LacPatrick News
07
April
2016
Dairy by Ireland. Since 1896
Hello and welcome to
the April edition of
LacPatrick News.
In this issue, you can get some
advice on what to do in the current
market. There is an extensive
piece from a local dairy farmer
who emigrated to New Zealand
to manage a 450 strong dairy
herd there, with some insights and
advice you might find useful.
There are some important dates
for the diary as well as an update
on the forthcoming Balmoral Show
and how you can get tickets for
this year’s event.
There is also a useful article from
Deirdre Toal from Progressive
Genetics on breeding for higher
milk value.
If you have any comments or
queries on any aspect of the
magazine, please don’t hesitate to
email [email protected].
KEY DATES
DATE
SHOW
30th April
Killyleagh Show
11th – 13th May
Balmoral Show
27th – 28th May
Ballymena Show
3rd – 4th June
Ballymoney Show
4th June
Lurgan Show
11th June
Armagh Show
18 June
Lisburn &
Saintfield District
25th June
Newry Show
1 – 2 July
Omagh Show
16 July
Castlewellan Show
23 July
Antrim Show
27 July
Clougher Valley
Show
30th July
Londonderry/
Limavady Show
1st August
Castleblaney Show
Monaghan
th
st
nd
th
rd
th
2nd – 3rd August Fermanagh Show
20th August
Tydavnet Show
Monaghan
24th August
Viriginia Show
Cavan
A Challenging Year
for Producers
Aidan McCabe
Farm Liaison
Officer at
LacPatrick gives
some practical
advice in the
current market
situation.
The difficult and expensive spring
on top of a poor milk price is a big
challenge for every producer.
Slow growth and wet conditions
have certainly taken their toll in
added costs, increased workload
and reduced morale. With both
weather and price beyond our
control, what can producers do?
What’s wrong with Dairy Markets?
The steady decline in dairy market
prices has been caused by a
mismatch between supply and
demand. On the supply side, milk
production is simply growing too fast
in many areas around the world as
well as in much of the EU following
quota abolition. This has coincided
with lower market growth attributed
to a slowdown in China, the Russian
ban and lower revenues in many oil
producing countries. Any one of
these would be enough to cause
a ‘wobble’ in milk prices. All four
together is the cause of the present
situation.
Some attribute the low price to the
surge in Irish milk production over
the last year. In reality, the level of
production in Ireland has very little
impact on world prices because even
with the projected growth here, we
will still produce less than 1% of world
supplies. Ireland’s difficulty is that
when prices are low, we get that low
price for most of our milk because
we export around 85% onto the
world market, more than any other
country except New Zealand.
Is there any solution in sight?
A slowdown in production will be the
first positive signal. This has been
slow as many producers continue
to push production to minimise the
drop in the value of monthly milk
cheques. This cash flow approach
cannot continue indefinitely because
profitability and minimising losses
on each litre produced must become
the focus for survival in the current
prolonged downturn.
It looks like there will be no quick
solution, but analysts are confident
that the long term prospects remain
strong. Recent signs of an easing of
production are emerging in parts
of Europe including UK as well as in
New Zealand which is encouraging.
Increased demand from China in
early 2016 along with a hopeful
“bottoming out” in GDP auction
prices are also positive signals.
Eventually, milk supply and product
demand will be back in balance and
prices will improve again but this
looks unlikely for the rest of this year.
This is going to be a difficult year for
producers.
Strengthen your business
Circumstances and challenges on
farms vary enormously in critical
aspects like land type, farming
system, stage of development,
borrowing level and family support
available.
In his update from New Zealand
in this Newsletter, Monaghan man
Olin Greenan draws on his own
experience managing a 450 cow
herd, and makes useful suggestions
that could help you.
Ways you might strengthen your
dairy business are:1. Cull non-performing cows.
Most producers have some nonperforming cows which struggle to
have a profit, even in a good year,
including cows with lameness,
recurring mastitis or high SCC.
Cull non-performers, especially in
over stocked situations. This will
help reduce milk production costs
and leave a healthier herd for the
future.
2. Gather all possible information
to help with decisions.
No measurement means no
progress. Key information is
individual daily cow yield and
fertility status (ideally milk
recording information which also
gives milk solids, SCC etc.)
3. Grow more grass - this can reduce
costs.
4. Streamline your work routine. Time
saved in the parlour can reduce
costs.
5. Only urgent capital expenditure
should be undertaken this year.
Development work should never
be funded out of cash flow.
Olin Greenan’s
Advice to Farmers
in Ireland
1…
Share your problems and financial
worries with others. Knowing
your breakeven price will allow
you to tackle the problem more
confidently. Attend discussion
groups and farmer meetings.
Everyone is in the same boat.
Every Cloud has a Silver Lining
Having grown up on a dairy farm in Monaghan, Olin headed off after
finishing college to experience dairy farming in New Zealand. He hadn’t
planned to stay but opportunity, hard work and determination are helping
him to progress the NZ clearly structured farming career pathway. Along
the way, Olin has won several awards including Waikato District Young
Farmer of the Year and New Zealand Farm Manager of the Year 2008.
The Greenan’s presently milk 450 cows in a 50/50 sharemilking deal near
Auckland, supplying the livestock, labour and some machinery.
2…
There’s more to life than low milk
prices so cherish those close to you.
Make the effort to clear your head
and get off the farm regularly.
3…
Focus on what you can change, is
there room for improving some of
the physical performers on your
farm? Concentrating on improving
these will have a positive effect on
your bank balance.
• Tons of grass utilised
• Days at grass
• Calving spread
• Heifer liveweights
• Protein % in milk
4…
We are trading a commodity which
is cyclical, it will recover.
5…
Support each other, especially new
entrants, those who haven’t had a
downturn before. Your experiences
of dealing with previous challenges
will be invaluable.
6…
Farm safely.
Hopefully this has helped you gain
an overview of how things are in
New Zealand and I look forward to
reporting an improvement in milk
prices next year.
Olin Greenan and his wife Anna with children Jack and Noah.
As we get towards the end of
another milking season here, looking
back we are pretty satisfied how it
went for us.
The much talked about El Nino
weather pattern which was expected
to deliver a harsh dry summer for
many parts of New Zealand never
arrived, and I can safely say we have
had the most pleasant summer in all
of my 15 years farming here. Regular
rain ensured grass continued to grow
steadily during the hotter months.
This allowed us to farm through the
summer on pasture with the only
additional feed provided in the form
of 2-3kg/head/day of turnips. In
contrast to other years, where 70%
of the cows’ diet was in the form of
silage. The savings for our business
were huge- the cost of the feed not
to mention the time, labour, wear and
tear and diesel to feed the silage.
We did have a slow spring and grass
growth was back compared to
other years. As a result we were 3%
behind on last year’s production by
Christmas but are now forecasting
to end 2% above last year when we
finally dry off for the year at the end
of April.
Despite the harsher spring we still
achieved our best 6 week in calf
rate yet with 80% in calf in the first
six weeks of mating. We mated for
a total of 10 weeks with an overall
empty rate of 11%. This was a little
higher than last year but we reduced
the mating period by 1 week. These
results were achieved on an all grass
diet using CIDRs on 5% of the herd.
Currently on the farm, the cows are
milking 1kgMS/head as we near the
end of lactation. We are on a 50 day
rotation and cows are receiving 4
kg/head of home grown maize. We
aim to build pasture cover going into
winter, extend rotation and get cows
to target body condition score for
1st June.
It’s been an eventful year.
The property we sharemilk on
here was put on the market, so we
were uncertain about our future.
Thankfully the farm has yet to sell
and we’ve secured a contract for
another 12 months. We are now
actively looking at other options for
June 2017 and certainly not ruling
out land purchase.
Anna and I were delighted to
welcome our second son, Noah on
the 6th January. Jack will now have
someone else to play with his ever
increasing model farm set. It’s been
refreshing for me to have a new baby
in the house and highlighted that
there is much more to life than low
milk prices.
Financially it has been a challenging
year. Our low cost model has allowed
us to break even on milk price. However
we have been unable to pay any
principal. The current environment has
also highlighted the risk involved in
sharemilking, as your asset value can
fluctuate according to milk prices. We
have seen cow prices drop by over
$200/ head so when you calculate that
across our 480 cows, that’s substantial!
It’s important to remain positive in
this challenging environment. Being
negative and disillusioned means you
can’t make accurate decisions needed
to run a business. We are in a very deep
trough of a commodity cycle and our
aim is to be still standing when the
recovery happens.
General Thoughts of
farmers in New Zealand
It’s been interesting looking at the
highs and lows of New Zealand’s dairy
farmers over the past few years’ milk
prices:
spring. Again this needs to be carefully
considered to avoid too much pressure
on one individual as a result of reducing
man power.
Delight: in the season of 13/14, farmers
loved the $8.40/kg MS milk price.
3. Crisis management: sharing their
position with key stakeholders in their
business. Many are working closely with
their accountants, farm advisor, banker
and sharing the severity of the problem
with their own farm staff. This way the
farmer can lift a huge weight off his
shoulders and a team approach will
offer more solutions.
Disbelief and despair: 14/15 delivered
$4.40/kg MS and many couldn’t
comprehend the rapid fall, hoping that
it was only temporary and prices would
recover soon. Most could cope with one
poor year.
Disillusionment / determination: 15/16
forecasting $3.90/kg MS. Farmers have
all accepted that this is not going to
recover as early as anticipated. There
are two moods.
a) For some farmers this is the
last straw, they won’t change
fundamental aspects of their
business, and they are resigned that
they have a future in the industry.
Some have even decided to end
farming as a career, and are tempted
by secure well-paying jobs off farm.
b) On the other hand I have seen
massive guts and determination
amongst many as they try to adapt
to plummeting milk prices. They
are very much of the mindset that
if they knuckle down now they will
come out ok at the other end.
So, what have farmers and the wider
industry done to tackle low milk prices?
1. Cost cutting on farm: many farmers
(including ourselves) have trimmed
as much out of their running costs
as possible. But be careful as too
often the wrong costs are removed
and the consequences can be severe.
Eg. Better to reduce purchased feed
before cutting out vaccines or dry cow
therapy.
2. Labour restructuring: many farmers
employing managers have decided to
go back and milk themselves to reduce
the labour bill. Similarly some full time
positions have become temporary or
only hired as seasonal labour during the
4. Pasture first: Dairy New Zealand
is calling for farmers to refocus on
pasture as the key to their competitive
advantage. The industry has lost its
way over the past few years as high
milk prices encouraged high levels of
supplementary feeding. As a result,
many younger farmers don’t know
how to be a good pastoral farmer.
Interestingly we are seeing forecasted
figures coming through of this year’s
farm working expenses. Significant
reductions have occurred in feed
cost but ironically production has not
dropped significantly. The weather has
been favourable but the indicators are
there that there was massive pasture
substitution combined with high feed
wastage occurring.
5. Huge support from industry
organisations: In particular Dairy New
Zealand and the farmer lobby group
Federated Farmers have instigated
lots of support channels to farmers.
The area of mental health and farmer
wellbeing has been strongly addressed
encouraging farmers to seek help.
6. Banks and financiers: The message
from banks is that they are here to
support and help farmers. However, it’s
not clear for how much longer highly
indebted farmers will be able to carry
on. Banks will be very reluctant to be
heavy handed as this can have negative
impacts to their brand. It appears
that if the client is proactive and
communicating with their financiers,
the banks will work with them.
Attitude Towards Fonterra
Fonterra, owned by 13000 dairy
farmers in New Zealand and the world’s
largest exporter of dairy products has
come under fire here for not predicting
the price slump more accurately. The
general sentiment is that a combination
of China’s demand virtually stopping
and the Russian band has left us in this
position. This has been compounded
with no signals from anywhere globally
to reduce output in light of the low
demand. I’m careful not to upset
my grassroots, but many here are
blaming the removal of quotas as the
main problem. I look at that slightly
differently and believe the indicators
were there before April 1st 2015.
Fonterra has responded by aggressively
cutting costs but farmers remain
bitter about the large salaries senior
executives are receiving for running the
company.
Their loan support package has been
very popular with 70% of shareholders
availing of this.
Fonterra is New Zealand’s largest
company and with that comes the
spotlight from the media. Every move
from them is intensely scrutinised.
Similarly the media isn’t showing much
sympathy for struggling farmers, but if
this crisis continues and starts to really
affect urban centres we may see a
different approach from reporters.
We are yet to receive a forecast
milk price for next season but banks
are working on a price of $4.50/kg
MS. Good luck to anyone who can
accurately predict the price!
Special Admission Tickets
are now available costing
£10.00 or €12.00
Entrance costs to show grounds,
(without tickets):- Adults £18.00
12 – 18 age group £9.00
Senior Citizens
£11.00
Child 5 - 11 years
£2.00
Children under 5 years old are free
when accompanied by an adult.
Visit us on Stand No. C19
For NI suppliers, to order your tickets contact:
Dorothy Dale: 0035347 81400, [email protected], or
Jennifer Prue: 07767 846350, [email protected]
or your Farm Liaison Officer.
For RoI suppliers please contact:
Hilary Clarke: 047 81400 [email protected]
If you are emailing your order please quote your supplier number.
Book early as tickets are limited!
Please allow sufficient time prior to show for posting.
Breeding for
Higher Value Milk:
What’s Possible?
By Deirdre Toal, Progressive Genetics
The daughters of the bull HMY are
achieving an extra 2 cent per litre
or €180 per lactation more than the
average at current milk prices. The table
below compares the protein percentage
of HMY (+0.17% Protein) to daughters
of KOZ (+0.04% Protein) in third
lactations.
HMY
KOZ
0.17% P
0.04% P
Daughters
Protein (%)
733
3.62
Daughters
Protein (%)
1753
3.50
Data from ICBF shows high EBI cows
have 10% higher output per day than
average cows due to higher solids and
also better fertility performance, which
can equate to another 1c/litre. But what
does this mean to farmers?
Seamus Hughes of Progressive Genetics
has been meeting farmers at discussion
groups over the past few months. He
commented, “Maximising milk price
is on everyone’s minds. Most farmers
expect volatility but it is still a challenge
when it happens. Setting yourself up
for a better milk price helps in this
regard”. He explains that higher milk
solids from high EBI cows is making a
real difference on farms. “Farmers are
seeing their actual milk price is 2-3 cent
per litre higher than the base and even
higher later in the year. Better fertility
is also driving this as cows are calving
earlier and milking longer so you get
more high value late lactation milk”.
Seamus continued, “Almost every
farmer I meet is sticking to high EBI A.I.
bulls with a big emphasis on protein
percentages and a high production
sub-index. This is the best way to
maximise milk price and efficiency”.
Progressive Genetics has a team of bulls
this year with EBI of €330 and protein
percentage of +0.20. The expectation
is these bulls will have an even better
milk price than the HMY daughters
and also higher kgs milk solids and
better daughter fertility. The fact that
just a few years ago the top bulls were
+0.02% protein and we now have
+0.20%, ten times better, is a reflection
of the great progress made by the Irish
cattle breeding program.
Take a look at www.lacpatrick.com
Dairy farmers now have the tools to
breed a herd of cows that deliver
substantially more than the base price,
thereby insulating themselves long
term from milk price volatility.
BREEDING FOR MILK VALUE
Higher solids worth
2/3 c/litre
Better fertility means
higher output
Massive progress in
breeding for milk solids
Bulls teams EBI €330
and +0.20% Protein