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Review of Teagasc Activities in2014 and Prospects for the
Dairy Sector
Presentation to Oireachtas Joint Committee on Agriculture,Food and the Marine
March 10, 2015
Professor Gerry Boyle, Director Teagasc
Dr Tom O’Dwyer, Head Dairy Knowledge Transfer, Teagasc
Teagasc mission
To support science-basedinnovation in the agri-foodsector and wider bioeconomyso as to underpin profitability,competitiveness andsustainability
Teagasc goalsGOAL 1
Improve the competitiveness of agriculture, food and the widerbioeconomy
GOAL 2
Support sustainable farming and the environment
GOAL 3
Encourage diversification of the rural economy and enhancethe quality of life in rural areas
GOAL 4
Enhance organisational capability and deliver value for money
The Teagasc model of innovation
Teagasc programmes
• Animal and Grassland
• Crops, Environment and Land Use
• Rural Economy and Development
• Food
• Education
• Advisory
• Operations
Teagasc organisational chart, March 2015
Selected highlights in 2014• Promotion of genomics in animal breeding and new beef breeding
indices to underpin profitability (with ICBF)
• Completion of National Soils Survey
• Scientific verification of Irelands’ sustainability credentials and roll out ofthe “Carbon Navigator” (with Bord Bia)
• Policy support to the CAP negotiation and implementation
• Advisory service – 43,000 clients and 13,000 in Discussion Groups
• Collaborations with food industry ~ 250 companies per year
• Teagasc /Irish Farmers Journal BETTER Beef programme
• Science–based policy support to Nitrates Action Programme andClimate Change Policy
• Educating a new generation of farm managers – 3,600 in Teagasccourses, including, Professional Diploma in Dairy Farm Management,plus 3,500-5,000 in Adult Education and Training plus response toeducation needs as a result of the RDP
Current expenditure € m. 2008 – 2015
96 95 80 78 71 70 68 70
33 4340 43 44 41 40 45
59 46
41 51 53 50 5158
020406080
100120140160180200
2008 2010 2012 2014
Non-pay
Pensions
Payroll
c. 39 % own generated income (excl. pensions)
800
900
1000
1100
1200
1300
1400
1500
1600
Teagasc staff numbers 2001 to 2014
- 25%
Teagasc sites’ map March 2015
March 2015
Advisory offices 52
Teagasc colleges 4
Private colleges 3
Research centres 7
Trends in client and adviser numbers 2000 to 2014
0
50
100
150
200
250
300
350
400
450
500
05000
100001500020000250003000035000400004500050000
No of Clients No of advisers
Clients Advisers
- 42%Critical advisory shortages in majority ofregions especially Cork, Meath, Mayoand Tipperary, Galway / Clare and Kerry/Limerick
90
95
100
105
110
115
0
200
400
600
800
1000
1200
1400
1600
1800
2006 2007 2008 2009 2010 2011 2012 2013 2014
StaffEnrolments
College enrolments, teachers and technicians
Enrolements Staff NumbersEnrolments
Enrolments +154%
Staff shortages inall colleges
Refereed publications by permanent researcher2009 to 2013
8486889092949698100
100150200250300350400450500
2009 2010 2011 2012 2013
Publications Researchers
Publications Researchers
Critical vacancies in Food, AnimalScience, Soils Science, Fertiliser
Science, Beef, Tillage, Horticulture
Challenges and opportunities for Teagasc
• Innovation on farms and in processing industries never more important
• Continued reduction in frontline personnel due to recruitment andpromotions’ embargo
• Securing on-going investment for infrastructural needs
• Responding to RDP education demand – an extra 1,000 + applicantsfor Teagasc Green Cert
• Supporting farmers’ participation in GLAS – 15,000 + Teagasc clients
• Supporting dairy and beef farmers post quota
• Gearing up to support innovation drive in dairy and beef processing –MTL investment and “Food Technology Hub” at Teagasc Moorepark
• Climate Change and Sustainability – Kildalton Sustainable FarmProject
• Teagasc must continue to innovate and change and ensure value forpublic money
Prospects for dairying …
Key economic metrics on dairyfarms
• Big range in performance
• Relatively low levels of debt (all dairy farms €62k; all dairy farms with debt €94k)
• A significant number of dairy farmers face a potentially challenging 2015
• Proportion of farmers using financial management tools is low
Spring milkproducers
Average Top 10% Bottom 10%
Milk price, c/l 39.4 40.8 38.2
Gross output, c/l 39.5 42.1 37.0
Variable Costs, c/l 12.8 10.6 15.3
Fixed Costs, c/l 10.1 7.6 13.5
Total Costs, c/l* 22.9 18.2 28.8
Net Profit, c/l 16.4 23.9 8.2
* excl. family labour, owned land and capitalSource: Teagasc Profit Monitor analysis, 8/2/2015
The future
What will this mean?
• 330,000 more cows
• €1.5 – 1.9 bn new investment
• Larger dairy farms and more specialisation
• Increased on-farm/ off-farm employment
• More land used for milk production
0
1000
2000
3000
4000
5000
6000
7000
8000
Base 2010 2012 2014 2020
Milk deliveries (m litres; CSO)
Base 2010 2012 2014 2020
+ 50%
Price volatility
20
22
24
26
28
30
32
34
36
38
40
'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
c/ litre28c/litre 2 c/litre
32.5 c/litre 6+ c/litre
Source: CSO Manufacturing Milk Prices 3.7% fat and 3.3% protein; various years
• Total costs of production have increased from 22.0 c/litre (2007) to 27.4 c/litre (2013) (Teagasc NFS)• Expansion will cost money – costs to increase further?
500,000 litres milk supplier2 c/litre drop in milk price =€10,000 drop in revenue
Coping with volatilityManaging price volatility
• Improve cost control
• Produce high solids milk
• Build cash reserve
• Increase/reduce capitalspending
• Appropriate finance forexpansion
• Develop a cash flow budget
• Fixed milk price scheme
Milk price
High Cost
Medium Cost
Low Cost
High cost: Competitiveness problemMedium cost: Needs to manage price riskLow cost: Can ride out the volatility
Response to price volatility will dependon current cost structure of farm
business
Buckley, T. (2012), Managing Price Volatility in Dairy Farming,Proceedings of Teagasc National Dairy Conference, pp. 89 – 98.
Other risks
• Weather
• Animal disease
• Interest rates
• Increased debt
Teagasc Dairy KT Programme
• Equipping dairy farmers for a sustainable future …
• Emphasis on resilient dairy systems
• Cash Plan Programme (DAFM funded, 2014)
• Discussion Groups
• eProfit Monitor analysis
• ‘My Farm, My Plan’ strategic planning booklet
• Series of Spring Dairy Seminars
• Business planning tools
• Proposal to develop a new service – Dairy ExpansionService
Summary Teagasc approach todairy expansion• Teagasc promotes ‘resilient dairy systems’
• Teagasc recommends expansion only from an efficientbase – ‘better before bigger’
• Farmers will have to adapt to cope with milk pricevolatilty
• Industry stakeholders also need to provide potentialsolutions
• Potential cash flow issues for some farms in 2015
• Teagasc will support dairy farmers to expand in asustainable manner
THANK YOU
