The removal of milk quotas provides significant opportunity, but only for those farmers that are well prepared. This is according to Bank of Ireland’s head of Agriculture, Seán Farrell, who was speaking at last nights Bank of Ireland agri conference in Fermoy.
Irish dairy farmers are readying themselves for a potential boon period in the industry with the abolition of milk quotas from 2015. As one of the most profitable conventional farming system, the imminent removal of the quotas is set to enhance the sector’s attractiveness even further over the next five years.
To capitalise and profit, though, farmers throughout the country must prepare properly, according to Seán Farrell, head of Agriculture at Bank of Ireland. “We expect to see significant growth from next year onwards and we know that many dairy farmers have already bred additional stock in anticipation of the change, while many others are considering expanding their farms in the future.”
The removal of the sector’s most considerable limiting factor will also lend itself to attracting new entrants, and while Farrell encourages entry to the sector, he says that converting to dairying will not be for everyone and has a word of warning for those that are considering making the switch.
“New dairy farmers should concentrate their immediate efforts on seeking out the best advice possible at this stage. There are many platforms available for them to do so such as local discussion groups. Spending some time on dairy farms with high standards of efficiency is also a smart move, which should offer invaluable insight into proficient grass and cash budgeting. Starting out with good habits like this offers new entrants a solid base on which to build their business.”
Lending a hand
Farrell says that Bank of Ireland wants to assist with the key decisions. “We can help when it comes to assessing the feasibility for expansion. Dairy farmers will find our agri managers are available to discuss their requirements and determine an individual’s current repayment capacity, and how much each could potentially borrow based on expansion projections. We can also advise on the best structure for future financial commitments – we want to help farmers make the right decisions for themselves, their families and their businesses.”
What’s your position?
One of the key questions for all dairy farmers ahead of next year’s change should be ‘where am I now?’ “A thorough review of the existing balance sheet including land, buildings, infrastructure, machinery and stock should be an immediate priority,” notes Farrell. “It’s also best to carry out a full appraisal of the financial position and undertake a realistic assessment of the human resources required to take advantage once the limit of quota on production have been removed. Today, farmers should be asking themselves where they want to be in five years’ time, and while some farmers will choose to expand, others, depending on factors such as family circumstances or personal ambition, may wish to remain at current levels of production and decide that improving efficiencies within their current resources is the best way forward. Whatever the scenario for each individual, it’s best to have it worked out well in advance of such a marked shift in the sector.”