Europe will lift its dairy quotas next year, unleashing its farmers to produce as much milk as they please and their bulk tanks can hold.
The lush, verdant pastures of Ireland, bespectacled by Holsteins across the virtual breath of this island nation, are poised to see even more cows in the coming five years.
On March 31, 2015, Europe will lift its dairy quotas, unleashing its farmers to produce as much milk as they please and their bulk tanks can hold. Irish farmers, perhaps unlike any others in the European Union (EU), are ready and willing and able to grow.
Unconstrained by European Union quotas, Irish dairy producer Richard Coughlan plans to grow his dairy herd over the next five years. (Photo: Jim Dickrell)
Thirty-one years ago, when the EU dairy quotas were imposed, Ireland was producing 11 billion pounds of milk annually. It’s doing that same volume yet today. In contrast, New Zealand was at that same 11-billion-pound level in the mid-1980s. Free to supply the world market with no constraints, New Zealand has quadrupled its production over these past three decades.
I spent most of last week in Ireland, talking to farmers and dairy co-ops about this new era of free market European milk production. I was there at the invitation of Enterprise Ireland, a quasi-government, business development promoter.
What I learned: Irish farmers are almost straining in the harness, seeing a world of opportunity with $24 milk prices, total costs of $18/cwt. and cash costs just a fraction of that. Survey after survey, conducted by their dairy co-ops, show Irish dairy farmers plan to grow milk output 50% to 60% by 2020.
One such farmer is Richard Coughlan, who farms just west of Mitchelstown in County Cork, in south central Ireland. Coughlan, a third-generation farmer on ground bought by his grandfather in the 1920s, milks 110 British Friesians and stocks 160 beef cows on 320 acres. His plan: "I’ll wind down the beef herd because of poor margins (2013/14 was disastrous) and gradually grow the dairy herd to 150 cows in five years," he says.
And he’ll do it at very little cost. First off, unconstrained by quota, Coughlan will be able to push for more production through more concentrate feeding. Because of quotas, he only feeds 4½ lb. of concentrate per cow per day. He’ll likely feed more grain at both the beginning and end of lactation (when grass, his primary ration component, is less abundant and energy dense). More grain should increase his rolling herd average from 15,400 lb. to 18,000+.
He’s already breeding for more replacements. In the past, he would use Angus semen on dairy heifers for calving ease and then feed the resulting calves out as beef. Now he’ll use high-indexing Friesian semen to produce more heifers. For next year, he has held over about 10 two-year-old heifers for another season that failed to conceive in time for this grass season. They’ll calve as three-year-olds, but with abundant grass to feed them, it’s cheaper than buying in replacements.
Parlor capacity isn’t a concern, either. Coughlan milks in a double-10 Dairymaster swing-over parlor. Even though it has just 10 milking units, Coughlan and an employee can milk his 110 cows in less than an hour. Adding 40 more cows will add less than 30 minutes to that routine.
The co-ops, economists and university dairy specialists I spoke with all confirmed that Richard Coughlan’s plans are mirrored by a good portion of Ireland’s 18,000 dairy farmers. Ireland’s total milk output on a global scale is modest (comparable to Pennsylvania’s). So increasing its production by half in the next five years will likely account for just 10% of the growth in world markets that is expected to grow another 55 or billion pounds in that same time.
But it does show what opportunity and a free market can unleash after 31 years of the unyielding constraints of quota.