Milk Price- Please read Mod note in post #1

Greengrass1 · 17-06-2015 10:49PM

What's small 50 cows? Plenty made a living of it and plenty will to come I'm sure.
I'll milk more cows but not for any status. I want to make a living here alongside my parents and utilise what I have around the parlour to the max.
If we could do it at 60 ciws why can't we do it at 120/130

Dawggone · 17-06-2015 10:50PM

case885 wrote: »

Can you explain how QE has softened the blow Dawg?

Demain matin.

just do it · 17-06-2015 11:17PM

Dawggone wrote: »

Possibly one of my better posts and not one thanks.
Speaks volumes.

It's a petty we can't thank our own posts

Teagasc studied this and concluded a small farmer is as capable of producing the same margin/ha as a large farmer and argued efficiency will be the deciding factor as to who sinks or swims. The concern with this study of course is it's playing to their own client base.

just do it · 17-06-2015 11:20PM

Sure wasn't GG posting recently about a guy with a great lifestyle milking only 5/6 cows?!

(living in a country with slightly different living standards though

)

jaymla627 · 17-06-2015 11:31PM

just do it wrote: »

It's a petty we can't thank our own posts

Teagasc studied this and concluded a small farmer is as capable of producing the same margin/ha as a large farmer and argued efficiency will be the deciding factor as to who sinks or swims. The concern with this study of course is it's playing to their own client base.

But the small lad hasn't the scale to insulate himself from price shocks like we are seeing at the minute the big lad with say 90/ha even if his profit per ha is say halved our worse from say 1,000/ha to say 350/ha still comes out with over 30,000 euro which he will survive on, the small guy with 30/ha on the other hand in the same scenario has in our around 11,000 euro for his troubles and is up s**t Creek our simply goes on farm assit our has a laying hen/good sfp to tide him over....
I really think to be viable going forward you need to be producing well over 700,000litres/50,000 kilos of milk solids a labour unit, the small lads will of course have their place but in a free market environment with no other influencing factors no farm could start up say a 40-50 cow from scratch at present prices and be viable even with the land base taken as free of charge

Greengrass1 · 17-06-2015 11:32PM

just do it wrote: »

Sure wasn't GG posting recently about a guy with a great lifestyle milking only 5/6 cows?!

(living in a country with slightly different living standards though )

Member in my dg off in China atm doing a Nuffield. Says there spending millions to try establish a dairy industry and have a huge appitite in European nz Australian and American milk and securing a high quality supply is all they talk about when you talk about ag with them

kowtow · 17-06-2015 11:46PM

mahoney_j wrote: »

Agh dwag bit of a vulture in you!!,define a small farm??,been on lots of farm walks over last few years and a lot of guys if of seen milking up to say 100 cows are some of the most efficient operators you could ever meet.every acre counts,every animal counts every litre of milk counts .been on places too where lads just loaded on cows cause they had the land to and run absolute ****e operations efficiency will be key,scale would be great but not if managed correctly

I suspect both of you are right.

Efficiency is going to be a sine qua non for dairy survival in the near and medium term. Every acre should always count - one of the reasons that the Amish are consistently the most profitable farmers in the US.

But there comes a point where the only way to make a 100 cow herd more efficient is to make it a 200 cow herd. Economies of scale really do make a big difference, It doesn't take me much less time to milk a dozen cows, wash down a yard, etc. than it takes my neighbour to milk a hundred - and I doubt he needs any more gloves, detergent or electricity than I do for the job!

A figure I have always thought would be really interesting is tractor HP / hectare in Ireland and other EU countries. I have an inkling that we would be at the high end of the scale.

We are all in the business of trying to make the most expensive farmland in the world, with disproportionate machinery costs, generate a very high basic wage which is itself barely enough to cover an outrageous cost of living. And we're trying to do this with a commodity product for which we are price takers.

Reducing the variable cost per litre is critical , but milk sales per man are going to be an equally important factor. The fixed costs simply have to be spread across a wider base.

jaymla627 · 17-06-2015 11:49PM

Greengrass1 wrote: »

Member in my dg off in China atm doing a Nuffield. Says there spending millions to try establish a dairy industry and have a huge appitite in European nz Australian and American milk and securing a high quality supply is all they talk about when you talk about ag with them

Talk is fairly cheap to be fair, they have access/their pick of dairy markets worldwide at prices/quality that they will never be able to produce milk at themselves but they are still persisting at establishing a dairy industry and subsidising it to the tune of 15-20 cent litre over world prices all the while importing 80% plus of the feed for these cows and using up water supplies the country simply does not have given its population size it's crazy

Deepsouthwest · 17-06-2015 11:56PM

kowtow wrote: »

It's a cardinal rule of those who trade markets for a living to absolutely ignore any journalist comment on market prices. Journalists are no better able to explain movements in prices than anybody else, nor - like the rest of us - are they equipped with a crystal ball to see the future.

Typically news articles simply follow an agenda which reflects the exposure of the majority of their readers.

It's very easy to see this bias in the article above. When prices are going up, they report the change in prices. However, when prices are falling they begin to report the "rate of fall" instead of the price. The headline is usually "are prices finally bottoming out?" or something similar. The mainstream Irish press used this tactic throughout the period of property price falls for similar reasons... many if not most of their readers are invested in property in some way and are exposed to falling property prices as opposed to rising prices.

The GDT auction itself is not above a bit of massage. Around Christmas, when the market was "bottoming out" last time.. few people paid attention to the fact that there was a conscious decision to reduce the quantity of product offered at auction and the apparent turning point therefore occurred on very low volume... this tactic is as old as the hills, an easy way to force the hand of buyers waiting on the sidelines. What was significant about the winter / early spring prices was that when the buyers were flushed out they turned out to be smaller in number and nowhere near as keen as previous commentary suggested. Professional traders learn very early to watch how volume reacts to price, and take their clues from that.

It is as well to remember that every piece of research ever written has to be paid for by a client of some description. Whilst there are countless organisations in the world (co-ops, processors, farmers - the entire dairy industry in fact) who need a case made for increased global demand and stronger prices over the long term to support their investment and expansion plans there is little if any obvious demand for commentary making the opposite case. For that reason at all a big pinch of salt is needed when looking at dairy market commentary.

Its rare in any market to find an individual or organisation who doesn't 'talk his own book'.

Brilliant post kowtow, well worth the half hr it took to read it!!

Milked out · 18-06-2015 12:01AM

Aside from, or even a more probable reason than Milk price, i would say the main reason smaller farms will disappear will be because the next generation will not take it on as they are less viable going forward to make a living. While a few may go under, hopefully only a few, due to market conditions at a particular time i would see the smaller farms disappearing more gradually due to the age demographic and the lack of interest in the next generation at that scale of 40 to 50 cows. This is and has been happening for a while regardless of quotas, i know of no young farmer with or involved in running farms of this size, only older lads nearing retirement. Its over burdening debt, and cashflow issues that will take lads down regardless of scale,

kowtow · 18-06-2015 12:03AM

mahoney_j wrote: »

Also think this country and its family farms are a bit unique ,there's an awful (good or bad)atrachement to a praticular plot of land that doesn't seem to exist in other country's .there will certainly be more 300 to 1000 cow operations but they will be the minority's .the 90/140 ish single unit operations with the laying hen will be more the norm

Never understood this ridiculous childish reference to partners incomes in assessing the viabliity of a farm - in fact when I saw it in a Teagasc paper the other day and my first thought was that it was the processing industry managing farmers expectations.

Perhaps in this time of low milk prices we should be insisting that all co-op employees have their salaries reduced by 50% of their wives incomes. While we're at it, we could require that they pay for shares and put money at risk before they are eligible for employment.

Maintaining a 1.5 - 2 Million Euro asset which will or will not generate the minimum wage for 24/7 work over an extended cycle and is somehow dependent on a "laying hen" is not a business, it is a risky & expensive hobby.

Instead of teaching kids at ag college to grow more grass why not just spruce them up and get 'em a better marriage?

kowtow · 18-06-2015 12:12AM

jaymla627 wrote: »

no farm could start up say a 40-50 cow from scratch at present prices and be viable even with the land base taken as free of charge

Agree with you completely on scale but I have a feeling we will prove you well and truly wrong on this latter point!

just do it · 18-06-2015 12:16AM

jaymla627 wrote: »

But the small lad hasn't the scale to insulate himself from price shocks like we are seeing at the minute the big lad with say 90/ha even if his profit per ha is say halved our worse from say 1,000/ha to say 350/ha still comes out with over 30,000 euro which he will survive on, the small guy with 30/ha on the other hand in the same scenario has in our around 11,000 euro for his troubles and is up s**t Creek our simply goes on farm assit our has a laying hen/good sfp to tide him over....
I really think to be viable going forward you need to be producing well over 700,000litres/50,000 kilos of milk solids a labour unit, the small lads will of course have their place but in a free market environment with no other influencing factors no farm could start up say a 40-50 cow from scratch at present prices and be viable even with the land base taken as free of charge

The small lad might be better insulated and not taking as big a hit to his income due to his other part-time job

. There's more than one way to skin a cat....

Brown Podzol · 18-06-2015 12:16AM

Deepsouthwest wrote: »

Brilliant post kowtow, well worth the half hr it took to read it!!

I had to read it three times. First heard of the mismatch between global supply and demand of milk at a positive farmers conference around 06/07 and that ould carrot is being dangled in front of us since. Reality is that if milk price rises far enough it will draw milk from the moon.

kowtow · 18-06-2015 12:21AM

just do it wrote: »

The small lad might be better insulated and not taking as big a hit to his income due to his other part-time job . There's more than one way to skin a cat....

Even better if he has a significant private income with or without the need for a part time job.

So for the 200 acre dairy guys out there - rent out 160 acres on a long lease tax free, marry well, buy a robot and milk 50 on the rest.

And if you have a bit of time on your hands help out in the local co-op on a Saturday.

kowtow · 18-06-2015 12:26AM

Brown Podzol wrote: »

... at a positive farmers conference around 06/07

Are they as rigorous & objective in their market analysis as their name suggests?

Brown Podzol · 18-06-2015 12:38AM

kowtow wrote: »

Are they as rigorous & objective in their market analysis as their name suggests?[/

Trouser the fees, happy clappy, bright future and see you all again next year.

Dawggone · 18-06-2015 07:30AM

RightTurnClyde wrote: »

Dawg, didn't you post your COP somewhere earlier, trying to remember, but wasn't labour cost an issue. Is labour cost an inefficiency of scale?

If I include all labour costs to my CoP it sends it to 42cpl.
However there are 2 other enterprises here and one of them is much bigger than dairy.

Dawggone · 18-06-2015 07:36AM

kowtow wrote: »

Never understood this ridiculous childish reference to partners incomes in assessing the viabliity of a farm - in fact when I saw it in a Teagasc paper the other day and my first thought was that it was the processing industry managing farmers expectations.

Perhaps in this time of low milk prices we should be insisting that all co-op employees have their salaries reduced by 50% of their wives incomes. While we're at it, we could require that they pay for shares and put money at risk before they are eligible for employment.

Maintaining a 1.5 - 2 Million Euro asset which will or will not generate the minimum wage for 24/7 work over an extended cycle and is somehow dependent on a "laying hen" is not a business, it is a risky & expensive hobby.

Instead of teaching kids at ag college to grow more grass why not just spruce them up and get 'em a better marriage?

One of your better posts Kowtow.
Should be mandatory reading...

frazzledhome · 18-06-2015 08:39AM

The issue I see with "smaller dairy farms" is the next generation. I think where the pinch point will be is when a successor arrives on the scene and another income is needed.

It is inevitable that the business will need to grow to provide this.

A working wife's income may be dismissed in theory and in practice but does it not depend on the families stage. Drawings peak around the time of high education costs.

You could argue that the second income is paying these. In other words its supporting the family as opposed to the farm.

Few in my DG with 120 cows wife not working living very well so for now its being done. These guys are calving 160 and selling 40 calved heifers.

yosemitesam1 · 18-06-2015 09:01AM

jaymla627 wrote: »

Talk is fairly cheap to be fair, they have access/their pick of dairy markets worldwide at prices/quality that they will never be able to produce milk at themselves but they are still persisting at establishing a dairy industry and subsidising it to the tune of 15-20 cent litre over world prices all the while importing 80% plus of the feed for these cows and using up water supplies the country simply does not have given its population size it's crazy

I wouldn't underestimate what's possible in china,look at how far their grain production has come over the last 25 years

Dawggone · 18-06-2015 09:06AM

The "Family" Farm.
That phrase needs to be abandoned. It's now a business. All protection is gone.

Most on here have been handed an asset on a plate, worth 1million and much more. The new reality means expand or get out. The trick is to expand without diluting the asset.
The family farm was, and it's well proven, the source of the best educated, upcoming leaders in business, politics etc.
Those boarding schools were funded by the family farm. Then afterwards on to third level...
How will this be done on 70 or 100 cows?
How many arable acres would be needed?
How many suckler cows?

frazzledhome · 18-06-2015 09:18AM

Dawggone wrote: »

The "Family" Farm.
That phrase needs to be abandoned. It's now a business. All protection is gone.

Most on here have been handed an asset on a plate, worth 1million and much more. The new reality means expand or get out. The trick is to expand without diluting the asset.
The family farm was, and it's well proven, the source of the best educated, upcoming leaders in business, politics etc.
Those boarding schools were funded by the family farm. Then afterwards on to third level...
How will this be done on 70 or 100 cows?
How many arable acres would be needed?
How many suckler cows?

"The family farm business"

Don't for one minute underestimate the business acumen of a husband and wife team with 100 cows. Probably the most robust business unit in rural Ireland.

Not only are they producing a real product as opposed to a service they are contributing greatly to the greater economy by holding education as highly as they do. All this is after tax btw

Lets not derail thread by going down education route, I'm just pointing out that fact as you brought it up.

On your point about the family farm being free I'd have to disagree as would many here who "got the farm". My hole, there was debt, siblings to educate and "fix up" a second house to be run. These farms are far from free.

Perhaps if you were an only child who got a farm debt free. Theres more than one way to buy a business

jaymla627 · 18-06-2015 09:37AM

Dawggone wrote: »

The "Family" Farm.
That phrase needs to be abandoned. It's now a business. All protection is gone.

Most on here have been handed an asset on a plate, worth 1million and much more. The new reality means expand or get out. The trick is to expand without diluting the asset.
The family farm was, and it's well proven, the source of the best educated, upcoming leaders in business, politics etc.
Those boarding schools were funded by the family farm. Then afterwards on to third level...
How will this be done on 70 or 100 cows?
How many arable acres would be needed?
How many suckler

Back when my father was "given" the farm back when his mother suddenly died in 1995 he was left in a situation due to siblings/houses/ and shares been mined from the farm that give our take a few thousand he basically paid market value for the place, you should never underestimate how costly it is for certain farmers on the transfer of land when the siblings get the claws out

mahoney_j · 18-06-2015 10:05AM

frazzledhome wrote: »

"The family farm business"

Don't for one minute underestimate the business acumen of a husband and wife team with 100 cows. Probably the most robust business unit in rural Ireland.

Not only are they producing a real product as opposed to a service they are contributing greatly to the greater economy by holding education as highly as they do. All this is after tax btw

Lets not derail thread by going down education route, I'm just pointing out that fact as you brought it up.

On your point about the family farm being free I'd have to disagree as would many here who "got the farm". My hole, there was debt, siblings to educate and "fix up" a second house to be run. These farms are far from free.

Perhaps if you were an only child who got a farm debt free. Theres more than one way to buy a business

Excellent post frazzled ,as someone who inherited a farm from my parents lock stock and barrel I can associate To it.i worked off farm in a well paid job for over 10 years but always had more of an interest in the land than working off it for life.wouldnt swap those years for love nor money .travelled the world ,drank solid 3 night weekends and got to do things I'd probably never of done if I'd gone straight home.luckily I had a dad who was extremely progressive and open to new ideas and allowed me to implement them at his cost ,a lot proved a great success but some crashed and burned .nuts and bolts of farm were very good when I took over but I've invested in more roads ,reseeding ,parlour,.quota and around the yard to the tune of nearly 4 k per cow borrowed as well as been held back from. Getting into more cows by quota restrictions .im also paying my parents a set weekly fee in lieu of getting the farm which I in no way begrudge them.

Deepsouthwest · 18-06-2015 11:02AM

mahoney_j wrote: »

Excellent post frazzled ,as someone who inherited a farm from my parents lock stock and barrel I can associate To it.i worked off farm in a well paid job for over 10 years but always had more of an interest in the land than working off it for life.wouldnt swap those years for love nor money .travelled the world ,drank solid 3 night weekends and got to do things I'd probably never of done if I'd gone straight home.luckily I had a dad who was extremely progressive and open to new ideas and allowed me to implement them at his cost ,a lot proved a great success but some crashed and burned .nuts and bolts of farm were very good when I took over but I've invested in more roads ,reseeding ,parlour,.quota and around the yard to the tune of nearly 4 k per cow borrowed as well as been held back from. Getting into more cows by quota restrictions .im also paying my parents a set weekly fee in lieu of getting the farm which I in no way begrudge them.

Similar story here, and it does bug me the way one poster constantly refers to the family farm as "the land I got from my father for nothing".
Have been paying a weekly fee to my mum since my father died and I took over the place 13 yrs ago. Also had to help finance 4 younger siblings through second and third level education, and travelling etc for some of them!
Got the farm signed over 4 yrs ago, but I expect the payments to my mum will go on indefinitely, which she is entitled too.
Have 2 sisters getting married this yr, just wondering should I be giving them something more than a wedding present in lieu of my dad?

frazzledhome · 18-06-2015 11:15AM

Deepsouthwest wrote: »

Similar story here, and it does bug me the way one poster constantly refers to the family farm as "the land I got from my father for nothing".
Have been paying a weekly fee to my mum since my father died and I took over the place 13 yrs ago. Also had to help finance 4 younger siblings through second and third level education, and travelling etc for some of them!
Got the farm signed over 4 yrs ago, but I expect the payments to my mum will go on indefinitely, which she is entitled too.
Have 2 sisters getting married this yr, just wondering should I be giving them something more than a wedding present in lieu of my dad?

Your an honourable man, many wouldn't even consider it. I'd feel duty bound to do likewise

mahoney_j · 18-06-2015 11:15AM

kevthegaff wrote: »

Insightful stuff lads off to bed, had a lad for a few weeks so on my own again:-(, budgetcuts! Hopefully ill have a few pages to read over the brekkie in the morning wondering am i a big fella or small fella:-D

Well Kev did u have the brekkie yet,and did u figure out if your a big lad or a small lad!!!!ðŸ˜›ðŸ˜

keep going · 18-06-2015 12:14PM

Dawggone wrote: »

Ah Lads!
Quotas haven't gone a couple of months and there is a smell of shyte off this thread.
Welcome to the real world.

Small farms will go to the wall and the big will get bigger. It's inevitable...

Maybe not now as QE has softened the blow. But sooner or later, the small will go.

Small farms have always been eliminated , its just the size of what is defined as a small farm gets bigger.and anyway as long as you can live on what you are doing , who gives a damn aboit the size of it

kowtow · 18-06-2015 12:32PM

Deepsouthwest wrote: »

it does bug me the way one poster constantly refers to the family farm as "the land I got from my father for nothing".

If it is my posts you are referring to - and it may not be - you misunderstand my point - I have no problem at all with inherited land, money or anything else* - if I did it would make me a prize hypocrite.

What I think very dangerous, in terms of managing a business, is inheriting land and pretending - in an accounting sense - that it is valueless by not attributing any cost to the grass it produces. To do so is to fatally mistake cash & capital for profit and loss.

Whatever you pay for the land you inherit - and as the posts here illustrate most of us pay for it in one form or another, sometimes very dearly indeed - don't make the mistake so often seen of pretending that just because you didn't pay in cash for it the grass it grows is free!

* Edit - except syphilis perhaps, wouldn't be too keen on that.

Milk Price- Please read Mod note in post #1

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