We’ve seen some serious pulses of rain over the last few days which have made grazing conditions very difficult for both the cows and the young stock. We have increased meal feeding to the cows and moved some to dry paddocks for a few days. We will keep silage out of the milkers’ diet for another week if possible to keep up the amount of ground grazed in October in preparation for the spring.

We are using 12-hour strip wires for the cows and multiple entrances to paddocks where possible to reduce damage. We will go to on-off grazing next if necessary or if rain persists and we will start to dry off some cows from next week on. Early calvers, empty cows and first calvers will be first on the list. We have kept everything milking up to this point.

There’s a bit more rain on the forecast, but hopefully the worst of this weather is past us now and we can continue with some sort of normal grazing routine. The heifers will need a 24-hour strip wire from here on and the calves will need a bit more managing as well. Hopefully we can keep everything out for another forthnight at least.

Glanbia

Off-farm we welcome in new chairs to both Glanbia Co-op and Glanbia plc. Donard Gaynor takes over the chair of the plc at a time when share price is on the floor and confidence is at a low ebb. A large number of farmers have built up significant shareholdings in the plc over the last few years of spin-outs. These farmers have seen their shares halve in value over the last 18 months and it looks like a very long road back for them, with a lot of competition in the performance nutrition sector and a lot of headwinds for the recent investments in the weight-loss sector as well.

Gaynor and co will have to think outside the box and possibly take some risks to re-grow the value of the business. Hopefully this can be done without leaning too heavily on the Irish sections of the company.

John Murphy takes over the co-op chair from Martin Keane at a time when milk price is also on the floor. The strategy of GII to run the milk processing business with the fattest margin in the country will have to be called into question by Murphy and his board in the co-op at the earliest opportunity.

The farmers that they represent are tired of hearing that we have the most up to date, innovative, forward-thinking and modern milk processing company in the world. We are researching, developing and adding value to product left, right and centre for everyone outside the farm gate.

The reality is that we are running a very large margin in the GII business. We are using this margin to pay for investment in expansion facilities at an unsustainable rate. We are paying for dryers with a 20-year life-span over two years.

There is a snowball effect to this, as huge levels of depreciation are usually used to reduce tax bills as we all know at this time of year, but we have created a monster where the profit after tax margin is set in stone. This is 3.2% of turnover which means that the depreciation from the last five years of heavy investment is added on to this margin, rather than reducing it.

The net result is that GII has to run at well over 6% EBITA in 2020, by my reckoning, to cover interest, depreciation and tax before leaving 3.2% profit after tax at the end of the page. This 6% grows annually with expansion as interest and depreciation increase.

The fairness of this situation needs to be called into question by the co-op board immediately. Using an EBITA performance target would be a fairer and more transparent system for all stakeholders involved.