Milk Price III

alps

Spent a few days lately at a Dairy Conference in Czech Republic...listened to a few presentations, visited a few farms, good food beer and company...

The Czechs are pretty good stock men, able to achieve some of the highest yields worldwide, and interestingly, level with Ireland are the lowest cost producers of milk in Europe. Agriculture only employs about 2%of the workforce and is not a significant player in their economy, but runs its own show very well. Czech dairy farmers do not control their processing industry and more or less take what they get for their milk, which again is priced the same as Ireland...

Dairy farms are large, usually forming only a part of an overall business incorporating tillage and forestry and biomass...Some of these are very modern units, more of them are trying to make the best of the old communist style cow barns, while planning for upgrades. They are in no way shy of spending money on facilities. Funds are easily borrowed at 2%.

Parlours are modern, typically 15/16 unit double ups with rapid exit, milking 3 times daily. Cows are grouped in 130/150 numbers, to facilitate familiarity for the cows themselves, for feeding, and for movement to and from the parlour so as not to be absent from their barn for too long.

Joe Spacer, President of DairyVisor Inc, Minnesota, https://www.dairyvisor.com/ , gave a very interesting presentation on the world of free markets. His company trade milk on behalf of many US dairy farms, much of it in futures markets. His clients traded through the downswing at an 8% premium to normal traded milk prices. This on the scale of the farms he traded for is very significant and in many cases will be the total profit from the farms involved. The smallest farmer client has 350 cows (US cows).

A frightening statistic he came out with was that the number of dairy farmers in his referenced state, had halved in the previous 5 years, and output was still up. One company was expanding milk production at such a rate that they were adding enough barn capacity annually, equal to 15% of the total output of the state.

Dairy farming is becoming industrialised, owned and Run by huge corporations, who can make significant profits, be it the 8% premium spoken about earlier. This can , and may be replicated in many corners of the world. Of course our own difficulty with fragmentation may preserve us from the onslaught of this industrialisation process, but will not protect us from low milk prices. And if the corporates can survive on margins from futures trading, we will effectively be left with a break even standard traded price for us to survive on.

So I left Prague with a pretty certain conclusion....

We need to differentiate our product immediately from this industrialised offering. We cannot and will not survive, supplying an unidentified commoditised product against the corporate dairying world.....and we need to, if we want to retain our European markets, go GMO free immediately...

GMO free is the biggest buzz world with European milk producers, and it would cost us relatively nothing to do it.....

Water John

Good report and analysis, there Alps.

Grass based, outdoors/free range and GM free are three and a good starting point.
The grass based gives different Omega levels.
The processors should be getting a premium and sharing that with the producers.

alps

Water John wrote: »

Good report and analysis, there Alps.

Grass based, outdoors/free range and GM free are three and a good starting point.

That's it right there......

Farmer Ed

alps wrote: »

Spent a few days lately at a Dairy Conference in Czech Republic...listened to a few presentations, visited a few farms, good food beer and company...

The Czechs are pretty good stock men, able to achieve some of the highest yields worldwide, and interestingly, level with Ireland are the lowest cost producers of milk in Europe. Agriculture only employs about 2%of the workforce and is not a significant player in their economy, but runs its own show very well. Czech dairy farmers do not control their processing industry and more or less take what they get for their milk, which again is priced the same as Ireland...

Dairy farms are large, usually forming only a part of an overall business incorporating tillage and forestry and biomass...Some of these are very modern units, more of them are trying to make the best of the old communist style cow barns, while planning for upgrades. They are in no way shy of spending money on facilities. Funds are easily borrowed at 2%.

Parlours are modern, typically 15/16 unit double ups with rapid exit, milking 3 times daily. Cows are grouped in 130/150 numbers, to facilitate familiarity for the cows themselves, for feeding, and for movement to and from the parlour so as not to be absent from their barn for too long.

Joe Spacer, President of DairyVisor Inc, Minnesota, https://www.dairyvisor.com/ , gave a very interesting presentation on the world of free markets. His company trade milk on behalf of many US dairy farms, much of it in futures markets. His clients traded through the downswing at an 8% premium to normal traded milk prices. This on the scale of the farms he traded for is very significant and in many cases will be the total profit from the farms involved. The smallest farmer client has 350 cows (US cows).

A frightening statistic he came out with was that the number of dairy farmers in his referenced state, had halved in the previous 5 years, and output was still up. One company was expanding milk production at such a rate that they were adding enough barn capacity annually, equal to 15% of the total output of the state.

Dairy farming is becoming industrialised, owned and Run by huge corporations, who can make significant profits, be it the 8% premium spoken about earlier. This can , and may be replicated in many corners of the world. Of course our own difficulty with fragmentation may preserve us from the onslaught of this industrialisation process, but will not protect us from low milk prices. And if the corporates can survive on margins from futures trading, we will effectively be left with a break even standard traded price for us to survive on.

So I left Prague with a pretty certain conclusion....

We need to differentiate our product immediately from this industrialised offering. We cannot and will not survive, supplying an unidentified commoditised product against the corporate dairying world.....and we need to, if we want to retain our European markets, go GMO free immediately...

GMO free is the biggest buzz world with European milk producers, and it would cost us relatively nothing to do it.....

Thanks for that Alps. Yes this GM free thing is one potential food scandal waiting for us as soon as the competition start to use it against us that our kerrygold grass fed butter is not GM free. And as you have rightly pointed out it would cost us less to go GM free than most. Plus it may also give a much needed boost to our grain growers.

rangler1

Farmer Ed wrote: »

Thanks for that Alps. Yes this GM free thing is one potential food scandal waiting for us as soon as the competition start to use it against us that our kerrygold grass fed butter is not GM free. And as you have rightly pointed out it would cost us less to go GM free than most. Plus it may also give a much needed boost to our grain growers.

GM free any better that organic...every body wants it but not at an extra cost....reference Quality Assurance, the industry dreamt it up and producers paid the cost, yet not getting any extra money

Farmer Ed

rangler1 wrote: »

Farmer Ed wrote: »

Thanks for that Alps. Yes this GM free thing is one potential food scandal waiting for us as soon as the competition start to use it against us that our kerrygold grass fed butter is not GM free. And as you have rightly pointed out it would cost us less to go GM free than most. Plus it may also give a much needed boost to our grain growers.

GM free any better that organic...every body wants it but not at an extra cost....reference Quality Assurance, the industry dreamt it up and producers paid the cost, yet not getting any extra money

I suppose the point is we need to protect our grass fed image. I agree with quality assurance for the most part is just a duplication of the inspections the department carry out and not returning anything meaningful to us. But Alps is correct our grass fed image is very important to us and should not be taken for granted. The consumer of Kerrygold butter couldn't care less if the cow that produced it only had one tag, but would be far more likely to be concerned about the amount of GM grain she is being fed. Also there could be a knock on benefit for our grain growers and possibly the department may not need to get a high court injunction to remove them from the department offices.

Only joking the department would want to be totally stupid to use such a heavy handed tactic.

mahoney_j

Farmer Ed wrote: »

I suppose the point is we need to protect our grass fed image. I agree with quality assurance for the most part is just a duplication of the inspections the department carry out and not returning anything meaningful to us. But Alps is correct our grass fed image is very important to us and should not be taken for granted. The consumer of Kerrygold butter couldn't care less if the cow that produced it only had one tag, but would be far more likely to be concerned about the amount of GM grain she is being fed. Also there could be a knock on benefit for our grain growers and possibly the department may not need to get a high court injunction to remove them from the department offices.

Only joking the department would want to be totally stupid to use such a heavy handed tactic.

How is grass fed milk so important producing milk from gm free cereal likewise ,imo don't matter a ****e the tegasc model of pushing more and more milk to spring calving and big may/June peaks and practically shut down plants in Dec/Jan is baffling as all it's doing is shoving more milk into cheap commodities .i was in Tesco last night and just observing people shopping ,gm free /organic /grass fed they don't care ,they care about price and ability to feed there families
If u look at the big milk producing countries /us etc there getting better price for there milk than us ,cows housed ,lots of meal fed tmr mix going in and practically no grass .as it is the low cost (a pure myth)grass fed happy cow in the field Irish and kiwi cow is shovelling milk into cheap commodities ,can't see it changing

blue5000

mahoney_j wrote: »

How is grass fed milk so important producing milk from gm free cereal likewise ,imo don't matter a ****e the tegasc model of pushing more and more milk to spring calving and big may/June peaks and practically shut down plants in Dec/Jan is baffling as all it's doing is shoving more milk into cheap commodities .i was in Tesco last night and just observing people shopping ,gm free /organic /grass fed they don't care ,they care about price and ability to feed there families
If u look at the big milk producing countries /us etc there getting better price for there milk than us ,cows housed ,lots of meal fed tmr mix going in and practically no grass .as it is the low cost (a pure myth)grass fed happy cow in the field Irish and kiwi cow is shovelling milk into cheap commodities ,can't see it changing

The problem is we take it for granted. Same with grass fed beef. Have you ever seen or tasted Danish butter? It's white.

mahoney_j

blue5000 wrote: »

The problem is we take it for granted. Same with grass fed beef. Have you ever seen or tasted Danish butter? It's white.

I've had steak in New York snd Orlando ,absolutely tasteless in comparsion to an Irish steak

Farmer Ed

And the reality is that grass fed butter is the next big thing at the moment. Without it I'd hate think what our current milk price might be. Even if our pricing system is not fully reflecting the reality of the market. I'm all for trying to reward farmers for producing milk at the shoulders of the year i milk year round myself, but the reality is if cheap grain is the driver of milk production, it is one area where we simply can not compete. Grass fed butter has become an unexpected windfall for us. Now that it has we would be very foolish not to protect and corner that market.

White Clover

blue5000 wrote: »

The problem is we take it for granted. Same with grass fed beef. Have you ever seen or tasted Danish butter? It's white.

Even English butter is rubbish...well the stuff I have eaten

Water John

Well, comsumers don't chase the cheapest always. If that was the case, the Kerrygold brand would be of no value.
Yesterday in a Spar shop, Kerrygold butter 3.35, Spar butter 2.25. Similar with milk. There is a lot of customers for the brand.
If you make a real difference eg grass fed, which increases the good Omega, that is a good reason to have a premium.
People buy Free Range eggs, not necessarily organic, Rangler. They can see the Omega difference in the yolks. Same with grass butter, it has the golden colour.

Buford T. Justice XIX

mahoney_j wrote: »

I've had steak in New York and Orlando ,absolutely tasteless in comparison to an Irish steak

It all depends what you're going doing with the meat. If you eat it without garnish, like I prefer, you need flavour in the meat. The few times we eat out, I would always order the garnish on the side so I can taste the meat.

If you're going to cover the meat in gravy or garlic butter or whatever, the flavour of the meat becomes much less important and any old piece of meat will do the job.

yosemitesam1

mahoney_j wrote: »

How is grass fed milk so important producing milk from gm free cereal likewise ,imo don't matter a ****e the tegasc model of pushing more and more milk to spring calving and big may/June peaks and practically shut down plants in Dec/Jan is baffling as all it's doing is shoving more milk into cheap commodities .i was in Tesco last night and just observing people shopping ,gm free /organic /grass fed they don't care ,they care about price and ability to feed there families
If u look at the big milk producing countries /us etc there getting better price for there milk than us ,cows housed ,lots of meal fed tmr mix going in and practically no grass .as it is the low cost (a pure myth)grass fed happy cow in the field Irish and kiwi cow is shovelling milk into cheap commodities ,can't see it changing

Just on people buying only on price, came across this a while ago. In Sierra Leone (west Africa), there was a lot of resistance to 'improved' varieties and a lack of interest in swamp cultivation of rice through the 70's/80's despite higher yields.
A lot of that was purely down to taste. If poor people in a third world country can value better tasting food over cheap crap surely there's potential here...

kowtow

There is one point worth bringing up which I haven't seen mentioned at all in the Irish Press - touching both Alp's post above about the industrialization of production and the threat of a hard trade border after Brexit...

As far as I am aware, WTO tariffs on Cheese, Butter etc. are applied on a per kg basis, not as a % of price - which is how we often see them reported "Cheddar Cheese could be subject to 40% duty etc."..

The implication of that is that higher value goods, true premium goods, exported from Ireland will suffer much less as a result of tariffs. For example - €1.50 on a kg of factory cheddar (no idea if this is the likely figure) is devastating and would drive it from the market, whereas the same rate applied to a kg of premium farmhouse cheese at €10-12 per kg wholesale would represent only a 15% duty, and that on a product which is relatively insensitive to price.

That's why premium wines from France, Brie, Camembert etc. etc. will all continue to enjoy their markets in the UK, although perhaps a little diminished, after any hard Brexit while commodity products might be all but wiped out.

Another argument - if one were needed - to support the diversification of Irish dairy and encourage more truly premium or Artisan products at the local level. Not a solution for everyone or for all the milk by any means, but definitely not to be ignored.

Farmer Ed

kowtow wrote: »

There is one point worth bringing up which I haven't seen mentioned at all in the Irish Press - touching both Alp's post above about the industrialization of production and the threat of a hard trade border after Brexit...

As far as I am aware, WTO tariffs on Cheese, Butter etc. are applied on a per kg basis, not as a % of price - which is how we often see them reported "Cheddar Cheese could be subject to 40% duty etc."..

The implication of that is that higher value goods, true premium goods, exported from Ireland will suffer much less as a result of tariffs. For example - €1.50 on a kg of factory cheddar (no idea if this is the likely figure) is devastating and would drive it from the market, whereas the same rate applied to a kg of premium farmhouse cheese at €10-12 per kg wholesale would represent only a 15% duty, and that on a product which is relatively insensitive to price.

That's why premium wines from France, Brie, Camembert etc. etc. will all continue to enjoy their markets in the UK, although perhaps a little diminished, after any hard Brexit while commodity products might be all but wiped out.

Another argument - if one were needed - to support the diversification of Irish dairy and encourage more truly premium or Artisan products at the local level. Not a solution for everyone or for all the milk by any means, but definitely not to be ignored.

Add the that the emerging reality that some of our processors main core business is shipping mass produced blocks of Cheddar to the UK to be sliced and diced before being shipped back here again. So I suppose its no wonder some are getting very worried.

Galwayforliam

I see the Farmers Journal have a big promo this week naming all the board members of the coops including their pay levels etc. Be interesting to see what's in it tomorrow

Farmer Ed

Galwayforliam wrote: »

I see the Farmers Journal have a big promo this week naming all the board members of the coops including their pay levels etc. Be interesting to see what's in it tomorrow

Anyone seen this yet? Haven't brought the comic in years but might reconsider if i thought some actual real journalism was being practiced? Would feel bad spending my 2.50 or what ever it costs now days if I thought all I would be reading was press releases from some company or another. Anyone made the plunge and read the article yet?

mahoney_j

Farmer Ed wrote: »

Anyone seen this yet? Haven't brought the comic in years but might reconsider if i thought some actual real journalism was being practiced? Would feel bad spending my 2.50 or what ever it costs now days if I thought all I would be reading was press releases from some company or another. Anyone made the plunge and read the article yet?

Shame on u ed ,I thought you'd have this info to hand .i know what board members in arrabawn get and a fair idea of what dairygold and glanbia get .it was outlined at last years agm I think .our board members get a small fee in comparasion

Farmer Ed

mahoney_j wrote: »

Farmer Ed wrote: »

Anyone seen this yet? Haven't brought the comic in years but might reconsider if i thought some actual real journalism was being practiced? Would feel bad spending my 2.50 or what ever it costs now days if I thought all I would be reading was press releases from some company or another. Anyone made the plunge and read the article yet?

Shame on u ed ,I thought you'd have this info to hand .i know what board members in arrabawn get and a fair idea of what dairygold and glanbia get .it was outlined at last years agm I think .our board members get a small fee in comparasion

I have a fair idea what they get alright but I'm am waiting with baited breath to see if the comic will report the full extent of all the perks and boards they sit on. You are correct that Arrabawn board members are not well paid and would be on a much higher pay scale were they on the board of larger Co Ops. Possible reason for the desire of one of them to be taken over by a larger Co Op? I guess everyone who gets on a soccer them has the ultimate dream of playing in the premier league.

whelan2

Farmer Ed wrote: »

Anyone seen this yet? Haven't brought the comic in years but might reconsider if i thought some actual real journalism was being practiced? Would feel bad spending my 2.50 or what ever it costs now days if I thought all I would be reading was press releases from some company or another. Anyone made the plunge and read the article yet?

Its €3

whelan2

Is it lakelands board members who are on expenses only?

Farmer Ed

whelan2 wrote: »

Farmer Ed wrote: »

Anyone seen this yet? Haven't brought the comic in years but might reconsider if i thought some actual real journalism was being practiced? Would feel bad spending my 2.50 or what ever it costs now days if I thought all I would be reading was press releases from some company or another. Anyone made the plunge and read the article yet?

Its €3

I'm saving €159 euro a year so. Thanks for that I honestly didn't know what the price was nowadays .

whelan2

Farmer Ed wrote: »

I'm saving €159 euro a year so. Thanks for that I honestly didn't know what the price was nowadays .

young lad pays 20 euro a year and gets the journal every friday as part of his ag science course in school. Alot cheaper than 3 euro a week. Have to buy it during the summer holidays though

Farmer Ed

whelan2 wrote: »

Farmer Ed wrote: »

I'm saving €159 euro a year so. Thanks for that I honestly didn't know what the price was nowadays .

young lad pays 20 euro a year and gets the journal every friday as part of his ag science course in school. Alot cheaper than 3 euro a week. Have to buy it during the summer holidays though

Let us know if its worth buying this week, I'm a right tight ass when it comes to supporting the media but may be tempted to splash out 3 euros from my holy communion money.

mahoney_j

Farmer Ed wrote: »

I'm saving €159 euro a year so. Thanks for that I honestly didn't know what the price was nowadays .

Not really tax allowable expense ....

mahoney_j

Farmer Ed wrote: »

I have a fair idea what they get alright but I'm am waiting with baited breath to see if the comic will report the full extent of all the perks and boards they sit on. You are correct that Arrabawn board members are not well paid and would be on a much higher pay scale were they on the board of larger Co Ops. Possible reason for the desire of one of them to be taken over by a larger Co Op? I guess everyone who gets on a soccer them has the ultimate dream of playing in the premier league.

Arrabawn are well paid ,I'd only expect a board member of a plc to be on a higher pay scale

Farmer Ed

mahoney_j wrote: »

Farmer Ed wrote: »

I'm saving €159 euro a year so. Thanks for that I honestly didn't know what the price was nowadays .

Not really tax allowable expense ....

Please don't tell the tax man but I didn't declare my holy communion money for tax purposes! I won't tell if you won't.

Farmer Ed

mahoney_j wrote: »

Farmer Ed wrote: »

I have a fair idea what they get alright but I'm am waiting with baited breath to see if the comic will report the full extent of all the perks and boards they sit on. You are correct that Arrabawn board members are not well paid and would be on a much higher pay scale were they on the board of larger Co Ops. Possible reason for the desire of one of them to be taken over by a larger Co Op? I guess everyone who gets on a soccer them has the ultimate dream of playing in the premier league.

Arrabawn are well paid ,I'd only expect a board member of a plc to be on a higher pay scale

I know that in 2013 when questioned at the AGM the wage bill for the Dairygold board of 12 was in excess of 400k I'm assuming that was before expenses and the money they were getting from sitting on other boards. How many meetings a year would a board member have and how long would they be away from home? You do know that 4 board members on the renumeration committee decide how much to pay the board? So effectively they decide themselves how much they get paid. I don't know how much the pay is for being on the renumeration committee? Also in larger Co Ops you could have dozens of companies. Being a director of nine or ten of those could also carry perks.

K.G.

I can feel a whole string of misery begrudgerey and bulls##t coming today and some posters revelling in it. What a way to live your life