We are back to the rain this week in Clara, but we had an exceptional couple of weeks before that, with grazing conditions almost perfect. It has been an excellent opportunity to graze some of the wetter paddocks on the farm.
It was also a great opportunity to get the maiden heifers out to grass and settled in to their grazing routine. It’s great to get them out early and settled into a grass diet for as long as possible before the breeding season.
Hopefully, the weather doesn’t break down too badly now, as most paddocks were only just getting to the comfortable stage this week.
We have seen unprecedented growth in milk supply in the Glanbia catchment area in recent years
Calving is very much on the wind down now and it’s all beef-bred calves from here on. It’s great to get all of the replacement heifers on the ground in February and it should make it easier to keep them very even as a group as they progress into milking cows over the next two years.
Hopefully, by the time these heifers reach the milking parlour, there is somewhere for the milk to go to be processed.
We have seen unprecedented growth in milk supply in the Glanbia catchment area in recent years, with the company growing from processing 45m litres per week at peak, to hopefully 100m litres next spring.
This expansion was well funded at the start, with the co-op selling a portion of its stake in the PLC to generate capital for the initial Belview project. We have grown much quicker than was anticipated at the beginning of this journey, as current forecast supply predictions are much lower than they were at the start.
Milk processing arrangements with other processors at peak capacity have allowed milk supply to continue.
The next couple of years might be a bit different however, as the latest expansion project has hit a serious roadblock – a judicial review is holding up planning permission for the proposed joint venture development with Royal A-ware in Belview. This delay could cost farmers in the south-east of the country tens of thousands of euros over the next few years.
There have been strong indications over the last 12 months that this project could be delayed at the very least
The planning issues have been ongoing for over 12 months now, but have been getting more serious as we keep missing deadlines, to the extent that it now looks like Glanbia will be unable to cope with the projected peak supply for 2022 and 2023 at least.
There have been strong indications over the last 12 months that this project could be delayed at the very least. The approach would seem to be for the company to pursue the A-ware option at the exclusion of all other avenues available, to put capacity in place for the milk that was well forecasted to arrive on their doorstep over the next few years.
The rewards from this project are potentially huge, with a lower investment cost through the JV and higher margins projected from this plant. It would bring the potential to deliver more product diversity away from Brexit-compromised cheddar into the UK market.
This is a significant multiple of what the other Irish milk processors are able to function at
We wait now for the board to decide on the best way out of this situation for both the company and milk suppliers. Flattening the milk curve to push more milk into the shoulders would significantly erode margins on-farm and pass all of the pain back to the milk suppliers.
Meanwhile, the GII margin continues to run at 3.2% PAT or profit after tax. This is a significant multiple of what the other Irish milk processors are able to function at. This margin has to be reduced over the next few years to share the pain.
The milk suppliers have paid for the growth, both on farm and off over the last six years and they can’t be expected to carry the full cost burden of not having any Plan B in place.