Irelands Dairy Sector Poised for Growth Presentation to

Ireland’s Dairy Sector Poised for Growth Presentation to Conaprole Dairy Conference, XXX, Uruguy, October 12 the 2017 Professor Gerry Boyle, Director Teagasc, Agriculture and Food Development Authority Ireland

Outline of presentation § A little about Teagasc § A little about the Irish agricultural economy § The Irish dairy industry in growth mode § Factors underpinning growth § Constraints on growth 2 Teagasc Presentation Footer

Teagasc § Teagasc – Pronounced “Chawg-ask” means “instruction” § Teagasc – The Irish Agriculture and Food Development Authority – research, advisory and education § Annual expenditure € 180 m. and 1200 total staff – 70% State grant § 240 researchers + 240 Ph. D. studentes; 65 subject-matter specialists ; 65 teachers; 250 advisory; 7 research centres; 51 advisory offices and 7 colleges

Some structural features of Irish agriculture 4% 4% 6% 39% 9% Milk Beef Pigs 37% Sheep Cereals 140, 000 farmers Avg farm 33 ha 81% pasture Other

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Irish dairy product mix 16% of global infant formula market 6

Rapid change on Irish dairy farms Year Milk Production ( mill. lts. ) Cow Numbers (million) Milk Yield/cow (lts. ) Fat % Protein% 1984 5, 422 1. 549 3, 811 3. 51 3. 27 2007/09 (govt. baseline) 4, 932 1. 005 4, 469 3. 81 3. 33 2014 5, 651 1. 192 4, 740 3. 99 3. 43 2015 6, 399 1. 295 4, 938 4. 03 3. 50 2016 6, 674 1, 347 4, 956 4. 08 3. 46 2020* 7, 600 1. 466 5, 190 4. 16 3. 54 * Projected

Accelerated growth in 100+ herds 700, 000 4, 500 4, 000 600, 000 3, 500, 000 400, 000 2, 500 300, 000 2, 000 1, 500 200, 000 100, 000 500 0 0 2005 2007 Number of cows 8 Teagasc Presentation Footer 2010 Year 2013 Number of dairy farms 2016 Number of farms Number of cows 3, 000

Dairying returns the highest income to Irish farmers

120000 100000 Income by herd size - 2016 Teagasc National Farm Survey FFI % of farms 40 35 % of farms 30 80000 25 60000 20 15 40000 10 20000 5 0 0 <10 cows 10 to 40 cows 40 to 70 cows 70 to 100 cows 100 to 130 cows >130 cows

KPIs of the average, top 20% , bottom 20% of Irish dairy farms Average Top 20% Bottom 20% Net margin (€/ha) 1, 165 2, 126 278 Stocking rate (LU/ha) 1. 93 2. 23 1. 69 Concentrates (kg/cow) 926 800 1, 091 Days grazing (days) 242 255 229 Kg MS/cow 402 432 365 Total costs (€/kg MS) (cent/l) 3. 03 23. 4 2. 48 19. 3 3. 78 28. 9 Net margin (€/kg MS) (cent/l) 1. 37 10. 7 2. 06 16. 0 0. 51 3. 9 Milk Solids kg/Ha 887 1, 019 774 7, 796 9, 378 6, 359 Grass utilised kg/ha

Teagasc research : from farm to gut

Integrating production and processing research Animal & Grassland Programme Food Programme Quality & Safety Pasture Animal Breeding Research Staff Milk Chemistry Sustainable Systems Research Staff Processing

Innovation the key to growing export markets Technologies to extend shelf life to reach far away Markets SMART ingredients – nutritional base for foodstuffs elsewhere in the world beyond the UK market Cheese diversification, e. g. , Cheese for China World-leading expertise in quality / safety, e. g. , Beef and Dairy reassure new buyers in new markets. Leading Analytical Capabilities Cross-Cultural Sensory Studies

Discussion Groups as a technology transfer tool • Discussion groups are a key methodology to transfer new technology • Increase adoption of technology and management practices • Evaluation shows increased financial benefits € 9, 600 for a 40 hectare dairy farm (€ 240 x 40) or about 3 c/litre • Survey results show that farmers join groups primarily to learn and gain information • Discussion groups are a valuable peer to peer learning environment • The benefits of group membership need to be continually highlighted to overcome one to one culture

Ireland’s grass-based dairy production model compact seasonal calving high Model ideal for the post quota environment EBI dairy • Profitable • Competitive cattle • Replicable • Resilient productive • Sustainable ryegrass/ skilled But there’s big scope for improvement … clover swards agronomic management

The way forward: relentless focus on improving adoption of ‘best practice’ Dairy Farms 2015 Practice adoption (%) Advisory Contact Non. Advisory Milk Recording 48 21 AI 86 69 Genomically selected bull 54 37 Herd Plus 65 35 e-Profit monitor 48 9 Regular soil testing (last 5 yrs) 83 67 Re-seeding (2015) 51 51 Farm grass cover 26 9 GPS/GIS devices (fertiliser spread. etc. ) 10 5 Technical recording devices (collars etc. ) 6 6 Heat detection devices (electronic) 4 5

Evolution of the EBI

Big improvment in fertility through genetics Phenotypic Genetic

Next Generation Herd- 2013 - 2016 Next generation herd National average 5, 499 5, 704 MS (kg) 448 442 Protein (%) 3. 75 3. 58 SCC (‘ 000 cells/ml) 108 126 3 Week Sub. Rate (%) 92 86 Preg. 1 st Serv. (%) 60 46 Preg. 6 weeks (%) 73 58 In Calf Rate 12 weeks (%) 92 81 Mean BCS 2. 94 2. 77 Mature LWT (kg) 560 570 Milk yield (kg/cow)

“Big data”

Dairy Practice Adoption: Milk SSC (1/2) 290 270 ‘ 000 cells/ml 250 All NFS dairy farms 230 210 2020 Target 190 170 150 2010 -2012 2011 -2013 2012 -2014 2013 -2015 Source: NFS 22 Practice Adoption and Impact Targets – KPI Trends

Dairy Practice Adoption: Grass Utilisation Target: Increase by 0. 5 t DM/ha year on year 9 8. 5 8 All NFS dairy farms t DM/ha 7. 5 7 Target 6. 5 6 5. 5 5 2010 -2012 2011 -2013 2012 -2014 2013 -2015 Source: NFS 23 Practice Adoption and Impact Targets – KPI Trends

Dairy Practice Adoption: Economic Breeding Index Target: Increase EBI by € 10 per cow per year. € 140 € 130 All herds Target Average EBI € 120 € 110 € 100 € 90 € 80 € 70 € 60 2010 -2012 2011 -2013 2012 -2014 2013 -2015 2014 -2016* *2016 figure shown uses old EBI base. All cows scaled back by € 71 EBI as of September 2016 base change. 24 Practice Adoption and Impact Targets – KPI Trends Source: ICBF

1. 4 16. 0 Fat plus protein Groundwater NO 3 -N concentration in groundwater (mg/l) Fat plus protein production (t/ha) Increasing stocking rate/output can be compatible with good environmental performance in a pasture-based system 14. 0 1. 3 12. 0 1. 2 10. 0 8. 0 1. 1 SR (cows/ha) Conc (kg/cow) N fertilizer (kg/ha) 6. 0 1 4. 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2. 4 741 2. 4 716 2. 4 645 2. 6 636 2. 6 1202 590 2. 9 617 2. 9 288 2. 9 450 2. 9 430 294 289 296 331 259 313 244 248 252 249 Year 2. 7