Is America still the land of opportunity? Westmeath man Gary Nolan certainly thinks so. For every $1 Gary brought with him to Missouri in 2009, he now has $160. Share-milking has provided the vehicle for Gary to achieve this phenomenal success but the driver of this vehicle has been Emerald Dairies.

Emerald Dairies is an equity partnership formed in 2010 between Gary Nolan and Corkman Niall Murphy, along with their respective wives, Siobhan and Lisa. Equity partnerships work by distributing profits based on the amount of money invested by each party on day one.

Before forming Emerald Dairies, Niall and Gary were both working for a company called Grasslands in Missouri. Grasslands is a New Zealand-based farming company operating in Canterbury, New Zealand, and in Missouri, United States. It was formed in 1999 and has a number of Irish shareholders. The company owns 2,650 hectares in New Zealand, where it is milking 7,750 cows. In 2005, with opportunities for expansion in New Zealand decreasing, the company made a bold move to buy 4,200 hectares of arable land in Missouri, with a view to developing large-scale grass-based dairy farms.

Gary joined Grasslands Missouri in 2009, working as operations manager – basically overseeing the operation of a number of farms, including some newly commissioned dairy farms. His main role was to implement low-cost systems and train staff for managing grass.

Joining forces

Before leaving for the US, Gary was running the Grazing Musketeers programme in Ireland, where he honed his grass management skills by improving grass growth and quality on 16 top Irish dairy farms. Before this, he worked as a contract-milker in New Zealand.

Niall’s path to the US was similar, having gained experience in Ireland and New Zealand before joining Grasslands as a farm manager in 2009.

In 2010, the pair joined forces and set up Emerald Dairies, bought a 450-cow herd and started share-milking on a Grasslands farm. The two men knew each other before going to Missouri and have become close friends since they started working together. Gary’s big passion is grass and implementing efficient grazing systems. Niall’s big passion is business growth. He can ream off returns on equity and returns on capital from undertaking different investments like a machine. The two of them see ownership of cows as key to their business – both as an efficient converter of grass and as a source of capital that appreciates and accumulates over time.

Together, they are following a growth trajectory in Missouri that their peers in Ireland and elsewhere can only dream about. In 2011, they secured a 50/50 share-milking job from Grasslands on the two Wilson Springs farms near Carthage in southwest Missouri. This 342-hectare block is run as two units with separate parlours, milking 1,000 cows. Gary and Niall managed a block each initially but for the 2013, 2014 and 2015 seasons, the pair took on a second share-milking farm at Mariposa, near Joplin. This block is called Mariposa Farms and extends to 206 hectares and 615 cows, which is managed by Gary with Niall running the Wilson Springs units.

The 50/50 share-milking model works by splitting the milk cheque equally between farm owner and share-milker. In return, the share-milker provides all the stock and labour, as well as any machinery used in running the farm. Certain expenses such as parlour running costs and power are paid for entirely by the share-milker while others are split between the farm owner and share-milker. Last year, Gary and Niall signed off on the purchase of a 240-hectare dairy farm near Carthage called Kenoma Dairies – Emerald’s first venture into land ownership in Missouri.

The Emerald way

So, how do two Irish men end up owning 240 hectares and 1,600 cows along with 400 replacement heifers in Missouri?

“Share-milking has allowed us to grow our business to where it is today. We have been consistently achieving returns on capital in excess of 25% and returns on equity close to 40%. This has allowed us to reduce our borrowings and build up sufficient cash reserves to take on the land purchase,” says Niall.

By reinvesting these returns in the business, they are achieving compound growth on their assets. For their new farm, the pair are estimating a return on capital of 19% and a return on equity of 33%. Importantly, no asset appreciation is included in their calculations – they are based solely on returns from dairy farming.

November and December and July and August are very tough months on man and beast

So, why aren’t more people out farming in Missouri? Achieving a 19% return on capital from owned land is a huge return – surely one of the highest anywhere in the world.

It would be incorrect to think that grassland farming in the state of Missouri is easy. There are many challenges and most relate to the weather. Winters are extremely cold. Sometimes it hits -20°C but it usually remains dry so the cows don’t do damage.

Summer temperatures go the opposite direction, sometimes reaching as high as 40 degrees but usually between 25 and 30 degrees. This causes severe droughts which seriously affect grass growth. This also causes heat stress on cows which reduces milk yield by about 20% during the summer.

“November and December and July and August are very tough months on man and beast ... It’s like having two winters in the one year,” says Gary.

“From a cow point of view, the cold winters aren’t as bad as the hot summers. Cows are dry in winter and once they are well fed they are happy enough in the cold. On the plus side, spring and autumn are exceptional – far better than in Ireland.” he says.

The real challenge is in summer, to keep milking cows content and to keep the grass growing. Most farms in the area are either cropping farms (mostly corn or maize) or grass. The native grass is Kentucky fescue – a tough, unpalatable and ugly grass with a thick stem and a large seedhead which grows up to waist height. Bizarrely, this grass kills cattle. The endophytes in the grass that make it drought-resistant affect the blood flow in cattle, which prevents them from regulating their body temperature. To overcome this, farmers create ponds in the fields where cattle can go and lie down in the water to cool down.

When Grasslands first started farming in Missouri, the company planted perennial ryegrass pastures but most failed to survive the cold winters and hot summers. Grasslands, and latterly Emerald Dairies, have been pioneers of grassland dairy farming in the region – basically learning from their own mistakes as they went.

In response to the perennial ryegrass failing, non-endophyte fescue grass was sown. While this survived the cold winters and hot summers, it is an extremely unpalatable grass – the type of grass most farmers in Ireland would be rushing to reseed. The grass expert that he is, Gary Nolan set about finding alternatives to the fescue and after trial and error discovered a perennial ryegrass variety called Albion that was capable of withstanding the extremes of the Missouri climate. Albion is a French variety of ryegrass which was developed in the Massif Central for its tolerance to drought.

“While it’s not the best variety quality-wise, it does survive, which is nearly more important than quality for us – at least we’re not having to reseed large sections of the farm every year.”

Change of mindset

Gary says their whole thinking around grazing and managing grass had to change when they got to Missouri.

“We killed more ryegrass than I ever imagined possible and most of the swards died after being grazed in the dry period,” he says.

Gary returned to the textbooks to discover the reasons why the ryegrass, even Albion, was dying.

“While the drought was affecting growth rates, we noticed that only some paddocks were actually dying. This led to the conclusion that something we were doing was causing the plants to die; if it was just down to weather, all the fields would be the same,” he says.

Making a breakthrough

By reading about grass physiology and brushing up on their agronomy skills, Gary and Niall have adapted the way they graze during the drought to keep the perennial ryegrass alive.

“The key is to protect the plant. We graze hard for the first and second rotations – just like we would at home – and take surpluses out for bales as they arise. From the 1st of June, in anticipation of drought, our management changes,” Gary says.

“We want to start building up grass covers at this point by extending the rotation length up to 50 or 60 days and avoiding having surpluses. We target an average farm cover of 800kg per hectare.

“In the first few years, we made the mistake of grazing down tight in the drought, trying to get as much out of grass as possible, which was completely the wrong thing to do as all the grass plant’s energy reserves are in the crown, not the roots. By grazing lower than previously, the cows nip off the crown so the plant has no energy left and dies,” explains Gary.

A major breakthrough in grass management occurred when the first irrigator was used to water grass on Gary’s farm in Mariposa. Now pivot irrigators are in place on about half of Grasslands’ farms and Niall and Gary are going to install three new pivots on their purchased farm. Niall says the pivots aren’t a cure-all but are a huge help in keeping grass growing.

Pivot irrigation

Each pivot covers 57 hectares so about 66% of the new farm will be irrigated, which they feel is optimum. On Gary’s farm in 2014, the irrigated sections grew 16t of grass while the non-irrigated sections only grew 12t per hectare, but this was with poor soil fertility.

Niall feels the potential of their farms is 16t per hectare with 66% irrigation and fertile soils, which they are striving to improve. Before irrigation, they were growing summer-grazing crops such as stubble turnips on about 10% of the area and grazing these during the summer. Extra concentrate and maize silage was fed out during the dry. Gary thinks they will still have to feed supplement during the summer, even with irrigation.

“There will be times when we shouldn’t graze at all as it will damage the plant. This will be when nighttime temperatures remain over 30 degrees. In this heat, the grass can’t perspire and becomes really stressed. Grazing it in this state will be detrimental,” says Gary.

Watch a recent video update from Niall below:

Gary and Niall agree that having the discipline to take cows off grass in the height of summer will take some effort. There are no sheds on any of the farms. Cows are out-wintered on sacrifice paddocks and are fed bale silage through a feed trailer. If cows need to be fed silage during the summer, they will be put into a paddock with lots of shade and fed bale silage using feed trailers. Each trailer has feed space for 50 cows and they attach to each other like a train, making feeding out easier.

The share-milked farms all have in-parlour feeders but their newly purchased farm has an outdoor feed pad. Gary reckons they will get away with feeding only 200kg of supplement per cow once they get up and running fully on this farm. The plan is to stock the farm at 3.25 cows/ha when they are growing 18t of grass, with 66% irrigated. Irrigation costs about €2,500 hectare to install.

Cost of production in Missouri

While much is being made of the United States’ capacity to produce milk at low cost with cheap feed, the price of feed is of little consequence to Emerald Dairies as most of their feed is grazed grass. In 2014, just over 50% of farm output was retained as profit, before interest and tax. The forecast for 2015, with lower milk prices, is for 48% of output to be retained. Nearly all farm inputs are cheaper in the US than they are in Ireland. A tonne of urea costs €360. Veterinary costs are €21 per cow including a comprehensive vaccination programme. The contractor costs involved in mowing, baling, wrapping and stacking a round bale of silage is €22 per bale. Round-Up costs €1.20 per litre. On the labour front, general farm workers are paid in the region of €22,000 per year plus a house. Milk price for 2015 is expected to average 34c/l for Emerald Dairies.

The Future

With young children in both the Nolan and Murphy families, time together and away from work is important to them. They both say that their preference is for their children to be brought up and educated in Ireland, so they have earmarked a return to Ireland within the next five years. Gary’s dream is to own a dairy farm in Westmeath. Niall and Gary say that the biggest threat to their business over the next five years is that they will not drive it on fast enough or strong enough.

“We want to add motors and horsepower to speed up our growth and achieve as much as we can as quickly as possible. Adding a farm every second year for the next five years is our goal.”

So what happens when they return to Ireland?

“Provided we set up good systems and have good people running our farms, there is no reason why we can’t continue to oversee the operation of our farms out here from Ireland, with myself and Niall taking turns to call out here for a few weeks at a time,” says Gary.

Having overcome nearly all previous challenges, the odds are stacked in their favour and you wouldn’t bet against Emerald Dairies achieving their goals.

Fact box:

Emerald Dairies, Missouri, USA

Article focus area:

New land

Total land area:

548ha

Milking platform:

548ha

Cow numbers:

1,600 milking

Farming system:

Spring-calving