David McWilliams, ag article

st1979

Milked out wrote:

Two things there, he may have debt of 800k but over what term and what are costs of that money. It is likely to be better on the continent than here. Also I would be surprised if our feed costs would be similar for the type of cow that he is likely to be milking or that we could have a consistency of quality for those type of cows. I could be wrong but until it was actually done I would find it hard to believe

He had most of the debt over 25 years. He would be better interest rate than some guys here and same as some guys over here. He was with rabobank so linked to euribor. Think he was paying 2% at time which today would be even less. But that works out at 3400 per month. Little over 40k per year. And he said he took out of the business 20k for himself. Not a lot but he had another enterprise on farm which improved his income. And when you see the system it really was a part time job. Would be surprised if it were more than 3hrs per day.
He was on the loony end of debt per cow.
His one comment about feed that stuck with me was his silage had too little fibre. Which reduced robot visits. He fed stemmier silage his visits increased. And reduced meal fed and milk increased. Seemed to me he had subclinical acidosis from too much meal. He had fed 0.4 kg per litre. And reduced it to 0.34. Yields were not that crazy in Holland most were 8000litres.
Saw one place and he said his calf rearer but cost €500 per ton. It had grass nuts in it and you didn't need to feed hay with it that it was a complete diet.
Fr bull calves were similar price to here which seemed crazy considering that's where ours ends up. But think they get them off farm quicker than us.
I just came home thinking we in Ireland are actually very lucky that we could do that system at lower cost than them if we wanted to. Or we can do the new Zealand system.

patsy_mccabe

I travel a fair bit with work, all over Europe and a little to the USA. The only place I ever saw cattle out grazing was in a hilly region in Germany. It's cattle in sheds and maize growing away outside in most of Europe.
The real shame in all this is we don't exploit that whole Green image we have. We're just selling cheaper on the commodity markets.

kowtow

Also that debt of 800k may contain a significant chunk paid in cash to his own family if he had to buy the farm.

In due course that cash will come back in some part via inheritance and the cycle will continue. In effect it is a long term revolving loan to pay a lump sum inheritance tax throughout your life.

kowtow

patsy_mccabe wrote:

I travel a fair bit with work, all over Europe and a little to the USA. The only place I ever saw cattle out grazing was in a hilly region in Germany. It's cattle in sheds and maize growing away outside in most of Europe. The real shame in all this is we don't exploit that whole Green image we have. We're just selling cheaper on the commodity markets.

We have to leave cows to graze because unlike countries with a local market we can't afford to feed them - there is no market for our milk other than the world surplus market which by definition is a low value dumping ground.

That's what really irritates me about politicians crowing about our "competitive advantage".. it's like the tallest tramp in town boasting that he can get the food out of the restaurant trash easily.

blue5000

I haven't been to Holland since a school tour, even back then the processed food was rubbish. We really don't appreciate our green image enough.

st1979

kowtow wrote:

We have to leave cows to graze because unlike countries with a local market we can't afford to feed them - there is no market for our milk other than the world surplus market which by definition is a low value dumping ground.

That's crap. I have had French students most years and its always shocked me that I get a similar milk price and if I am to believe what they told me sometimes better price than they do.
We can't export 90% of our produce and expect to get paid more than the native producers of that country.
For years the UK farmers got paid less than us in Eire. Yet they have to import milk. Surely the British farmer should get paid more than the Irish farmer. Considering that consumers generally prefer to support native businesses. If I was a German farmer I would be pissed off if I was not getting significantly more for my milk than an Irish farmer. As I am supplying my native countrymen who are one of the richest nations on the planet.
And as Irish farmers we are supplying many very poor countries and many rich ones.
I heard it said that when milk went above 34 cent that the Nigerian market suffered which Glanbia supplied. I think its a sad truth that the poor in Nigeria could pay a relatively decent price compared to us rich westerners. Think they appreciate what it is to go hungry.
Sorry for the rant

Nekarsulm

blue5000 wrote: »

I haven't been to Holland since a school tour, even back then the processed food was rubbish. We really don't appreciate our green image enough.

And asking for milk in your tea or coffee causes bewilderment. And the offer of some "creamer" instead.

kowtow

st1979 wrote: »

That's crap. I have had French students most years and its always shocked me that I get a similar milk price and if I am to believe what they told me sometimes better price than they do.
We can't export 90% of our produce and expect to get paid more than the native producers of that country.
For years the UK farmers got paid less than us in Eire. Yet they have to import milk. Surely the British farmer should get paid more than the Irish farmer. Considering that consumers generally prefer to support native businesses. If I was a German farmer I would be pissed off if I was not getting significantly more for my milk than an Irish farmer. As I am supplying my native countrymen who are one of the richest nations on the planet.
And as Irish farmers we are supplying many very poor countries and many rich ones.
I heard it said that when milk went above 34 cent that the Nigerian market suffered which Glanbia supplied. I think its a sad truth that the poor in Nigeria could pay a relatively decent price compared to us rich westerners. Think they appreciate what it is to go hungry.
Sorry for the rant

Nothing to apologise for in that rant, I think you are largely correct.

Africa is a complex one because it depends who is buying the milk (powder).. the richer parts of Nigeria - the middle classes, if you like - are of course significantly richer than the middle classes here. When I lived in Africa milk powder was one of the four or five substances subject to a regulated import price (the others were diesel, butane gas, cement from memory)... and as such it was a real commodity import - certainly nobody would have much cared where it came from or whether it was produced from grass. That's one of the intractable problems for Ireland IMO - so hard to carry the true value of our milk through into a commodity priced market.

Frazz mentions above that German farmers also amazed and getting less at the gate.

However - there is no question that the world surplus market (best represented by NZ prices) is both more volatile and consistently lower than either the EU farmgate market or the US market, both of which are supported by local premium liquid. In that environment it makes total sense that the Irish price (also the Dutch spot price for exports) will be both volatile and lower year on year than the price in other EU countries which are less dependent on exports. As far as I know, that is an area in which everyone is in complete agreement.

If it were the case - which your post seems to suggest - that Ireland could and will continue to command farm-gate prices as high or higher than Germany, France etc. - then the central theme of this debate is completely open, in other words why don't we feed our cows and increase litres / labour unit as the Dutch do? It is well established that when land and labour are taken account of our cost of production is already higher than the Netherlands, and for a 100 cow herd it is surely better to spread the €60,000 odd required for those (not to mention the other fixed costs) across a million litres than across 500,000?

My own central view FWIW is that Irish prices will get closer to a lower, volatile (though slightly less volatile than historically) world price... ie. the NZ price and EU average prices will settle higher than Ireland, but lower than historical averages and also a little more volatile. The more an EU country depends on exports the closer to the "Irish line" they will be.

kowtow

Nekarsulm wrote: »

And asking for milk in your tea or coffee causes bewilderment. And the offer of some "creamer" instead.

If you can't get milk at all for a few years its amazing how quickly you become addicted to that creamer!

alps

st1979 wrote: »

That's crap. I have had French students most years and its always shocked me that I get a similar milk price and if I am to believe what they told me sometimes better price than they do.
We can't export 90% of our produce and expect to get paid more than the native producers of that country.
For years the UK farmers got paid less than us in Eire. Yet they have to import milk. Surely the British farmer should get paid more than the Irish
Sorry for the rant

Not Crap at all...just the view from a punter who has the capibility of seeing the wood from the trees.
I'm not trying to insult a profession, but I would suggest that a huge number of farmers all over the world have run their business with a financial planning model of spending what I can afford, therfore in any market nearly always making just enough to survive. That meant in higher priced markets, more was spent on what we may deem to be needless stuff, complicating the system to the point where the sales rep and everyone else makes us a slave to their needs of making a living.
Just look up milk prices currently and don't believe anything you are "told". Milk price in UK is currently at 35c. The salesman always throws in the worry...look at the milk that is out of contract getting just 7p/l. Farmers supply to their contract amount and the excess is at 7p....last year our excess was at 4c/l...
Friesland are consistently 3c/l ahead of DOC Kaas in Holland where DOC produce just commodity cheeses and Friesland have gone for added value...strengthens Kowtow s argument.
What I would disagree with Kowtow on is our access to markets. We have an island frame of mind with an inferiority complex when it comes to food marketing. We not only produce food to a standard of welfare and green image that the world lings for but food that has a chemical composition that can only be replicated by organic production methods. We have utterly failed to make an advantage of this, denying this advantage to such an extent that we have placed our whole future on milk powder commodities. The plants now in place added to by those in construction will have to run to full capacity to keep them efficient thereby denying even more of our milk destined for high value products.
Are we an Island? Yes in terms of animal welfare, and being able to deferinciate our product from the rest.
No in terms of transport and sales.
If I close the doors on the back of a 40ft fridge unit right now, I can have it at a distribution depot on London in 13 hours, ready for tomorrow's drops to stores in the UK. I can have it in a distribution depot in Paris, Brussels in about 26hrs and within the range of 250 million people within 48 hours. Don't believe someone who days this is too expensive...I'll chase down rates, the cheapest mile any product can travel is on water.
We made a better effort at this back when the donkeys carried the butter along the old butter road from kerry to the butter exchange in Cork City, and exported all overy the world.

micraX

st1979 wrote: »

That's crap. I have had French students most years and its always shocked me that I get a similar milk price and if I am to believe what they told me sometimes better price than they do.
We can't export 90% of our produce and expect to get paid more than the native producers of that country.
For years the UK farmers got paid less than us in Eire. Yet they have to import milk. Surely the British farmer should get paid more than the Irish farmer. Considering that consumers generally prefer to support native businesses. If I was a German farmer I would be pissed off if I was not getting significantly more for my milk than an Irish farmer. As I am supplying my native countrymen who are one of the richest nations on the planet.
And as Irish farmers we are supplying many very poor countries and many rich ones.
I heard it said that when milk went above 34 cent that the Nigerian market suffered which Glanbia supplied. I think its a sad truth that the poor in Nigeria could pay a relatively decent price compared to us rich westerners. Think they appreciate what it is to go hungry.
Sorry for the rant

That's exactly how Irish vegetable farmers feel, look in the supermarkets, all the imports, a lot from Holland and most of the produce can be grown here. Irish growers aren't given a chance. It's not fair. And it's never highlighted. All the media and farming organisations want to hear about it milk and cattle...

kowtow

st1979's post above sent me back to look at Irish vs German milk prices since 2001....

And he is absolutely right... at least since 2006 Irish prices have kept pace with, even bettered German prices. The graph below shows the accumulated advantage of Germany over Ireland for the last 15 years (basically adding all the prices together and deducting a notional 24c COP for both countries). What is interesting is that in the "old days" when commodity prices were stable Germany consistently did better than us.. since the price shocks + commodity bubble of 2006 onwards, growth of China etc. Ireland has caught up - because our milk prices at the farm gate have actually been a bit better (although a small bit) on a fairly consistent basis.

Whether that will continue depends on whether the period since 2006 is an aberration and commodities return to a more stable long term price, and also on how much milk Germany produces for export to world markets (diluting their own local liquid price).

But if our advantage over Germany in sale price is real, and will continue beyond 2015, we need to ask ourselves do German farmers enjoy a higher standard of living than us... and if so why? The answer to that probably lies in cost of production which - when labour and land are added - makes us a more expensive producer than Germany. That's easily enough solved by feeding the cows, getting in the robots etc., and making sure you produce a million litres for every man on the farm.

Of course, if commodities don't behave that way and settle back down to long term norms then the German domestic price will go back to being better than ours, and while they will be able to afford to feed the cows indoors we certainly won't. On the other hand we won't be enjoying prices much above 20-30c for what we do produce, either.

So you pays your money and you takes your choice.

st1979

My general kinda point is the grass is always greener far away. And I mean that in a ' they have lower input cost or better milk price' kinds of way. I think we actually do a pretty good job. We are a commodity producer like new Zealand but we are seen to have higher standards due to them having some expensive food scares. And whilst they are closer to the growth markets of south east Asia we are getting a small premium over them no matter where you are or who you sell to world price will bring you up and down its just a matter of getting a premium over world price.
Fixed milk price scheme helps but its only there to even out the volatility. Too many see it as a win or lose situation. If the farmer 'wins' every time the buyers will give up.