When the annals of Irish farming are read sometime well into the future, the years 2010 to 2020 will be remembered as the time the Irish dairy industry came of age. Looking back, certain periods are memorable for the events that happened during that time.
The famine of the 1840s, the 20th century world wars and geopolitical events like Ireland joining the EEC, have each had major impacts on Irish agriculture. The same can be said of the ending of milk quotas.
Shackled since 1983, the lead-in to the removal of quotas on 1 April 2015 saw a frenzy of herd expansion, construction and expectation.
While Ireland’s milk output remained more or less static, at about five billion litres, during the bulk of the quota era from 1986 to 2010, the same period saw a huge reduction in the number of dairy farmers and dairy cows.
Farmer numbers fell up to 2010
There were 68,000 dairy producers in Ireland when quotas were introduced and this was down to 18,300 by 2010.
Three out of every four dairy farmers disappeared during the quota era. However, the number of dairy farmers in Ireland at the close of the last decade was broadly similar to the numbers at the start of the decade. This is probably the first decade since the famine that the numbers of people milking cows in Ireland did not decrease.
A decade of expansion
While producer numbers stayed more or less the same, both the number of cows per farm and the volume of milk being produced per farm increased greatly over the last decade. In 2010, the total number of cows being milked was just over 1.07m, producing 5.14bn litres of milk. Average herd size was 59 cows.
By 2019, dairy cow numbers increased to 1.52m, a 42% increase, while the volume of milk produced increased to just shy of eight billion litres, a 56% increase over the decade.
Increased scale on farms has led to increased investment in facilities to cater for extra numbers and create an efficient workplace
The average rate of growth in milk volume was 5.6% per year, which is more than twice the global growth rate in dairy production and it made Ireland the fastest-growing dairy producer in Europe, although we only account for about 5% of the total EU production.
At farm level, the changes during the decade have been immense. With cow numbers increasing and farm numbers static, average herd size has increased from 59 cows in 2010 to almost 80 cows in 2019.
Over half of the cows in Ireland are milked in larger herds of 100 cows or more and the number of farms milking more than 100 cows more than doubled between 2010 and 2016.
This increase in scale at farm level was largely driven by increased specialisation in dairying. Mixed dairy farms that once ran beef cattle, tillage or heifer-rearing enterprises alongside replaced these enterprises with extra dairy cows. In some cases, replacement heifers were moved to out-farms or were contract-reared.
Throughout the decade, the number of animals being contract-reared steadily increased and, while no official figures exist, it is estimated that between 10% and 15% of all dairy heifers are now being contract-reared.
This is particularly the case for larger farms where outsourcing the heifer rearing allows the operators to focus 100% on the milking herd.
Alongside the outsourcing of heifer rearing has been the outsourcing of machinery-related tasks such as silage, slurry and fertiliser spreading.
Investment
Increased scale on farms has led to increased investment in facilities to cater for extra numbers and create an efficient workplace.
There has been a boom in on-farm construction of milking parlours, cubicle sheds, silage slabs and farm roadways. The extra 600,000 dairy cows on Irish farms over the past decade have all required new cow housing and milking facilities costing in the region of €1.38bn in capital investment.
Another trigger for the expansion of the dairy sector has been tax incentives for the long-term leasing of land.
Tax-free rental income for long-term leases has increased the supply of land in the rental market, something dairy farmers have capitalised on. The 2015 scheme has proved to be mutually beneficial for the lessor, lessee and the State.
For the dairy farmer, getting an opportunity to lease land contiguous to the grazing platform has allowed the farmer to increase cow numbers without incurring excessive capital costs. In many cases, the leased land enabled the existing facilities to be fully utilised, thereby increasing the overall return on capital.
For the State, the trickle-down effect of increased economic activity from dairy has boosted the rural economy. According to a report by food economist Ciaran Fitzgerald, the value of the dairy industry to the Irish economy has increased from €1.8bn in 2009 to €3.8bn in 2018.
Challenges
The expansion of the dairy sector has not been without its challenges. In the early part of the decade, the main challenges were around finance.
Milk price volatility and limited access to credit in the wake of the global recession taught farmers hard lessons in their newfound free-market economy.
The trend line for milk prices over the last decade looks a bit like the trajectory of a tennis ball dropped from a height.
The big drop came in 2009 when Irish prices hit 21c/l – the lowest on record. The big rise came in 2013 when Irish prices went over 35c/l – the highest on record. For the rest of the decade, the tennis ball has been bouncing along, but with far less energy.
This has not just happened by accident.
Mechanisms such as fixed-price milk schemes and forward-selling have helped to smooth the volatility.
New challenges emerged post-2015, particularly in the area of labour. An improved Irish economy with near full employment combined with widespread inexperience of managing people lead to teething problems in attracting and retaining staff on dairy farms. A scarcity of skilled, trained workers for dairy farms exacerbated the problem, with good farm managers in high demand.
Concerns around the environment and animal welfare intensified towards the end of the decade. Dairy farms make up 20% of Ireland’s agricultural land area, yet account for over 50% of the fertiliser used. The amount of farmland under nitrates derogation increased by 34% between 2014 and 2018.
There are now over 7,000 farms in a nitrates derogation and dairy farmers make up a disproportionate amount of these.
Concerns around the environment and animal welfare intensified towards the end of the decade
Debate around the future size of the national herd, considering methane and ammonia emissions, intensified as the decade went on.
Many environmentalists have called for the national herd to be reduced, with official policy veering towards a reduction in the national suckler herd to allow for a continuation of growth in the more lucrative, and environmentally riskier dairy herd.
A severe fodder deficit in spring 2018, followed by a severe drought in the summer, increased the cost of production on Irish farms.
The issue of dairy bull calves hit the headlines the following spring as beef farmer demand for dairy-bred calves collapsed and transport issues caused difficulties for live exports.
Attention turned to ways of increasing the value of male calves but as the decade closed, the elephant in the room was the unfettered expansion of dairy cow numbers; economic success yes, but at what cost to the environment and calf welfare?
Irish dairy in the next decade
In 10 years’ time, Irish dairy farmers will still be debating the best ways to milk cows, grow grass and breed dairy replacements.
These will still be the core fundamentals of the Irish dairy industry. I say this with a high degree of confidence, simply because the fundamentals of grass-fed dairy are so strong in terms of product quality, health, and environmental sustainability.
Towards the end of the decade, the impact on restricted growth in dairy will really begin to bite
Of course, some things will have changed – nothing ever stays the same. The socioeconomic headwinds of Brexit and COVID-19 will dominate the start of the decade. Within the farm gate there will be change as well.
Headroom for further expansion
At some point over the next decade, there will be a cap put on cow numbers. When that happens and the stock numbers it applies to will be dependent on political decisions.
However, is likely to be somewhere between 1.7m and 1.8m dairy cows.
At current levels of milk production per cow, this will cap milk output at between 8.5bn and 9bn litres of milk. This will essentially reintroduce the milk quota that shackled dairy farmers for 30 years and force the production of extra dairy into parts of the world that have a higher carbon footprint per kilo of output.
However, an important difference between the old milk quota restriction and the new restriction is that any new constraints will be aimed at reducing environmental risk rather than reducing milk output.
Nitrate limitations
The form that new limits take will likely be based on tighter regulation of organic nitrate excretions per hectare. This will be used as a proxy, a catch-all. Rightly or wrongly, it will attempt to solve the greenhouse gas, water pollution and air quality issues facing Irish agriculture.
At present, every dairy cow is considered to produce 85kg of organic nitrogen per year and the nitrates derogation sets a limit of 250kg of organic N/ha, giving a maximum overall stocking rate of 2.94 livestock units/ha. If Ireland implements a system for nitrates, which is similar to what the Dutch did for phosphates, then every farm will have an upper limit on the kilos of organic nitrogen it can apply per hectare.
While producer numbers stayed more or less the same, both the number of cows per farm and the volume of milk being produced per farm increased greatly over the last decade.
Before people start racing to breed higher-yielding cows, it is likely that every herd will have a different organic nitrogen excretion rate per cow, based on milk yield and composition, as has partially happened in Denmark.
Policymakers will not allow or incentivise farmers to switch to higher-input systems which carry a higher environmental risk, even if these production systems enable milk production per cow to increase.
Ways to expand
The impact of putting a restriction on cow numbers will take some time to kick in. In the initial years, the national dairy herd will probably continue to expand, and probably at a faster rate than before, as farmers race to beat any further restrictions. We may also see those that were “on the fence” about getting into dairy, triggered to take the plunge. The expansion will be possible by getting heifers contract-reared by retiring beef and dairy farmers, which frees up nitrate quota for the dairy farm to expand.
Farmers will also be able to expand by simply keeping fewer replacements, but this can only be achieved where herds have good fertility and health traits. A low replacement rate has two advantages:
It increases the land area and nitrate quota available for dairy cows.It increases the average age within the herd, so milk yield per cow will increase. Genetics
Achieving this is going to put more scrutiny on genetics. The EBI will not change too much from where it is now, with most of the emphasis on fertility and milk solids. The conundrum will be on cow size and how the industry squares the circle to have efficient dairy cows and yet has beef progeny from those cows that will deliver a return to the beef farmer.
Towards the end of the decade, the impact on restricted growth in dairy will really begin to bite. With cost inflation running at 2% per annum and milk price inflation at about half that, the real margin from dairy farming will continue to erode and dairy farmers will have less buying power. Expanding businesses to keep up with inflation will be a lot more difficult.
Technology
Staying within the farm gate, we can expect to see more technology on dairy farms. While artificial insemination (AI) has been practised on dairy farms since the 1950s, a new type of AI (artificial intelligence) will come to prominence over the next decade.
We will see the widespread rollout of sensors on farms. These sensors will become cheap and almost disposable. They will be in fields, on tractors, in milking parlours and in cows’ legs, necks and rumens.
Each sensor might only gather a small amount of data, but each dataset will be connected through the internet of things and AI will be used to predict outcomes such as grass growth, milk yield and calving dates.
The debate will be about who owns this data and who benefits from it. The companies supplying the equipment, the milk processors, the feed merchants or the farmers?
Robotics and labour
The rate of innovation growth in robotic milking systems will decline, driven by a reduction in demand for robots in America and Europe.
More farms in Ireland will continue to go down the robotic milking route, but at a lower rate than in the last decade.
As more information becomes available on running costs, reliability and the skill set required to successfully operate robotic systems, farmers will decide to install larger rotary and herringbone parlours instead.
Since the end of quotas in 2015, Irish dairy expansion has been accommodated by it being competitive in the global market.
Skilled labour will continue to be scarce, while the demand for labour will continue to increase due to increasing herd size.
The new restrictions will slow or stop large-scale dairy farm conversions, but existing farms will continue to grow in size and the prolificacy of multiple farm units under a corporate-type structure will increase.
Structures will evolve to allow farm managers have a share in these businesses.
Since the end of quotas in 2015, Irish dairy expansion has been accommodated by it being competitive in the global market. While there will be unforeseen challenges in the years ahead, in addition to those we know about, forecasts of more global demand for dairy products suggests that Ireland will have a successful dairy sector at the end of this decade.
Irish dairy farming has moved from a state of contraction to positive expansion in the past decade.While overall demand is likely to increase, there will be many new challenges driven mainly by environmental concerns. Technology and breeding will continue to bring benefits to producers and a level of further expansion in the sector seems likely in a portion of the coming decade.
When the annals of Irish farming are read sometime well into the future, the years 2010 to 2020 will be remembered as the time the Irish dairy industry came of age. Looking back, certain periods are memorable for the events that happened during that time.
The famine of the 1840s, the 20th century world wars and geopolitical events like Ireland joining the EEC, have each had major impacts on Irish agriculture. The same can be said of the ending of milk quotas.
Shackled since 1983, the lead-in to the removal of quotas on 1 April 2015 saw a frenzy of herd expansion, construction and expectation.
While Ireland’s milk output remained more or less static, at about five billion litres, during the bulk of the quota era from 1986 to 2010, the same period saw a huge reduction in the number of dairy farmers and dairy cows.
Farmer numbers fell up to 2010
There were 68,000 dairy producers in Ireland when quotas were introduced and this was down to 18,300 by 2010.
Three out of every four dairy farmers disappeared during the quota era. However, the number of dairy farmers in Ireland at the close of the last decade was broadly similar to the numbers at the start of the decade. This is probably the first decade since the famine that the numbers of people milking cows in Ireland did not decrease.
A decade of expansion
While producer numbers stayed more or less the same, both the number of cows per farm and the volume of milk being produced per farm increased greatly over the last decade. In 2010, the total number of cows being milked was just over 1.07m, producing 5.14bn litres of milk. Average herd size was 59 cows.
By 2019, dairy cow numbers increased to 1.52m, a 42% increase, while the volume of milk produced increased to just shy of eight billion litres, a 56% increase over the decade.
Increased scale on farms has led to increased investment in facilities to cater for extra numbers and create an efficient workplace
The average rate of growth in milk volume was 5.6% per year, which is more than twice the global growth rate in dairy production and it made Ireland the fastest-growing dairy producer in Europe, although we only account for about 5% of the total EU production.
At farm level, the changes during the decade have been immense. With cow numbers increasing and farm numbers static, average herd size has increased from 59 cows in 2010 to almost 80 cows in 2019.
Over half of the cows in Ireland are milked in larger herds of 100 cows or more and the number of farms milking more than 100 cows more than doubled between 2010 and 2016.
This increase in scale at farm level was largely driven by increased specialisation in dairying. Mixed dairy farms that once ran beef cattle, tillage or heifer-rearing enterprises alongside replaced these enterprises with extra dairy cows. In some cases, replacement heifers were moved to out-farms or were contract-reared.
Throughout the decade, the number of animals being contract-reared steadily increased and, while no official figures exist, it is estimated that between 10% and 15% of all dairy heifers are now being contract-reared.
This is particularly the case for larger farms where outsourcing the heifer rearing allows the operators to focus 100% on the milking herd.
Alongside the outsourcing of heifer rearing has been the outsourcing of machinery-related tasks such as silage, slurry and fertiliser spreading.
Investment
Increased scale on farms has led to increased investment in facilities to cater for extra numbers and create an efficient workplace.
There has been a boom in on-farm construction of milking parlours, cubicle sheds, silage slabs and farm roadways. The extra 600,000 dairy cows on Irish farms over the past decade have all required new cow housing and milking facilities costing in the region of €1.38bn in capital investment.
Another trigger for the expansion of the dairy sector has been tax incentives for the long-term leasing of land.
Tax-free rental income for long-term leases has increased the supply of land in the rental market, something dairy farmers have capitalised on. The 2015 scheme has proved to be mutually beneficial for the lessor, lessee and the State.
For the dairy farmer, getting an opportunity to lease land contiguous to the grazing platform has allowed the farmer to increase cow numbers without incurring excessive capital costs. In many cases, the leased land enabled the existing facilities to be fully utilised, thereby increasing the overall return on capital.
For the State, the trickle-down effect of increased economic activity from dairy has boosted the rural economy. According to a report by food economist Ciaran Fitzgerald, the value of the dairy industry to the Irish economy has increased from €1.8bn in 2009 to €3.8bn in 2018.
Challenges
The expansion of the dairy sector has not been without its challenges. In the early part of the decade, the main challenges were around finance.
Milk price volatility and limited access to credit in the wake of the global recession taught farmers hard lessons in their newfound free-market economy.
The trend line for milk prices over the last decade looks a bit like the trajectory of a tennis ball dropped from a height.
The big drop came in 2009 when Irish prices hit 21c/l – the lowest on record. The big rise came in 2013 when Irish prices went over 35c/l – the highest on record. For the rest of the decade, the tennis ball has been bouncing along, but with far less energy.
This has not just happened by accident.
Mechanisms such as fixed-price milk schemes and forward-selling have helped to smooth the volatility.
New challenges emerged post-2015, particularly in the area of labour. An improved Irish economy with near full employment combined with widespread inexperience of managing people lead to teething problems in attracting and retaining staff on dairy farms. A scarcity of skilled, trained workers for dairy farms exacerbated the problem, with good farm managers in high demand.
Concerns around the environment and animal welfare intensified towards the end of the decade. Dairy farms make up 20% of Ireland’s agricultural land area, yet account for over 50% of the fertiliser used. The amount of farmland under nitrates derogation increased by 34% between 2014 and 2018.
There are now over 7,000 farms in a nitrates derogation and dairy farmers make up a disproportionate amount of these.
Concerns around the environment and animal welfare intensified towards the end of the decade
Debate around the future size of the national herd, considering methane and ammonia emissions, intensified as the decade went on.
Many environmentalists have called for the national herd to be reduced, with official policy veering towards a reduction in the national suckler herd to allow for a continuation of growth in the more lucrative, and environmentally riskier dairy herd.
A severe fodder deficit in spring 2018, followed by a severe drought in the summer, increased the cost of production on Irish farms.
The issue of dairy bull calves hit the headlines the following spring as beef farmer demand for dairy-bred calves collapsed and transport issues caused difficulties for live exports.
Attention turned to ways of increasing the value of male calves but as the decade closed, the elephant in the room was the unfettered expansion of dairy cow numbers; economic success yes, but at what cost to the environment and calf welfare?
Irish dairy in the next decade
In 10 years’ time, Irish dairy farmers will still be debating the best ways to milk cows, grow grass and breed dairy replacements.
These will still be the core fundamentals of the Irish dairy industry. I say this with a high degree of confidence, simply because the fundamentals of grass-fed dairy are so strong in terms of product quality, health, and environmental sustainability.
Towards the end of the decade, the impact on restricted growth in dairy will really begin to bite
Of course, some things will have changed – nothing ever stays the same. The socioeconomic headwinds of Brexit and COVID-19 will dominate the start of the decade. Within the farm gate there will be change as well.
Headroom for further expansion
At some point over the next decade, there will be a cap put on cow numbers. When that happens and the stock numbers it applies to will be dependent on political decisions.
However, is likely to be somewhere between 1.7m and 1.8m dairy cows.
At current levels of milk production per cow, this will cap milk output at between 8.5bn and 9bn litres of milk. This will essentially reintroduce the milk quota that shackled dairy farmers for 30 years and force the production of extra dairy into parts of the world that have a higher carbon footprint per kilo of output.
However, an important difference between the old milk quota restriction and the new restriction is that any new constraints will be aimed at reducing environmental risk rather than reducing milk output.
Nitrate limitations
The form that new limits take will likely be based on tighter regulation of organic nitrate excretions per hectare. This will be used as a proxy, a catch-all. Rightly or wrongly, it will attempt to solve the greenhouse gas, water pollution and air quality issues facing Irish agriculture.
At present, every dairy cow is considered to produce 85kg of organic nitrogen per year and the nitrates derogation sets a limit of 250kg of organic N/ha, giving a maximum overall stocking rate of 2.94 livestock units/ha. If Ireland implements a system for nitrates, which is similar to what the Dutch did for phosphates, then every farm will have an upper limit on the kilos of organic nitrogen it can apply per hectare.
While producer numbers stayed more or less the same, both the number of cows per farm and the volume of milk being produced per farm increased greatly over the last decade.
Before people start racing to breed higher-yielding cows, it is likely that every herd will have a different organic nitrogen excretion rate per cow, based on milk yield and composition, as has partially happened in Denmark.
Policymakers will not allow or incentivise farmers to switch to higher-input systems which carry a higher environmental risk, even if these production systems enable milk production per cow to increase.
Ways to expand
The impact of putting a restriction on cow numbers will take some time to kick in. In the initial years, the national dairy herd will probably continue to expand, and probably at a faster rate than before, as farmers race to beat any further restrictions. We may also see those that were “on the fence” about getting into dairy, triggered to take the plunge. The expansion will be possible by getting heifers contract-reared by retiring beef and dairy farmers, which frees up nitrate quota for the dairy farm to expand.
Farmers will also be able to expand by simply keeping fewer replacements, but this can only be achieved where herds have good fertility and health traits. A low replacement rate has two advantages:
It increases the land area and nitrate quota available for dairy cows.It increases the average age within the herd, so milk yield per cow will increase. Genetics
Achieving this is going to put more scrutiny on genetics. The EBI will not change too much from where it is now, with most of the emphasis on fertility and milk solids. The conundrum will be on cow size and how the industry squares the circle to have efficient dairy cows and yet has beef progeny from those cows that will deliver a return to the beef farmer.
Towards the end of the decade, the impact on restricted growth in dairy will really begin to bite. With cost inflation running at 2% per annum and milk price inflation at about half that, the real margin from dairy farming will continue to erode and dairy farmers will have less buying power. Expanding businesses to keep up with inflation will be a lot more difficult.
Technology
Staying within the farm gate, we can expect to see more technology on dairy farms. While artificial insemination (AI) has been practised on dairy farms since the 1950s, a new type of AI (artificial intelligence) will come to prominence over the next decade.
We will see the widespread rollout of sensors on farms. These sensors will become cheap and almost disposable. They will be in fields, on tractors, in milking parlours and in cows’ legs, necks and rumens.
Each sensor might only gather a small amount of data, but each dataset will be connected through the internet of things and AI will be used to predict outcomes such as grass growth, milk yield and calving dates.
The debate will be about who owns this data and who benefits from it. The companies supplying the equipment, the milk processors, the feed merchants or the farmers?
Robotics and labour
The rate of innovation growth in robotic milking systems will decline, driven by a reduction in demand for robots in America and Europe.
More farms in Ireland will continue to go down the robotic milking route, but at a lower rate than in the last decade.
As more information becomes available on running costs, reliability and the skill set required to successfully operate robotic systems, farmers will decide to install larger rotary and herringbone parlours instead.
Since the end of quotas in 2015, Irish dairy expansion has been accommodated by it being competitive in the global market.
Skilled labour will continue to be scarce, while the demand for labour will continue to increase due to increasing herd size.
The new restrictions will slow or stop large-scale dairy farm conversions, but existing farms will continue to grow in size and the prolificacy of multiple farm units under a corporate-type structure will increase.
Structures will evolve to allow farm managers have a share in these businesses.
Since the end of quotas in 2015, Irish dairy expansion has been accommodated by it being competitive in the global market. While there will be unforeseen challenges in the years ahead, in addition to those we know about, forecasts of more global demand for dairy products suggests that Ireland will have a successful dairy sector at the end of this decade.
Irish dairy farming has moved from a state of contraction to positive expansion in the past decade.While overall demand is likely to increase, there will be many new challenges driven mainly by environmental concerns. Technology and breeding will continue to bring benefits to producers and a level of further expansion in the sector seems likely in a portion of the coming decade. 
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