Value-Added Dairy Farm Diversification - The Ingredients for Success

There has never been a better time for Irish dairy farmers to produce value-added products. In an era of growing scrutiny of high food miles associated with imported goods, consumers are tending to choose local, high quality foods, produced using sustainable agricultural practices. All this at a time when Irish agriculture enjoys a clean, green image internationally.

The value-added approach is in stark contrast to the dominant commodity mindset in the wider dairy sector that places value on scale and growth within the industry. Diversification can however lead to better financial security for the farm household. The benefits of dairy farm value-added diversification extend far beyond the farm gate by contributing to the socioeconomic fabric of rural areas, creating valuable skilled employment, as well as contributing to the development of Irish food culture and the successful branding of Ireland as The Food Island.

The transition from commodity dairy farmer to a producer of a differentiated value-added product, takes a significant change in strategy – from being the lowest cost producer of a commodity to producing a unique, value-added product.

As the diversified value-add enterprise functions at every stage of the food supply chain there is a vast range of skills needed to be successful. When transitioning from commodity dairy farmer to value-added producer the farmer needs an awareness of his/her own strengths and weaknesses, the skills that are lacking and those that can be developed either by him or within the family or indeed recruited. Given the complexities of value-add farm diversification the development supports on offer need to be multi dimensional.

There is a notably high level of extended farm family and specifically female involvement in value-added diversified enterprises. A culture of entrepreneurship must be encouraged and supported within farm families. Enterprise education should feature throughout the entire education cycle. Entrepreneurship acceleration programmes aimed at women such as ACORNS, are having a positive impact on female entrepreneurship in rural Ireland and should be continued to be supported.

The capital requirements of a diversified value-added farm enterprise will depend on the degree of processing complexity and scale at start-up. There is a need to ensure farm families are more aware of the financial and educational supports which are available and to ensure that those supports are not excessively bureaucratic. Furthermore once government backed funding (e.g. LEADER or LEO match-funding) is awarded to a project the pillar banks should accept this approval as collateral.

Teagasc has earned the trust of farmers and is perfectly placed to advise farmers and their families considering farm diversification. The Teagasc training programme ‘Options’ is a good first point of contact, but could be further developed to offer one-to-one mentoring to support farm families to evaluate their current farm situation and their suitability for new enterprise development.