Milk Price- Please read Mod note in post #1

orm0nd

Greengrass1 wrote: »

At the walk today in Jim delahuntys they had a graph of his stock numbers for last 10 yrs and the milk price fir those yrs.
It was a clear pattern that milk price had dropped every 3 yrs.
2006
2009
2012
and now we're in 2015 with a lowish milk price.
coincidence?
his average milk price fir last ten yrs was 34c

for those of us that didn't get there


http://www.teagasc.ie/publications/2015/3623/Dairy_Open_Day_Jim_Delahunty.pdf

Buford T. Justice XIX

alps wrote: »

Don't bet the farm on it Dawggone, lots of life left in the Irish family farm system yet. Where else will you get free land and cheap labour? All of the expansion from here on must pay in full for the land and the labour....Even the comment from the farm walk today was that this progressive farmer was willing yo expand to where he is now, but was doubtful he would take the risk of going the next step involving paying staff and renting ground, where others make the money and he takes the risk...
As far as I can see models like the greenfield, shinock in Bandon and their likes are just not throwing off enough profits to justify the risk to the initial capital investment. Gonna be hard to beat a moderately borrowed family farm that keeps it's system simple and efficient like we saw today.

+1.

The highlighted bit is going to be the biggest concern in the near future. If you lease land, it's done mostly on a fixed price so if output prices drop then all the risk and little of the benefit is going to the person doing the work and taking the risk.

I know frazzled(?) posted before on a fluctuating land rental depending on milk prices and this is going to have to be done a lot more in the future with milk prices fluctuating so much.

kowtow

Dawggone wrote: »

My prediction is that milk will go the same route as tillage ( maybe because I have experience of both).

SCALE! Acres! Numbers of cows!!

I have a feeling that an equally good example might be pigs or even poultry...

1. In the end, no matter how much we work on production efficiency, variable margins (the difference between milk price and input costs) will always be volatile. Milk price can - will - move against you faster than you can grow grass.

2. Scale is nearly always the antidote to fixed costs, and the largest fixed costs are labour and land, neither of which are available free of charge in the quantities required to achieve scale. This is the vicious cycle of expansion.

3. The absurd thing about some current doctrine in Ireland is the apparent desire to pretend that variable costs can be fixed by feeding only 'free' grass, and fixed costs can be varied by hiding the costs of land and labour.

4. Notwithstanding point 3 above, It may be that there is a 'sweet spot' at which the free labour and inherited land of a typical Irish family farm facilitates careful expansion by the use of (temporarily) free labour and existing equity to increase the herd size, reduce variable input costs, and maximise efficiency.

5. There is, however, a natural limit to this type of family farm expansion. It will only take us so far down the road to efficiency, and it has to be paid for eventually in terms of future labour units, pensions, e.t.c. if nothing else.

A sobering question for any family farm is whether a rational business minded non family farmer could afford to buy the place lock stock & barrel as a standalone dairy farm, borrowing say 40-60% of the capital, and make a living. If not, it might be only ourselves we are fooling.

Panch18

kowtow wrote: »

A sobering question for any family farm is whether a rational business minded non family farmer could afford to buy the place lock stock & barrel as a standalone dairy farm, borrowing say 40-60% of the capital, and make a living. If not, it might be only ourselves we are fooling.

clearly the answer to this is no - a resounding no. Farming could barely pay for land if it was 2,000 an acre and not the 12-14,000 it is currently making - in our area at least

But of course the numbers have nothing to do with it - land is never bought on numbers alone and plenty of farmers will pin themselves to a wall for life if a bit of land comes up that they want

so not much point discussing what the price of land should be relative to its farming return

visatorro

is there not loads of smaller family dairy farms in the US still, and look at the factory farms there. I don't know what the profits would be but it certainly wouldn't be as low cost as here.

kowtow

Panch18 wrote: »

clearly the answer to this is no - a resounding no. Farming could barely pay for land if it was 2,000 an acre and not the 12-14,000 it is currently making - in our area at least

In which case the next generation must be ready - capable and willing to suffer for it the same way, never able to buy additional land. How will they increase productivity to pay for rising fixed costs, when our generation has capitalised and spent all the biggest / easiest efficiency gains?

kowtow

visatorro wrote: »

is there not loads of smaller family dairy farms in the US still, and look at the factory farms there. I don't know what the profits would be but it certainly wouldn't be as low cost as here.

Not sure what the definition of a small family dairy in the US is - there are plenty of larger (300+ cows) family dairy farms I can think of.

But the key difference in the US is that land is a fraction of the price, whether to rent or to buy.

Dawggone

kowtow wrote: »

Not sure what the definition of a small family dairy in the US is - there are plenty of larger (300+ cows) family dairy farms I can think of.

But the key difference in the US is that land is a fraction of the price, whether to rent or to buy.

And the cheap cereals that are freely available.
And the cheap migrant labour...

Dawggone

kowtow wrote: »

I have a feeling that an equally good example might be pigs or even poultry...

1. In the end, no matter how much we work on production efficiency, variable margins (the difference between milk price and input costs) will always be volatile. Milk price can - will - move against you faster than you can grow grass.

2. Scale is nearly always the antidote to fixed costs, and the largest fixed costs are labour and land, neither of which are available free of charge in the quantities required to achieve scale. This is the vicious cycle of expansion.

3. The absurd thing about some current doctrine in Ireland is the apparent desire to pretend that variable costs can be fixed by feeding only 'free' grass, and fixed costs can be varied by hiding the costs of land and labour.

4. Notwithstanding point 3 above, It may be that there is a 'sweet spot' at which the free labour and inherited land of a typical Irish family farm facilitates careful expansion by the use of (temporarily) free labour and existing equity to increase the herd size, reduce variable input costs, and maximise efficiency.

5. There is, however, a natural limit to this type of family farm expansion. It will only take us so far down the road to efficiency, and it has to be paid for eventually in terms of future labour units, pensions, e.t.c. if nothing else.

A sobering question for any family farm is whether a rational business minded non family farmer could afford to buy the place lock stock & barrel as a standalone dairy farm, borrowing say 40-60% of the capital, and make a living. If not, it might be only ourselves we are fooling.

The doctrine that you speak of in point 3 is a denial of the new reality. Akin to creative accountancy.
No business would carry on in this way.
This doctrine emanates from the industry that depends on those family farms, and the establishment as a whole.

Greengrass1

Thought this was very good

https://twitter.com/Sambrondanw/status/613966370150182912?s=09

orm0nd

orm0nd wrote: »

for those of us that didn't get there


http://www.teagasc.ie/publications/2015/3623/Dairy_Open_Day_Jim_Delahunty.pdf

and a few pics from the day



https://www.facebook.com/Teagasc/posts/874816659263836

jaymla627

alps wrote: »

Don't bet the farm on it Dawggone, lots of life left in the Irish family farm system yet. Where else will you get free land and cheap labour? All of the expansion from here on must pay in full for the land and the labour....Even the comment from the farm walk today was that this progressive farmer was willing yo expand to where he is now, but was doubtful he would take the risk of going the next step involving paying staff and renting ground, where others make the money and he takes the risk...
As far as I can see models like the greenfield, shinock in Bandon and their likes are just not throwing off enough profits to justify the risk to the initial capital investment. Gonna be hard to beat a moderately borrowed family farm that keeps it's system simple and efficient like we saw today.

Was current debt levels per cow gone into on the day and what intrest/capital repayments where running into per litre, given they're was a serious ball of cash spent the last few years on the farm...
The headline figure teagasc where throwing out of over 1,300 euro common profit a cow for 2014 seems to paint a great picture but then they fail to go into any detail regarding debt levels on the farm/repayments etc

Greengrass1

jaymla627 wrote: »

Was current debt levels per cow gone into on the day and what intrest/capital repayments where running into per litre, given they're was a serious ball of cash spent the last few years on the farm...
The headline figure teagasc where throwing out of over 1,300 euro common profit a cow for 2014 seems to paint a great picture but then they fail to go into any detail regarding debt levels on the farm/repayments etc

400000k dept
yeild was 25l 1.8kg meal
can't remember his bf and p though
his costs were 20c/l don't know many that have that figure

Timmaay

Greengrass1 wrote: »

400000k dept
yeild was 25l 1.8kg meal
can't remember his bf and p though
his costs were 20c/l don't know many that have that figure

400k investment I thought, without the price of the extra cows included. Milking SR of 3.77, with 150 high dmd bales, 50 to tide over droughts, and 100 for the shoulders, was an interesting rule of thumb, I got 16 so far this year haha.

Sacrolyte

Timmaay wrote: »

400k investment I thought, without the price of the extra cows included. Milking SR of 3.77, with 150 high dmd bales, 50 to tide over droughts, and 100 for the shoulders, was an interesting rule of thumb, I got 16 so far this year haha.

I got 0

jaymla627

Greengrass1 wrote: »

400000k dept
yeild was 25l 1.8kg meal
can't remember his bf and p though
his costs were 20c/l don't know many that have that figure

Is that the figure still out standing is what I'm asking, our has a good chunk of this been paid down, would take the 20c/l with a pinch of salt, it's before capital repayments/wages I take it...

Greengrass1

http://www.farmersjournal.ie/article.php?id=184061

This might have an impact on American milk production

Timmaay

Euro dipping even more with the Greek mess, hopefully that will help support the milk price some bit!

orm0nd

Greengrass1 wrote: »

http://www.farmersjournal.ie/article.php?id=184061

This might have an impact on American milk production

Timmaay wrote: »

Euro dipping even more with the Greek mess, hopefully that will help support the milk price some bit!

we always have to depend on other country's misfortune to hike price here

frazzledhome

Timmaay wrote: »

Euro dipping even more with the Greek mess, hopefully that will help support the milk price some bit!

False economy really, the euros we now have are worth less. Not good

KCTK

Timmaay wrote: »

Euro dipping even more with the Greek mess, hopefully that will help support the milk price some bit!

I hear on the grapevine Kerry to drop by 2cent again this month, maybe the fall in the euro might help hold price a bit but as fraz said it's a false economy when so much of our inputs come from outside euro zone (oil, felt, soya, maize etc) so they will get more expensive, all other things staying equal.

kowtow

frazzledhome wrote: »

False economy really, the euros we now have are worth less. Not good

Unless you are considering a holiday in Greece.

Or buying Feta for a gigantic sandwich, like Mr Noonan.

Timmaay

KCTK wrote: »

I hear on the grapevine Kerry to drop by 2cent again this month, maybe the fall in the euro might help hold price a bit but as fraz said it's a false economy when so much of our inputs come from outside euro zone (oil, felt, soya, maize etc) so they will get more expensive, all other things staying equal.

Even more of a reason to focus on grass grass grass, the low input lads are less exposed to all of the above.

frazzledhome

Timmaay wrote: »

Even more of a reason to focus on grass grass grass, the low input lads are less exposed to all of the above.

+1000

kowtow

Timmaay wrote: »

Even more of a reason to focus on grass grass grass, the low input lads are less exposed to all of the above.

Not disagreeing for a moment re: grass being cheapest feed, but I wonder whether we are a little black and white here when we consider grass vs. high input.

Was surprised to see a piece the other day on a UK herd yielding (from memory) 12K or 13K per cow - obviously fed a TMR + maize silage but *nuts* / concentrate made up a surprisingly low figure, I'm going to say 1kg or 2kg a day on average but until I go back and check the piece I can't be sure.

My point being that I think here we sometimes think of high input herds as a bit of grass and the rest all compound @ ?28-30c kg/dm when we think through their economics... the reality is that there is a wide spectrum of feed in the mix and I'm fairly certain that - although more expensive than grass - the overall cost per kg /dm isn't as high as we like to imagine when we compare with grass.

By way of discussion - what are the economics of an 11,500 herd average cow on 6 - 10kg of ration, of which 6kg is in the TMR, with the rest of the diet being a mixture of grass / maize / other silages?

Not suggesting that they are better than grass economics (at least per ha) but perhaps not quite as simple as buying an extra kg of nuts for every litre delivered over the first 19 or 20?

Milked out

kowtow wrote: »

Not disagreeing for a moment re: grass being cheapest feed, but I wonder whether we are a little black and white here when we consider grass vs. high input.

Was surprised to see a piece the other day on a UK herd yielding (from memory) 12K or 13K per cow - obviously fed a TMR + maize silage but *nuts* / concentrate made up a surprisingly low figure, I'm going to say 1kg or 2kg a day on average but until I go back and check the piece I can't be sure.

My point being that I think here we sometimes think of high input herds as a bit of grass and the rest all compound @ ?28-30c kg/dm when we think through their economics... the reality is that there is a wide spectrum of feed in the mix and I'm fairly certain that - although more expensive than grass - the overall cost per kg /dm isn't as high as we like to imagine when we compare with grass.

By way of discussion - what are the economics of an 11,500 herd average cow on 6 - 10kg of ration, of which 6kg is in the TMR, with the rest of the diet being a mixture of grass / maize / other silages?

Not suggesting that they are better than grass economics (at least per ha) but perhaps not quite as simple as buying an extra kg of nuts for every litre delivered over the first 19 or 20?

You are prob right when comparing our grass based systems to high input systems in other countries where grain and other forages can be grown more cheaply or byproducts can be used economically like in the UK or over with dawg where he prob grows all his own feed with none bought in but within Ireland high input systems are still much more expensive as most grain would be bought in and wholecrop and maize while comparable in cost to silage are still dearer than grass

kowtow

Milked out wrote: »

You are prob right when comparing our grass based systems to high input systems in other countries where grain and other forages can be grown more cheaply or byproducts can be used economically like in the UK or over with dawg where he prob grows all his own feed with none bought in but within Ireland high input systems are still much more expensive as most grain would be bought in and wholecrop and maize while comparable in cost to silage are still dearer than grass

Yeh - I had assumed that geography / lack of choice had something to do with it... Is there scope for any of this to change?

maybe dawg will weigh in later with more specifics.

Timmaay

Hmmm well I'll actually stand my ground on the grass v high cost ha, yes agreed on the surprisingly low cost of some concentrates in the UK system etc, but a hell of a lot of soya needed to balance up the protein, which is imported, and some report afew days ago said the soya harvest looking like it will be lower than expected, which means higher price, grass on the other hand is by far our cheapest form of protein.

Also for the small Irish dairy farmer with less than 150 cows, he has a poor economic of scale, little buying power for any concentrates, long grazing seasons means he gets to reduce his silage and slurry requirements which means less diesel needed, alongside lower labour etc etc.

But agreed that we should be slow about boasting about our cheap grass based system, it's not necessary the cheapest gig in town, but for any small enough farmer in Ireland with afew acres around the milking parlour maximising grass and minimising exposure to imported inputs really is their best option.

frazzledhome

I'm hearing a lot about how high the cost of grass is, put a figure on it. How much per kgdm?

Milked out

kowtow wrote: »

Yeh - I had assumed that geography / lack of choice had something to do with it... Is there scope for any of this to change?

maybe dawg will weigh in later with more specifics.

I don't know really know if there is scope to change, no real byproducts I know of bar brewers grains which can be inconsistent as well in terms of supply and quality according to some and then our summers can put paid to many a maize or tillage crop along with quality of silage. dawg or black grass or a few of the other would have more of a clue in terms of costs of what can be grown here successfully. But balancing everything with protein is our big cost really. Grass is our protein crop and the highest we've ever hit is 14.5%. In dilage
Perhaps forward buying of soya barley etc could be a way of controlling the cost somebit? Would scale be needed to make any progress at that?