The Irish dairy boom goes on... and on

Press, 26 January 1979, Page 12

The Irish dairy boom goes on... and on

By

CHRISTOPHER PARKES

in the ‘‘Financial Times,” London

While British dairy farmers complain and buckle down under the burden of a vastly over-valued agricultural “green” pound •— getting effectively only 70p for every pound’s worth of milk yet still paying IOOp for every pound’s worth of inputs — the astonishing boom in Ireland continues with unflagging vigour. Latest provisional figures from An Bord Bainne. the Irish National Dairy Board, show that milk production in the past 12 months leapt by more than 15 per cent. The value of exports shot up 28 per cent to £476M — in what all in the dairy trade agree was a "bad” year. The British market, which still absorbs a large proportion of Irish milk products, was heavily over-loaded with both cheese and butter for the full 12 months. Price cutting became standard procedure at all levels in the distributive chain, but the marketing skills of An Bord Bainne have clearly been paying off. These abilities are highly praised in a report just published by the United Kingdom Milk Marketing Board which produces some startling, not to say alarming, comparisons between the British and Irish dairv industries.

Examining the small dairy' herds in Ireland — and there are 60,000 herds with fewer than 20 cows in the country producing 55 per cent of national milk output — the author shows how a fair, even comfortable living can be made on a 40-acre holding.

A mixed farm of this size, with a 10-cow herd as the main enterprise, produced a net profit during 1977 of more than £4OOO a year. The farmer paid no tax and even qualified for income supplement. In 1974, the year after

Ireland joined the E.E.C. a farmer on such a unit was making less than £l5OO. During 1977. then, the average small-scale Irish operator was making £2OO profit per hectare of land. During the same time farmers in Britain, classed among the most efficient dairy producers in the country, were making only £lOB a hectare. Specialist dairy farmers in Ireland took £261 a hectare profit.

"It seems almost as if the Common Agricultural Policy with regard to milk was designed with the Irish in mind.” says the foreword to the report. The main body of the paper is devoted to an even-handed comparison of the British specialist against Irish specialist. The higher profits in Ireland were due partly to the difference between the milk prices paid in lhe two countries. The Irish earned 0.7 p a litre more. But the overriding cause of the difference, the author concludes was the extremely’ low level of both fixed and variable costs on Irish farms. Total fixed costs on the farms studied averaged £5141 in Ireland and £15.655 in Britain. The biggest descrepancy was in the bill for labour — £4426 in the United Kingdom and a mere £520 a year in the Republic. So although the total gross margin on the average Irish unit was less than £19,000 compared with more than £26.000 in Britain, trading account profits reversed the balance leaving the Irishman with £12,500 in his hand and his British counterpart with less than £BOOO to show for his year’s efforts. While some of the difference can be put down to the United King-

dom Government’s ’ price policy, a large proportion is clearly attributable to his torical tactical decision made in the development c British dairying. The average British dair farm is undoubtedly' far moo sophisticated than the aver age Irish unit. But the British farmer is paying a higi price for his sophistication.. Basically, the Irish farmer feeds his cattle on grass, gives them only a fraction of the costly concentrate feeds doled out by the British, .feeds his grass on a relatively stingy ration of nitrogen, and spends as little as possible on other “luxuries” like stock housing. The United Kingdom specialist dairy farmer, who feeds three times as much concentrate as the Irishman and uses a third more nitrogen, gets an average milk yield of 5000 litres a cow compared with 3290. But a reading of this paper raises the question: is it worth the candle? True, the Milk Marketing Board and the Ministry of Agriculture are steadily' promoting the idea of low-cost milk production here,- but from the other side comes the insistent commercial pressure on farmers to invest more and more in their units. Too often, it seems, such ’“improvements” merely add to the pressure on them to run harder and harder to keep the treadmill turning. Witness, for example, the current “hard sell” on computer technology for agriculture. True, the British dairy industry was developed to fulfil a set of criteria wholly different from those applying elsewhere in Europe. But now’ that it is having to survive within a structure developed for Europeans it

is having a sad time of it. ■ Interestingly, Irish farmers for all their new-found pros perity are not spending heavily 7 on their farms, r

ong history of low price and depression in th ountryside has instilled int. he farming community leep distrust of heavy invest nent.

The prosperity of th aimers is. however, only on< result of Ireland’s accessioi to the European Community More significant in the longer term is the seemingly open-ended opportunity to expand, offered to the dairy industry’.

The inherent conservatism of the rural community will probably ensure that poten-

tial expansion rates are not met fully, but it still seems likely that Irish milk production will grow from 3.8 tillion litres in 1977 to 6.5 tillion by 1985. This, of course, assumes tational milk production uotas are not imposed by he E.E.C. Council of Ministers which is currently earching for rays to cut he Nine’s structural surpluses of dairy goods. And. of course, outlets will have to be found for the coming flood. Since there are only 3M people in the Republic and they are already top m the Community 's dairy consumption league, they can hardly be expected to absorb much more.

New manufacturing capacity will have to be provided and new products devised. always assuming, of course. that the Dublin Government does not find a wav through British "health ’ regulations which stop imports, lav down a pipeline across the Irish Sea and pump its problems into Britain — with the help, of course, of a nice, tat monetary compensatory amount subsidy.

(A story on what some Irish farmers are doing vvith their new-found wealth appears elsewhere on this page.)