Why big is not always beautiful for

THE AVERAGE dairy farmer in Ireland today milks a herd of 80 cows. However, there are a handful of dairy farmers who have now broken the 1,000-cow barrier. Is this the way Irish dairy farming will continue: bigger and better?

Entrepreneurs are bred to grow and expand businesses. The adrenaline rush of being the biggest and the best drives business owners all over the world out of bed every day. Dairy farmers are no different. Not everybody wants to expand, but after over 30 years of stagnation caused by EU milk quotas, there are more expanding dairy farm businesses than any other farm enterprise in this country.

You have to question where it will all end.

The New Zealanders went from an average herd size of 124 cows per herd in 1979 to 419 cows in 2015.

Only time will tell whether we will follow the same path.

Fragmentation and small holding size are big challenges but some have overcome them already. So, are these dairy farmers millionaires or are they burdened by bank debt and neverending lists of problems?

Last year was a poor year for milk prices and the resolve of all dairy farmers was severely tested. But a small-scale expansion of milking, by adding an extra line or two of cows in the existing milking parlour, enabled dairy farmers to counter the fall in profits, as the extra cows put an additional €500 per cow into under-pressure bank accounts. Therefore an 80-cow dairy farmer who milked 100 cows in 2015 had an extra €10,000 of net profit at 25c/l — this assumes he employed no extra labour and rented no extra land.

This was the case for many dairy farmers, where their dairy cow numbers increased but the number of replacement heifers or beef cattle reduced; therefore, the farm stocking rate remained the same.

What about those who have grown at a faster rate? A 50-cow herd keeping all replacement heifers at a 20pc replacement rate can only grow to 60 cows in year one of an expansion plan.

A 500-cow dairy farmer with the same performance will grow to 600 cows in year one or he will produce a new herd of 100 cows per annum.

Such farmers often remark that getting to the first 100 cows is the hardest; the growth thereafter is rapid.

Quotas

These larger dairy farmers generally are those who had large milk quotas in 1983 and/ or were located in an area where an additional milk quota was readily available.

A typical growth curve for these dairy farmers, who started with approximately 100 cows in 1983, was to increase the herd by leasing land and milk quota in the 1980s and 1990s — they grew up to 180200 cows by 1999 — then it all stopped as milk-quota leasing with land ceased.

This lack of quota leasing stopped expansion in the period from 2000-2007. The Celtic Tiger distracted many until the announcement in 2007 that milk quotas were going in 2015.

New farm building grants, the Farm Waste Management Scheme, Farm Improvement