Parlour investment set to increase in 2025

Investment by dairy farmers is set to increase in 2025 on the back of higher milk prices and increased margins. The correlation between investment on facilities and equipment and farm profit is closely matched.

Despite lingering fears over the future of the nitrates derogation, the mood and morale among farmers has improved considerably over the last three or four months.

According to milking equipment suppliers, this has led to a surge in activity among farmers with new investments and additions or upgrades to milking facilities.

One thing is clear: the number of new entrants and greenfield conversions has fallen sharply from even three or four years ago, when there was one or two in almost every parish.

The costs of conversion are high, given the post-pandemic and post-Ukraine war inflation in concrete and steel as well as the huge costs of services such as electricians and plumbers.

It’s safe to say that costs have nearly doubled compared to six or seven years ago.

It was therefore a breath of fresh air to visit the Smith farm in Cavan that has been converted to dairy, with the whole project managed by 22-year-old James Smith.

He’s made sensible decisions on the scale of the parlour, location and importantly on the type of cow to buy, opting for high-EBI cows suitable for the grass-based system he is hoping to run.

No doubt his late dad would be proud of him.

Milking parlours

It’s likely that much of the investment over coming years will be on improvements to existing milking parlours or, as outlined in pages 36 and 37, we are likely to see more farmers transition to robotic milking systems.

It’s always important to seek second or even third opinions before making decisions on investments as fresh eyes can see solutions that may be cheaper and more effective in the long term.

Cow flow can often be a casualty of expansion or upgrades to existing facilities, but it’s one that should be avoided.

One casualty of policy over the last 12 months has been the change in the VAT rules around milking equipment.

It is disappointing that the election has come and gone and this significant change in policy didn’t really feature in the debates.

It adds a huge cost to farmers looking to make improvements to existing facilities as they are now unable to reclaim the VAT back.

The next government needs to listen to farmers on this and, at the very least, update the TAMS costings to include VAT.