l currently, but is changing constantly, he said.

Around 3p/litre has come off breakeven prices recently, said McMinn, although he emphasised that this has not really been due to improved efficiency but more to do with lower inputs such as diesel and feed, and better use of fertiliser.

Supply

Looking ahead, McMinn expects total milk production in NI to tail off from the 2.2bn litres produced in 2015, as more cows are culled on farms. He said that an average milk price last year of 29.31p/l, and an estimated average price of 20.7p/l this year, means that overall income from milk sales to NI farmers will be down £180m in 2015, which on average across NI equates to £576 less per cow.

McMinn also maintained that the European Commission and the wider industry should introduce mechanisms to help farmers to average out volatility through the milk price cycles.

Cycle

Also speaking at the NIIAS breakfast, LacPatrick Co-op chief executive Gabriel D’Arcy told the audience that milk prices were close to or at the bottom of the cycle.

He said that there is room to be optimistic in 2016, but that he was unsure how high prices could go. “I do not know if that will mean prices will be at 25p/l,” he said.

One issue that compounds the problem here is exchange rates. It is estimated that the weak euro is costing Northern Ireland producers 3p/l, suggested D’Arcy.

Leaders

During his presentation, he highlighted that more must be done by leaders in the agri-food industry in NI to ensure that there is an overarching vision.

He maintained that the industry across the island should work together to develop new markets and sell product. “Ireland sells and does dairy well. Britain is not a dairy-exporting country and doesn’t market itself as well as Ireland does; that includes Northern Ireland,” he said.

As part of the over-arching vision, D’Arcy also contrasted the investment in processing facilities north and south of the Irish border. Since 2010, €1.2bn has been invested in the Republic of Ireland. The comparable figure in NI is closer to £40m, said D’Arcy.

He was also critical of milk processors in Britain for differential pricing, which allows certain groups of producers, such as liquid milk suppliers to supermarkets, to get paid much more than other supplying farmers.