Sense for most Irish farmers
account. However, it is only €854 better than availing of the EU Scheme in option 2 and 1,184 better than option 3 where only 50pc of 2015’s October, Noveber and December milk supply is sold.
In option 4 where the dairy farmer dries off all the cows on October 1 and takes a holiday, there is a significant €7,408 fall in net profit.
It is important to highlight this example assumes the dairy farmer milked 100 cows in 2015 and is still milking 100 cows in 2016. If the dairy farmer increased to 120 cows in 2016 I calculate he would be better off by over €3,000 by not entering the scheme. Therefore, in general the EU Scheme is not suitable for expanding dairy farmers. So, back to the stable 100 cow dairy farmer in the
The example assumes 2kg of concentrate is fed per head per day. Feeding less would also leave the farmer better off by not entering the scheme. The biggest negative of the scheme in my opinion is the proposal to make payments next March or April. It usually takes the Department of Agriculture more time than planned to get new schemes up and running. Dairy farmers who do not enter the scheme will have a milk cheque in December and January, and a bird in the hand is worth two in the bush.
Of course there will always be exceptions to the rule where the scheme may suit some dairy farmers: farmers who are exiting production; switching from autumn to spring calving; restricted by disease or SCC. These farmers may enter the scheme example: should he dry off or not in early November?
Return
The return for his labour is small to say the least. This is all calculated at a net milk price of 28c/l (1c/l less in option 2 for drying off in October due to lower milk solids than in November and December).
The loss on entering the scheme would be greater with a higher milk price, since every cent is worth an additional €350 to the bottom line in the period.
These figures assume there is no labour saving. In reality larger farmers will not let staff go. Even owner-operators will not realise cash by drying off early since they will just have more time on their hands and are unlikely to earn cash offfarm. for a one-off bonus payment.
This scheme was lobbied for by the low margin dairy farmers from northern Europe who are hurting a lot more than their Irish counterparts in the current low milk price environment.
So despite every euro being like gold dust to dairy farmers this EU scheme makes little sense for most Irish dairy farmers — it is only a distraction to well thought-out expansion plans.
However, do talk to your consultant/advisor to check your eligibility for the scheme. The application forms are available on the Department of Agriculture website and at your local co-op or milk purchaser.
Mike Brady is an agricultural consultant based in Cork. 021-4545120