The dairy industry is facing a stark reality: soaring production costs are squeezing profit margins and threatening the long-term viability of many farms. This concerning trend, driven by a combination of rising input prices and increased usage, is highlighted in a recent Teagasc analysis of 100 high-performing dairy farms.
The study, which examined data from 2019 to 2022, reveals a worrying pattern. Costs per cow have increased by a staggering 40%, or £440, with fertiliser and feed accounting for the largest share of this growth. The cost of fertiliser, in particular, has skyrocketed due to rising unit prices, despite a slight reduction in usage.
However, it is the increase in purchased feed that is most concerning. The analysis shows a 29% jump in concentrates fed per cow, reaching 1,229kg/cow. This increase in supplements, while having only a minimal impact on milk output, has been largely attributed to the need to offset reduced pasture growth resulting from lower fertiliser nitrogen (N) input. The study suggests that this reliance on purchased feed, driven by a need to compensate for reduced fertiliser usage, is ultimately exacerbating the problem of rising production costs.
This trend is further compounded by the lack of clarity surrounding the Nitrates Derogation, which has left many farmers hesitant to invest in their businesses due to the uncertainty of future regulations. Furthermore, the impact of fluctuating milk prices and ongoing poor weather conditions have only served to worsen the situation.
"The current trends in concentrates fed and grass utilised are a recipe for disaster," said Patrick Gowing, Dairy Expansion Advisor at Teagasc. "We are seeing a clear shift away from efficient pasture utilisation, which is ultimately the key to profitability."
Despite the challenging circumstances, Teagasc remains optimistic that there is still room for improvement. The study reveals a strong correlation between pasture utilisation and profitability, with farms utilising pasture effectively achieving better margins. This highlights the importance of consistently monitoring grass growth and making informed day-to-day decisions to optimise feed budgets.
Dr Joe Patton, Head of Dairy Knowledge Transfer at Teagasc, emphasises the need for farmers to focus on sustainable pasture utilisation. "Driving milk solids production through pasture utilisation, rather than feeding extra supplements, is the key to a profitable future," he stated.
The message is clear: Dairy farmers need to embrace a more sustainable approach to production, prioritising efficient pasture utilisation to combat rising costs and secure their long-term viability. By adopting this strategy and engaging in proactive management of their feed budgets, dairy farmers can navigate the current challenges and ensure a sustainable future for their businesses.
