A dairy farm can produce 50,000 tonnes of milk solids or a half million litres of milk, and some analysts might say that is a good measure of a successful farm.

It is a good measure. However, there are so many ways to produce that milk, and output is only one measure.

Cows can be fed three to four tonnes of concentrate per cow to produce 14,000 litres of milk per cow, or lower yielding cows can be fed zero nitrogen grass and clover swards topped up with 400kg of concentrate per cow.

Both are extremes in terms of feed management, but both can work. The farmer margin differs depending on certain variables.

I met an American businessman this week, and he asked what are Irish cows going to be producing in 10, 20, 30 and 40 years’ time. It’s a great question.

His key point when we talked about breeding was that we need to be looking to the future – not what happens next year or the year after.

You have to be strategic. He was coming with the experience of 40 years of American high-producing cows in his DNA, and felt Irish cows had so much more room for improvement.

When he heard Irish butter was on North American shop shelves retailing for twice the price of American butter, it made him think twice on the best way forward for Irish cows.

Annual results

Tirlán announced its 2024 annual results this week and the results are good. Chief executive Sean Molloy’s prognosis for 2025 milk price at 10% higher than 2024 tells its own story (see more p3).

Debt levels are low for a business that has spent €700m investing in its core business recently without directly charging milk suppliers.

However, the question is, as a business, where will it be in 10, 20, or 30 years time? Tirlán now has Belview – a high spec infant formula grade powder drying plant, underutilised for a large part of the year.

It has a stream of whey from the Kilkenny Cheese Company in Belview that needs more investment to maximise byproduct revenues.

The fundamental issue that has a handbrake on co-op development is, like other processors, it has a milk supplier base that is unsure of the future.

Essentially the rug has been pulled out from under dairy co-ops because a small cohort of Irish farmers are being forced to comply with a European nitrates rule that is illogical in how it is enacted in an Irish scenario.

Stand back from the Tirlán situation. It is clear across all the dairy businesses profiled over the last number of weeks that one of the key metrics co-op management are measured on is actual milk price and positioning in the Irish Farmers Journal monthly milk league.

Co-op directors, mostly dairy farmers, hold management to account on this more than anything else – in some co-ops more than others.

I’m not privy to management incentive packages, but you’d have to question whether key co-op management is incentivised enough to make brave and strategic investment calls that involve higher than comfortable risk?

The continuous over the shoulder watching of next door neighbour competitors, and of Ornua, is undoubtedly holding back strategic investment.

It’s adding cost. It’s reducing efficiency. The Nitrates ambush is now spotlighting this inefficiency.

Case studies

Muller milk suppliers from the recently acquired Yew Tree Dairy near Liverpool have been spilling milk down the drain for the last two weeks not knowing if they will be paid.

Tipperary Co-op milk suppliers were investing in high-spec milk dryers until very recently – LacPatrick milk suppliers the same. The industry evolves whether we like it or not.

As an industry, we badly need to move on in terms of how we measure success at co-op level. It’s not that bigger is always better, but strategic thinking and investment is equally as important as year-to-year results for any co-op.

Bottom line, we badly need a more holistic barometer of dairy industry success. Secondly, the key Irish co-ops, as they are now configured, are badly short of milk solids.