The prevailing narrative surrounding dairy farming in Ireland is commonly that of negativity.
Seen to be doing the wrong thing by environmentalists and environmental regulators, pressure from the media and social media and a general sense of disenfranchisement towards dairy farming from other farming sectors can often lead dairy farmers to the conclusion that they are the bad guys.
Yes, Irish dairy farmers are facing even stricter environmental regulations than what we already have.
Recently announced proposals to change the Nitrates Directive will radically alter dairy farming practices, particularly around slurry, soiled water and chemical fertiliser use.
The net effect will be extra investment in slurry storage and a reduction in the stock carrying potential of the farm. But it won’t put dairy farmers out of business.
The environmental lobby is, however, putting real pressure on farmers. This is most clearly seen in An Taisce’s persistence in dragging the new Glanbia cheese plant all the way to the Supreme Court, despite lower courts unambiguously ruling in favour of the development at every juncture.
The net effect of this is that many dairy farmers in the Glanbia catchment are going to be paid less for their milk during the peak milk supply months over the next three years.
Further objections by An Taisce to dairy-based development are also planned.
It is clear that the national heritage organisation, which is in receipt of many millions in State funding as a service provider, is hell-bent on preventing any dairy-related developments, including objecting to individual and private farms.
The question needs to be asked – is An Taisce doing this for the good of the global environment, or to inflict damage to a sector its leaders dislike?
Ireland could probably get rid of close to 90% of its dairy cows and yet still be self-sufficient for dairy. Where would the 7bn litres of milk forfeited by Ireland be produced instead?
Where would the people who eat and drink that dairy get their essential nutrients, vitamins and minerals?
What would be the carbon footprint if the 7bn litres were produced somewhere else?
How much would global carbon emissions increase by as a result of Ireland’s decision to cease exporting milk?
This is before we even look at the impact on Ireland’s rural economy, which, to be fair, should be well down the list of things to look at.
The argument around local economics is a moot point for me.
The world is burning, we are in a climate emergency – if switching from dairy to some other, more benign enterprise was the best thing for the planet and humanity then I think we would have no choice but to embrace that new reality, even if it was less profitable. But that is not the case and it doesn’t look like it will be a reality any time soon.
Understanding the facts
The important thing is to make sure regulators and policymakers understand the facts and the science. Mainstream media and social media is largely misinformed when it comes to farming matters.
Social media is more often than not an ineffective and unhealthy place to engage with people of opposing views. Many of our farm leaders are ill-equipped to present coherent arguments in favour of farming in the media and on social media.
There is a public image issue that needs to be addressed by the right people.
So, is it all doom and gloom? Eh, no. Dairy farming in Ireland is booming and all the indications are that the first year of the new decade is starting out as it means to continue.
While milk prices in Ireland have been lagging international prices by about 3c/l, they are still about 3c/l ahead of where they were last year and last year was a very good year.
It’s obvious that processors are building up the balance sheet and in a co-operative-based processing sector, that is allowed to a certain extent, but farmers will be expecting and demanding higher prices over the coming months.
Input costs have increased, with fertiliser over 30% dearer than it was this time last year. Similarly, meal costs have also gone up by nearly €40/t.
General commodity prices have risen and while this will take a lot of the good out of the higher milk prices, healthy profits will be generated on most dairy farms this year.
Many analysts and forecasters suggest that dairy markets will be buoyant for the medium term. Rising oil prices means strong dairy demand in the Middle East, and China shows no signs of cooling off its insatiable dairy demand.
Of equal importance is that dairy supply isn’t growing like it used to, and nor will it.
The global dairy exporting powerhouses of Europe, the US and New Zealand are all under the cosh when it comes to environmental regulations.
By far the most regulatory-benign of these countries is the US, but even there the environmental lobby is taking an increased interest in planning applications for mega-dairies, even in the Midwest.
The biggest problem for the US dairy sector over the coming decades is likely to be access to water as aquifers begin to run dry. This will be the biggest challenge for agriculture.
In Europe and New Zealand, increased environmental regulation essentially means that peak cow numbers have been reached and the ability of either region to increase production due to increased demand is no longer what it once was.
Are we about to enter an era of rising food prices or will some event mean that demand will stay static or even drop to meet supply?
Either way, Irish dairy farmers are in a good position to capitalise on the dairy market. They produce a high-quality product in a sustainable way with excellent traceability and quality control.
These are the metrics that set Irish dairy apart from our competitors inside and outside of the EU.
The situation is certainly a lot better than it was 12 months ago, with demand back on track after COVID-19 and a crashout Brexit off the cards.
Managing fluctuations in input prices and processing capacity aside, all the indications are that dairy farming will be more profitable over the next five years than it was for the previous five years.
Collectively, many millions have been spent on developing farms and facilities to cater for extra cow numbers.
With these extra numbers now more or less in place, farmers will be looking to reap the rewards of their investment and hard work.
Pay down debt and build up a war chest for the rainy day or other investment should be the mantra on well-developed farms.
There is an increasing sense, however, that the door is being shut for new entrants to dairy.
The Glanbia announcement of last March that it was no longer taking on new entrants and capping all future new entrants at the equivalent of 100 cows sent shockwaves through the industry.
Other co-ops have since introduced similar measures to varying degrees, such as only allowing co-op members to supply milk and only accepting new entrants from within its catchment.
Increasingly, there is the feeling that quotas have returned, if not for existing farmers then for new entrants.
In many ways this is not a crisis for dairying, but a crisis for Irish farming that current and future generations of non-dairy farmers will be prohibited from working in a sector that gives them the only real hope of generating a full-time income from the land.
No alternative enterprises can deliver that on 60, 70 or 80 acres of land like dairy can when it’s done right.
What will these people do instead? Continue to try their best with beef/sheep/tillage and work off-farm to supplement their income?
People who have completed the journey from this lifestyle to dairy always comment on how dairy has reduced their workload as they now take off their wellingtons at 5pm, rather than put them on like they used to in the past.
The issue with new entrants is nothing to do with Government policy. It’s got all to do with the policies of milk processors.
Faced with tightening processing capacity, co-op boards have taken the decision that they are going to keep what capacity they have for their existing suppliers. This suits everyone except the new entrant, who has no voice at the table.
The issue stems from the fact that most co-ops have neglected to enforce a proper policy around shares and shareholdings. It was a non-issue during the quota era and when the shackles came off they opted for a free-for-all for fear they wouldn’t get the milk to fill the extra capacity.
The result is that, in most cases, milk suppliers paid for the extra capacity through accepting a lower milk price and, to be fair, most suppliers benefitted from that extra capacity.
Now we have the scenario whereby these existing suppliers, who have completed their expansion journey are naturally and correctly uninterested in paying for additional capacity through milk price, considering they won’t be using it.
The right thing to do, and it’s not too late to do it, is to use co-op shares as a processing right which can be bought and sold depending on whether a farmer is expanding or contracting.
A new entrant or someone expanding will then have to buy existing or new shares commensurate with the amount of milk they intend to supply. The next new dairy plant should be a joint venture between a number of different co-ops, to the benefit of all.
While there are challenges in dairy, particularly around labour, environment and technical performance (still poor on average), dairy farming is in a good place.
The era of large conversions is running out, but there are still lots of opportunities for farmers to grow.
The big risk is that dairy farmers talk themselves out of the opportunities under their feet.