What Irishmen learned from a free dairy market

The ambitions of the Irish in milk production were and still are large. What has helped in recent years is the favorable weather. The island owes this to a good gulf stream. It provides a mild climate, which suits dairy farming well. The grass grows well in this weather and the climate is ideal for the cows to produce milk.

Expansion is fueling again
The growing weather of 2015, 2016 and 2017 stimulated a rapid expansion of the dairy herd. However, when the weather doesn't cooperate, Ireland is a wet and miserable place to be a farmer. The last few years have made it clear what opportunities there are for the sector, but 2018 indicates that this cannot simply continue in the future. For example, Irish dairy farmers experienced disappointing grass growth in the first quarter of 2018. This results in higher feed costs, which puts an end to the advantage of low costs. At the same time, the milk price is getting lower and lower.

In the meantime it is also European playing field subject to change. For example, the European Union (EU) has stated several times that if the milk price falls again, they will not help. Dairy farmers have to take care of themselves with this.  

Crisis help desperately needed
The low milk prices of 2015 and 2016 underline the need for an instrument to help dairy farmers during a crisis. Although it is at odds with Ireland's growth plans, it is also necessary for them to have a say. A voluntary system of milk reduction is being considered, among other things.

Eurex recently announced that it would be launching one before the summer futures market for raw milk. Ireland is participating in the basket for the settlement of the futures market. Perhaps this will also provide starting points for developing a system that makes dairy farmers more resilient to the volatile world market. 

MelkFlex is expanding
Not only the milk price is taken into account, but also the financing. So it turns out MelkFlex Fund from Rabobank, which was first launched at Glanbia, a success. Other processors will also offer it to their producers. This proves that in a free market a different way of financing is needed. The product is praised for its innovative character and because it is 'farmer friendly'. However, it is the cooperatives that are taking the lead, which can be a lesson in continuing to find ways to absorb risks on dairy farms on the income side.  

The final lesson that the free market is slowly unfurling is that focusing on an industry also has its dangers. For example, dairy farming continues to attract attention, but this is starting to come at the expense of other agricultural sectors. It was precisely the synergy between livestock farming and arable farming that made the agricultural sector successful.

Modern agriculture takes its toll
The modern agricultural sector has reduced the power of this cooperation. The negative consequences of the focus on milk are already noticeable; Issues surrounding water quality also play a role here. To counteract the negative effects, other sectors are being presented with the bill. The arable farming sector in particular can support growth in dairy farming. The return of a balance between the different business types is the only way to achieve a sustainable sector.