Models for managing multiple dairy units in Ireland - Profitable dairy expansion

Ireland’s biggest competitive advantage in agriculture is its ability to grow grass. This is a cost effective, top quality source of energy and protein. Turning grass into milk offers some of the highest returns in Irish agriculture. The disadvantage of Irelands grass based dairy model is that the cows must be able to walk to this grass in order to keep costs as low as possible. This low cost grass based model requires big blocks of land where the cows walking ability is the limiting factor, not the boundary wall.

In Ireland ,the average farm comprises of 32 hectares broken into three different blocks. This is one of the main issues facing Irish farmers who are looking to expand and is the main instigator for seeking out a second or subsequent dairy unit.

For some dairy farmers setting up a second unit is the only viable method of expansion. Before this step is taken however, it is crucial that the original farm is performing at a high level and most importantly generating excess cash. If surplus cash is not being generated, then the time is not right. The expansion of dairy herds in Ireland has seen a huge increase following the removal of quotas in 2015, with one quarter of farmers now milking over 100 cows. The first step in expansion is optimising all of the land farmed and hitting the main key performance indicators. Only then should taking on more land be considered.

Many farmers have and will increase stocking rates, however, this should not be done to the detriment of the farming system. There is a strong correlation between stocking rates and the farming system. More feed is inevitably imported to sustain higher stocking rates. While more litres will be sold, they are produced at a higher cost.

Not all farmers get the opportunity to lease or purchase neighbouring land. Over the course of this scholarship I visited farmers who had expanded through taking on second and subsequent milking units. I wanted to identify the changes this brought, how they managed more than one unit and if there was a right time to make the move. People opted to set up second and multiple dairy units for a wide range of reasons. A key difference was the various models of management that were implemented. This report aims to examine these models in detail and inform Irish farmers of the various management options available.