Expansion through Partnership

• One Irish farm tackled the issue of supporting an additional generation under the constraints of both a quota system and increasingly strict environmental regulations.
• Goals set to meet the challenge included filling quota as cheaply as possible and changes in breeding emphasis.
• Milk yield was reduced from 6900 lt/cow to 5600 lt/cow; however, family goals are better met.

Background

Our farm is located at Doon in the Virginia/ Mullagh area of east Cavan, 8 miles from the Meath border. The farm until recently was a mixed dairy and beef farm with some horses. The farm would be considered dry in the most part, by Cavan standards.

My parents were blessed when I was born in 1982. In 1983, milk quotas came into being, so only one year of my life has been outside the control of milk quotas. Our quota in 1983 was 86,400 litres (19,000 gallons).

Fast forwarding to 2000, I finished my year in Ballyhaise College and have since completed the Green Cert. I travelled to New Zealand on the Stephen Cullinane scholarship and spent six months working on the farm of Arthur Bryant in the Waikato. On the way home, I spent three months working on grass-based dairy farms in Ohio and New York State.

After arriving home, I worked in construction as well as farming. In 2002, I worked for a year on a 130-cow, grass-based, low cost farm near Virginia. This experience strengthened my belief that a low-cost New Zealand-type farm would work in the Irish dairy sector.

Our own farm at this time had expanded to 30 hectares owned plus seven hectares rented with a milk quota of 277,300 litres (61,000 gallons). The herd by now was all spring calving. About 90% of the farm had been reseeded and a good network of fencing and roadways was in place. The beef enterprise was gone and we were going to concentrate solely on dairying into the future. The horses remain; Tony has a keen interest and they are ‘better than any topper’ for keeping grass under control.

	1983	2000	2004
Physical situation
Adj Ha	20	29	30
Rented	0	7	7
Stock details
Dairy cows	25	38	85
Repl heifers	5	10	19
Drystock	35	45	2
Milk production details
Quota (litres)	86,374	263,790	475,152
Yield (litres/cow)	3,454	6,941	5,600
Milk fat %	3.61	3.87	3.95
Milk protein %	??	3.47	3.38
Concentrate input (kg/cow)	600	560	300
Date of turnout	1st Apr	1st Mar	1st Feb

Setting up a Milk Production Partnership

The question was, would the farm support two household incomes into the future? Dairying appeared to be the way forward, but Tony could only acquire a few thousand gallons of milk quota in any given year. Quota was the most limiting asset, followed by land. With 61,000 gallons, I could not come home long-term to farm full-time. The main problems on the farm in 2002 were access to quota and a lack of housing, with cubicles for only 40 cows. Costs were not high and the farm was efficient at producing milk.

The Milk Production Partnership arrangement for farm families came at the right time for us. The obvious incentive was a big amount of milk quota in one go. We were able to get over 40,000 gallons from Lakeland Co-op. We were lucky to be in this region; many partnerships were set up to draw down just a few thousand gallons of quota. We were also lucky in factors such as age, where Tony was not too old, and in quota size, where we were just under the maximum size allowable.

We found the process slow and unsure. We were fortunate with our solicitor and with Ben Roche of Teagasc who helped it along. It would have been much easier if the Partnership book had been written before we started rather than now, with the job done in our case.

What differences has the partnership made?

The most obvious difference is a lot more quota to fill. We are now at 475,000 litres (104,000 gallons) with 85-90 cows. Tied in with this is a lot more debt, as Catherine is quick to point out. We borrowed €63,000 to buy quota in 2003. We spent over €10,000 on 15 extra cows in 2003 and €10,000 on ten more cows in 2004. In 2003, we fed a lot of meal in the autumn and managed to fill over 90% of our quota. To date this year, we have supplied 13,000 gallons more milk than this time last year. We will have to match last years milk supply pattern over the winter to fill the quota this year.

We did a good deal of the borrowing for cows on an overdraft. The rate we received was very competitive. The short term nature of our borrowings put extra pressure on us financially. The cost savings that we made this year and the extra milk sales mean that the overdraft to be cleared before Christmas. We borrowed for milk quota on a three-year term loan.

We could have maintained cows at milk yield levels of 6900 lt (1530 gals); that is what we were doing in 2000. A number of factors made me decide instead to reduce milk yields to 5600 litres (1200 gals) per cow and fill the quota with more cows:

1. I do not want to milk cows for twelve months of the year, I want a break
2. I would be feeding a tonne of meal to fill the quota with 69 cows; with 85 cows, I feed 300 kg meal per head. This gives a cost saving of €9500 or €600 per head over the 16 extra cows. It would not cost €600 for me to keep the extra 16 cows.
3. I can milk the cows totally off grass. The plan is that no cow will milk off silage. The limited grazing area at home is used purely to produce milk and when they are dry, cows are kept cheaply elsewhere.
4. This system should give us more flexibility in the future; we are not tying up our money in sheds and concrete.
5. Grass silage is becoming an expensive feed and I wish to move away from it. There are more options to winter cows cheaply over a long winter if lactactions are shorter.

We are aiming to fill the quota as cheaply as possible. We put the cows to grass day and night this year as they calved. Calving started at the beginning of February. We feed no meals during the spring and summer and did not start feeding some until the farm cover merited it and we felt a need to push the cows, which was around the 15th of October.

In our breeding programme, we are going for survivability and fertility. We want a cow that is easier to winter, cheaper to feed and is more fertile. It is good to see the EBI following our example. Last year we used Hugo, Kabul and Linde Bartho. We may use Hugo and Kabul and Dano in 2005.

Because of the good grass growing year, it was hard to keep the grass eaten on our farm in 2004, even with the large number of cows, and the level of nitrogen use is well down on other years. Utilisation would appear to have been better than other years. I find that measuring and budgeting grass allows me to see a surplus or deficit of grass several weeks in advance, so I can take remedial action in time.

Our cows calved outside this spring with minimal interference, without any problems. Having the milkers outside eased the workload considerably. Our calves have been on once-a-day yoghurt milk for the last few years. Eliminating the drystock enterprise has helped us focus more on the cows.

I have seen large numbers of cows been farmed across the world. I believe it was very important for me to travel and to see farming outside our own and to know that there can be different methods of working. After working in a different sector of employment, I am surer of my chosen career.

I have the role of day-to-day manager on our farm. It is vital for me that I have responsibility on the farm, instead of being a token partner. If I had not a major responsible role, I would not be at home farming now.

Tony’s job is relief milker, especially on Sunday and often Monday morning. He also keeps me on the straight and narrow. Catherine is by no means a silent partner either. She is the administration boss. She is trying to encourage me to show more than my only occasional interest in that side of things.

At this point, I would like to thank my parents for their faith in me, and for their willingness to let me walk my own path with the farm. I would also like to thank them for letting me be the one to stand up and represent the partnership here today.

Challenges for the future

The most immediate challenges are filling the milk quota and clearing farm debt. These will be solved by next spring.

A more long-term problem area is the milking system. We have an eight unit parlour at present. Depending on the number of cows we will eventually milk, we should be doubling the size of this parlour. The yard is also tight for 100 cows. Should we be spending money in this area? This depends on whether or not we will have access to more land at home, or more quotas?

The ability to winter cows is also an issue. We were short on winter housing even before we went for the partnership. Housing obviously is even more of a challenge today. Another problem linked with this is the limited farm size at home. Even if we had enough shed space, the farm is used now to provide summer grazing for the herd and there is not a lot of spare land for silage making. This winter we acquired wintering facilities on another farm where we will keep the dry cows and in calf heifers. The cows will come home when close to calving. Woodchip pads may have some role in the future, but they haven’t been approved yet for general use. Also, they will not solve the winter feed problem. We are looking seriously at the option of renting dry land to grow kale on after a cut of silage for next winter. The cows will graze the kale and eat the round bales of silage. We will be flexible in our approach to wintering over the next few years.

Our grass supply will be tightest in the spring and autumn. This spring, we went full-time to grass too early. In the coming season, calving and turnout are delayed from the beginning of February until the middle of February to ensure better covers until April.

Our aim is to have the cow’s diet consisting only of grass. Grass budgeting is a priority on the farm.

Perhaps milk price will warrant a more high cost system in the future; we feel at the moment that this is unlikely. Keeping costs down will always be a challenge. We were efficient before the partnership, we knew what we had to do or spend or not spend. Now with nearly twice as much quota and the problems linked with this, it is harder to know what is happening from year to year. We will have to continue to keep an eye on our profit monitors!

	2001	2002	2003	2004 projected
Dairy output c/l	26.5	27.5	28.0	28.5
Meal	2.4	2.7	2.6	1.0
Fertiliser	0.9	1.7	1.9	0.5
Vet	1.2	1.5	1.4	1.4
AI	0.5	0.5	0.6	1.7
Contractor	0.8	0.7	0.7	1.1
Other var. costs	0.3	0.6	1.6	1.2
Total var.costs	6.0	7.8	8.8	6.9
Gross margin	20.5	19.7	19.2	21.9
Machinery	0.4	0.6	1.2	1.0
Car/ESB/phone	1.6	2.0	2.1	2.1
Depreciation	1.2	1.3	2.6	2.5
Other fixed costs	0.8	0.4	1.3	1.3
Total common fixed costs	4.0	4.3	8.2	6.9
Common costs	10.0	12.2	17.0	13.8
Common profit	16.4	15.3	11.0	14.7

The Nitrates Directive will be another concern. Our stocking rate is high. We would be hoping that it would be possible to get some kind of derogation on stocking rate. If we are renting land for winter-feed, this will help reduce our stocking rate. We don’t know what the rules will be on the amount of slurry storage required, if we are out wintering stock or using early grazing. When all the issues are known, this topic may have to be revisited.

We would like to continue to expand our quota and land in the future. We will aim to increase our net worth each year. Perhaps land will be more available now in the post-Fischler era. Time will tell.

I wish to acknowledge the role of Macra in my development. The Cullinane scholarship allowed me to travel and see other types of farming in action. In addition, Macra pushed to bring in the partnership scheme, the topic of today’s conference. I will conclude by thanking David Colbourne in Teagasc. He taught me in Ballyhaise College and more recently he followed me to Baileborough where he is now my Teagasc adviser and discussion group facilitator.