Bretts Continue to Invest in their Business to meet the Challenges from its Customers

The dream of Harvest 2020 is fast becoming reality on the ground in the dairying sector.  The South East is the epicentre of expansion and Kilkenny leads the way with a massive increase in cow numbers.

The 2020 vision targeted an increase of 50% in milk output, and right now farmers are building new milking parlours and upgrading their facilities to take advantage of the opportunities when the milk quota disappears in April next year.

Extra milk production provides a huge economic dividend for the county and our GDP will grow accordingly.  Foreign direct investment is an essential component in our on going development, but the value added by the dairy industry and indeed the general agricultural industry is massive as the import content of farm produce is minimal.

Glanbia’s investment in Belview is the most tangible evidence of the benefits to the overall community with the construction jobs and the ultimate sustainable employment provided.  The spinoff for the exchequer is huge with VAT, income tax and rates all important to the National budget.  There is much more investment locally as a result of the dairy expansion.  One has only to think of the fencing, construction, water and slurry systems being installed.

In Bretts we continue to invest in our business to meet the challenges from our demanding customers.  Last year we commissioned a new 20,000 tonne grain store with radical new technology to reduce the cost of handling and treating grain for storage and eventual use as a prime raw material in our feeds.  The result is less electricity, reduced oil usage, less CO2 emissions and a more competitive native grain.  We are expanding our Mill capacity to meet the increased demand for dairy feeds.  This investment is geared for improved efficiency and again less energy consumption.

As the country braces itself for this massive explosion in milk output, the entire industry right through the food chain needs to prepare for all eventualities.  Right now it might seem as if this graph can only go in one direction, but caution and cold analysis must precede all sensible investment decisions.

Yes, we all accept the exciting market opportunities which are opening up in China and India and elsewhere.  These markets have enormous potential but we must factor in the inevitability of global shocks upsetting the script.  We have seen the unexpected results of weather issues, recession and geopolitical events in the past.

There is no doubt that increasing population and living standards are contributing to a huge growth market for proteins.  This will continue but so will milk output in key production areas.  One has to be concerned with the capacity of US dairy feed lots to turn up the taps almost instantly.  This is particularly so when world maize prices are so competitive.

Futures markets indicate that cheap maize will continue to be a feature and this poses a significant threat to our grass based dairy and beef farming.  I believe that dairy farmers should be less obsessed with simply increasing cow numbers, and should start by auditing their existing operation with a view to optimising efficiency before expanding.

The new dairy farmers will demand a highly professional service from us input suppliers – that means cutting edge technology supporting quality and service while ensuring competitive pricing.

Creameries throughout the country are investing in milk processing capacity and one hopes that every possibility which can contribute to reducing costs is being exhausted because when the market inevitably turns and all margins are challenged, then Ireland will need and industry fully fit for purpose to take on the challenge of the global dairy giants. 

Farmers require massive support from Irish banks and it seems that our Pillar banks, at least, are anxious for a share of the risk!  I use “risk” advisedly because the concept of risk assessment and risk management has been abandoned by banks and investors here for the past decade.  We can’t afford to expand our dairy industry on that failed model.  There is a wonderful opportunity here for young ambitious farmers but everyone needs to ask “what if”?

Budgets need stress testing at much lower milk prices than today and interest rates will not be this low forever.  Cash flow budgets need to be stress tested for lower milk prices going forward.  The low cost model based on extended grazing and minimal silage conservation has not been viable for farmers in the difficult conditions we have experienced in recent years.  Most dairy farmers have made their own decisions on the management of sound nutrition for their cows based on supplementing good grassland management with sensible concentrate feeding.

The future is certainly bright for our dairy sector and it can be profitable and sustainable if we can avoid the errors which have so damaged other sectors in this country.

James J. Brett

Contact details

Brett Brothers Ltd.,
Callan,
Co. Kilkenny.
Tel: 056-7755300
Email: enquiries@brettbrothers.ie

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