The Irish Farmers Journal Dairy Day was held in Páirc Uí Chaoimh last week. It is a fine venue. The event was stretched out over two floors. Most of the Agri businesses were there. Tim’s nephew, Liam Hennessy, FDC accountants, was speaking on the first panel at 9.30am. The panel was hosted by Aidan Brennan, Dairy Editor. Aidan was joined by Joe Patton, Teagasc, Sean Cummins, Kilkenny dairy farmer and Liam. The topic was ‘cutting costs to protect margin’. Very quickly it was established that the margin, in other words the profit, is very tight on dairy farms this year and it is difficult to cut costs.
The old story of driving efficiency as we did during the restrictive quota years is well back on the table. There is profit to be made, there has to be otherwise, we are out of business.
Costs are up
Joe laid out the current scenario; the cost of production has gone up by 8 to 9cents. Fertiliser is responsible for about 2 cents, increased contractor costs adds 1.5 cents, at least 4 cents goes on feed as the price of it has doubled. Electricity, farm insurance and vet bills have also gone up.
Many farmers reduced their fertiliser use but what was saved there just went into buying expensive feed. Liam suggested the increased production costs he was seeing were 9 and 10 cents. He said, “cash was scarce on farms and farmers also had the profits of 2022 spent”.
Sean was refreshingly honest about how things were going on his farm. He said, “this year was a good grass growing year but not a great one for grass utilisation.” He said the land on the farm was challenging and wet weather made grazing difficult. A particularly wet April hit the peak yield that the cows should have achieved. It was down by 10% and the cows never recovered it.
In 2022, Sean’s cows produced 465 kgs of milk solids from 12 tonnes of grass/hectare grown and 856 kgs of meal fed. In 2023, they produced 435 kgs, (back 30 kgs) on 12.4 tonnes of grass grown and 800kgs of meal. The difference in Sean’s opinion was not hitting the target peak yield. That is surely a key point for next year to try to have plenty of grass ready to drive that peak and then to try to hold it as long as possible. On our farm, we know that if it slips, it is impossible to get it back again.
Pick two or three things such as vet bills, meal or electricity and focusing on them to make some savings
The advice from the group was to scrutinise every cost and to focus on the most important things. The first priority is to produce milk cheaply from grass, to have and maintain good roads and infrastructure. Joe said that it was important not to be pessimistic about costs as it was inevitable that they were going to rise. He suggested picking two or three things such as vet bills, meal or electricity and focusing on them to make some savings.
For example, feeding 3kgs across the summer to bring cows into the parlour, or to keep them quiet is an absolute negative when grass growth is good and can be utilised. Keeping that meal in can add up to that extra 300 kgs or 400 kgs when the grass wedge would indicate that it’s not necessary. Joe asked, “How many days in the year are you feeding grass only?” Liam agreed that savings can be found. He urged farmers to have clarity around the system on the farm and to be clear on the mission statement. There’s food for thought now. How many farmers have that mission statement and furthermore, actually adhere to it?
There were several panels and discussions to suit everyone. We attended the, ‘dealing with the fallout from nitrates’ discussion too. The regulation is in and we will have to live with the 220kgs of nitrogen/hectare in the new year.
I also attended the ‘career paths for new starters in the dairy sector’ for a while. It is evident that some work will have to be done to enable young farmers who do not have land to actually be able to start up. Funding and mentoring are two necessary requirements for this cohort.
As the landscape of dairying changes, we farmers must respond appropriately.