review of teagasc activities in 2014 and prospects for the dairy sector presentation to oireachtas...
TRANSCRIPT
Review of Teagasc Activities in 2014 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-based innovation in the agri-food sector and wider bioeconomy so as to underpin profitability, competitiveness and sustainability
Teagasc goalsGOAL 1
Improve the competitiveness of agriculture, food and the wider bioeconomy
GOAL 2
Support sustainable farming and the environment
GOAL 3
Encourage diversification of the rural economy and enhance the quality of life in rural areas
GOAL 4
Enhance organisational capability and deliver value for money
Teagasc programmes
• Animal and Grassland • Crops, Environment and Land Use• Rural Economy and Development• Food• Education• Advisory• Operations
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 of
the “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 and
Climate Change Policy• Educating a new generation of farm managers – 3,600 in Teagasc
courses, including, Professional Diploma in Dairy Farm Management, plus 3,500-5,000 in Adult Education and Training plus response to education needs as a result of the RDP
Current expenditure € m. 2008 – 2015
2008 2009 2010 2011 2012 2013 2014 2015 (Budget)
020406080
100120140160180200
96 95 80 78 71 70 68 70
33 4340 43 44 41 40 45
59 46
41 51 53 50 5158
Non-pay
Pensions
Payroll
c. 39 % own generated income (excl. pensions)
800
900
1000
1100
1200
1300
1400
1500
1600 Year: 2001
Year: 2009
Year: 2014
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
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
05000
100001500020000250003000035000400004500050000
0
50
100
150
200
250
300
350
400
450
500No of Clients No of advisers
Clients Advisers
- 42%Critical advisory shortages in majority of regions especially Cork, Meath, Mayo and Tipperary, Galway / Clare and Kerry /Limerick
2006 2007 2008 2009 2010 2011 2012 2013 20140
200
400
600
800
1000
1200
1400
1600
1800
90
95
100
105
110
115
College enrolments, teachers and technicians
Enrolements Staff Numbers
Enrolments Staff
Enrolments
Enrolments +154%
Staff shortages in all colleges
Refereed publications by permanent researcher 2009 to 2013
2009 2010 2011 2012 2013100
200
300
400
500
85
90
95
100Publications Researchers
Publications Researchers
Critical vacancies in Food, Animal Science, 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 and
promotions’ embargo• Securing on-going investment for infrastructural needs• Responding to RDP education demand – an extra 1,000 + applicants
for 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 Farm Project• Teagasc must continue to innovate and change and ensure value for
public money
Key economic metrics on dairy farms
• 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 milk producers
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 capital Source: 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
Base 2010 2012 2014 20200
1000
2000
3000
4000
5000
6000
7000
8000
Milk deliveries (m litres; CSO)
Milk deliveries (m litres)
+ 50%
Price volatility
'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '1520
22
24
26
28
30
32
34
36
38
40
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 capital
spending • Appropriate finance for
expansion • Develop a cash flow budget• Fixed milk price scheme
Milk price
High CostMedium CostLow Cost
High cost: Competitiveness problemMedium cost: Needs to manage price riskLow cost: Can ride out the volatility
Response to price volatility will depend on 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 Expansion
Service
Summary Teagasc approach to dairy expansion • Teagasc promotes ‘resilient dairy systems’• Teagasc recommends expansion only from an efficient
base – ‘better before bigger’• Farmers will have to adapt to cope with milk price
volatilty• Industry stakeholders also need to provide potential
solutions • Potential cash flow issues for some farms in 2015• Teagasc will support dairy farmers to expand in a
sustainable manner