At the Irish Grassland Association pre-conference breakfast meeting in Kilkenny this week guest speaker Tom Clinton suggested that some percentage of the EU single farm payment should be directed at specific projects.

He said: “It is an awful miss not putting the money into specific projects.”

When pushed to explain this further he said: “Maybe putting 10% into a new milking unit might be an option. You have to appreciate what happened with the single farm payment. It did replace an inefficient system of giving the money direct to factories and exporters, but maybe something can be changed to direct funds in a certain direction.”

Tom was bullish about the international demand for dairy product and spelled out six reasons why demand will continue to grow and why the dairy business is a good business to invest in at the moment.

He said: “The problem of Ostepososis in old people in China and the change in the one-child policy to allow two children (because one grandchild can’t support six elderly people) will continue to drive dairy demand growth in China for coming years.”

The other issues he mentioned were the fact that the world is better fed, demand from Africa is growing, many more products are being made from milk, and, unlike most other produce, farmers still own the manufacturing base.

On funding agriculture, Tom said his former banking contacts in Bank of Ireland often suggested to him farming was most the profitable section in the bank and that dairy farming was the best in the sector. He said: “Dairy farmers should be given all the money that’s needed. What happened for the last two years where co-ops were charging large interest rates on account was crippling farmers because banks were not giving out money.”

He said there are a set of factors that can and will cause trouble, such as a weather crisis, bad feed, land purchase etc but when money is needed it must be given without delay: “What’s not needed is a very presentable person walking into a yard and taking up to three months for full approval. We are 14 years in New Zealand and never didn’t get approval. Make sure bankers working with farmers have a thorough knowledge of farming, the farm and the knowledge and work ethic of the farmer.”

On the transition from other agri-sectors to dairy, he said dairy farming is not about getting rich quick: “It’s about working harder, don’t complain about unsocial hours, be diligent about your business, keep cows alive and milking, rear all calves, and get your heifers in calf on time.”

He said planning authorities need to make swift decisions and that delays cost money. He called for leasing tax incentives to be extended to include companies and that safe borrowing levels were in the range of €2,000 to €4,000 per cow but much depended on the farm’s single farm payment, family labour, amount of rented land, whether spouse was working or not, number of family members to support, and stage of farm development.

Quotes in brief

“We have 25 milk processors in Ireland – there are five in New Zealand and one company, Fonterra has 85% of the milk pool. The big winners in this situation are the major supermarkets like TESCO, LIDL etc because we are competing with each other.”

“Average herd size in Ireland today is 70 cows while it’s 403 in New Zealand. There are 20,000 dairy farmers in Ireland and 14,000 in New Zealand. The asset value of Fonterra shares is about $8bn dollars – we don’t have the proper set up in Ireland.”

“Farmers should have to invest in their milk processor but they should get a dividend on that investment – the dividend should be a return on that greater than the cost of money in bank and then people will do it and then bankers will give it...give a 6 to 7% return if interest rates are 5% and farmers will willingly give it.”

On his long term vision for the Irish dairy industry he said the 50% increase in output will happen in Ireland in the next five or six years and the Food Harvest 2020 report has focussed minds. He went on to say he expects 100% increase by 2030 - “hurry on and do it because I want to see it happen in Ireland.”

  • Tom Clinton is a former IFA President farming with dairy farming interests in Meath and New Zealand.