Two-track farming

Matt O’Keeffe examines the disconnect between the dairy sector and other farming industries and points to the need for cooperation across all sectors.

 Are we on a two-track agriculture system in Ireland? The simplistic answer is that there is a complete disconnect between the dairy sector and ‘the rest’. That assumption, however, hides some fundamental facts that make for a more nuanced situation. While larger scale, efficiently managed dairy units are making significant profits when milk prices remain above 30c/litre, the higher overheads on many of these farms quickly bite into profitability once the milk price falls below 30c/litre. Many of the larger scale units, especially those which have expanded since the removal of quotas, are carrying high leasing and labour overheads that cannot be reduced when prices fall.

Uncomfortable facts

Another uncomfortable fact to face up to is that, on average, dairy farms are operated more efficiently than non-dairy farms. Average figures, as ever, hide the extremes that are there in every sector. There are dairy farms with lax stocking rates, low milk volume and solids yields and poor grass production and utilisation. The same can be said across every grass-based sector of farming in this country. But, when we come back to the average figures, dairy farms grow and utilise more grass, have higher stocking rates and have higher outputs per hectare than the other livestock-based sectors.

Not following the example

It is not for want of example that these inefficiencies remain in place. The two farms visited by the Irish Grassland Association during its annual sheep and beef farm events (covered in the June issue of Irish Farmers Monthly) bear testimony to the fact that well managed drystock farms are capable of giving many dairy farms a run for their money in terms of profitability, output and overall productivity.
The interdependency between dairy farms, drystock farms and tillage farms means that it is, or should be, in everyone’s interest that all sectors thrive. Dairy farms are dependent on tillage farms for a steady supply of grain-based feeds as well as a plentiful supply of straw for bedding and feeding. While, in theory, the grain element could be substituted with imported product, the importation of large quantities of straw would be both logistically impractical and prohibitively expensive. There is also a realisation across the industry that there is a need to protect an indigenous supply of grain. Being utterly dependent on imported grain is not a sound policy in terms of sustainability. We hear ever more regular utterances from milk processors of the need to consider moving the Irish dairy industry towards a GM-free model. There are both practical and cost considerations to be sorted out before any such move could be considered. While we have a grass-based production model, delivering over 80 percent of our milk output, there are critical periods of the year when cereal-based supplementation is required in the cow’s diet.
GM-free cereals are scarce and expensive
Referring back to grain supply, there is now very little grain for purchase on the world market that is GM-free and any that is available is considerably more expensive. There are even fewer sources of protein for inclusion in livestock rations that do not include some degree of GM produce. GM soya is now almost ubiquitious. If the demand for GM-free dairy makes it imperative that Ireland can guarantee at least some of its dairy products as GM-free, then there will have to be a lot of thought around how that can actually be achieved. One of the biggest challenges will be to source GM-free protein for dairy rations. The peas and beans grown indigenously could provide some of the tonnage required. However, without an exponential growth in protein plantings, that source would not nearly provide enough protein to supply our requirements. It is far from clear that a determined effort to increase the acreage of protein crops in Ireland would deliver the necessary tonnages. Those crops are quite dependent on weather conditions to achieve both yield and quality. While tillage farmers are willing to have a proportion of their crop profile sown to high protein crops, it is unlikely that they would risk having a high percentage devoted to proteins.
Competing against GM
There is also the issue of competition. The EU provides a protein crop subsidy for that very reason. Growing protein crops in Ireland is uncompetitive compared to growing comparable crops, especially soya, on the plains of North or South America. Add to that, undependable weather conditions in our temperate climate and competitiveness is further eroded. The competitive edge provided to soya bean growers by GM plant technologies is yet another cost disadvantage under which Irish protein and cereal crop growers must operate.The economics of GM-free livestock production is totally contingent on the market being willing to pay a considerable premium for GM-free food. If that could be achieved then the significant extra costs of production could be carried, provided, of course, that the premium were passed back fully to the primary producer, where the increased production costs of GM-free food are borne. Neither of those hypotheses are likely. Food purchasers are increasingly looking for new standards but show little sign of being willing to pay for the increased costs associated with those standards. If that continues to be the case then the whole economic model for GM-free dairy, for instance, falls flat. It simply cannot be delivered by producers.There eventually comes a time when food producers must stop carrying all of the burden of increased production costs in order to appease those further up the food chain who demand more and pay the same, or less, for the enhanced product.
The case for cooperation
Returning to the independency of our various production sectors, the dairy sector is dependent on cattle farmers to purchase their surplus livestock. The increase in dairy cattle numbers makes this even more important. While the live export trade takes some of this surplus, it is Irish cattle farmers, in the main, who buy the male, and surplus female calves from the dairy farms. Efforts have been made, aside from the Jersey-X animals which have very limited commercial meat value, to upgrade the beefi ng potential of many of these calves by introducing Hereford and Angus terminal sires where possible. This is a prime example of two sectors working together, even if that is often neither fully realised nor acknowledged, to the benefit of both parties.

Tags: Dairy sector Two-track agriculture system Dry stock farms tillae farms