This week the UVM Extension Farm Viability program and statewide VT Farm and Forest Viability Program partners got together to discuss current topics impacting farms.

Dennis Kauppila lead a discussion on farm business partnerships. We reviewed an older but still relevant resource guide that leads farm business owners that are setting up a partnership. Click here to download  Michigan State University: Farm Partnership Agreement Worksheet

Food safety is on our minds with the expectation of new federal  produce safety regulations this fall and the existing GAP’s/buyer-based verification programs. Ginger Nickerson explained the different post harvest packing and storage investments that produce growers are making  that can improve product quality in addition to meeting safety requirements. Click this link for a  fact sheet on building open packsheds. If you are thinking bigger, then click this link on renovating old barns .

A business planning meeting would not be complete without a discussion on risk management and crop insurance programs. Jake Jacobs, UVM Extension Crop Insurance Educator, provided an update on whole farm revenue insurance, Margin Protection for Dairy and the NAP program that could be used for maple producers. Click this link for a USDA Risk Management Agency (RMA) 2014 Farm Bill Crop Insurance Modifications

Last week I had the pleasure of bringing 3 colleagues from Ireland’s extension service

Kevin Connolly and James McDonnell, Teagasc, discuss the finer points of chattel loans with Alan Curler, VT Ag Credit Corp.

around Vermont. They are part of Teagasc, an Irish organization that is similar to our Land Grant college system.  I studied last year with James, Fintan and Kevin, financial management specialists, when I was on sabbatical study leave in Ireland.

During the week we visited with lenders from USDA’s Farm Service Agency, VT Ag Credit Corporation, and Yankee Farm Credit. Several concepts came up that were very interesting to ‘the lads’ and may help the reader understand ag lending here in Vermont.

1. Each of the lenders talked about a ‘relationship’ with the farm borrower. They called it one of the Five Cs of Credit (see the second page of this article). Borrowers often have a difficult time understanding this, until they have a couple of years of borrowing experience- then they see how important it is to be able to pick up the phone, or send an email to their lender about a certain situation. ‘The lads’ from Ireland said that ‘relationship’ is out the window in their country. It evaporated a few years ago when Irish banks took a direct hit with the bad economy. They miss it- a lender can’t go out on a limb for a farmer who has had a little slip, and the lender knows the farmer will be able to make it right in a year or so. A farm lender sits on the opposite side of the table when a farmer wants to borrow money. But the farmer does not see the lender when the lender is trying to get approval for the farmer’s loan from the loan committee.

2. Each of the lenders talked about ‘Chattel Loans.’ This is making a loan for livestock or equipment (or another asset) using the livestock or equipment at partial collateral for the loan. Lenders in Ireland do not do this anymore. After the Irish economy hit the skids a few years ago, one of their banks had to hire people in the US, and on 2 other continents to try and find the large construction equipment that had been sold (illegally) and moved. The lenders do not want to go through that again. So farmers in Ireland are facing very strict lending rules and regulations. Ireland, as part of the European Union, is under the EU’s Dairy Marketing Quota, that has limited the amount of milk that a farmer can sell since 1984. In the spring of 2015, this quota ends. The Irish government wants an expansion of dairy- this is a product that can be easily exported to bring much-needed cash into the Irish economy. Irish dairy farmers are looking to expand to make more profits. Irish farmers who have not been dairying are considering dairy, since it has been the most profitable sector of the Irish economy. Not having Chattel Loans makes this more difficult.

3. Each of the lenders also talked about Guaranteed Loans. USDA’s FSA can guarantee farm loans made by other lenders. This protects the lender in case the borrower cannot repay the loan. This encourages lenders to make loans. Some lenders (like VACC and Yankee, and some private banks) understand how this works and use the guarantees, others do not understand. Several years ago in the economic downturn in Ireland, one bank failed, and the government decided to rescue other banks. ‘The lads’ did not think that the average person in Ireland would be in favor of guaranteed loans at this time.

4. Yankee Farm Credit is a cooperative, owned and run by farmers who have loans from Yankee. (Yankee also provides various financial services to farmers- members and non-members alike.) There is no coop farm lender in Ireland, but there are credit unions. While we were visiting with people at Yankee in White River Junction, one of ‘the lads’ thought that maybe local Irish credit unions would be interested in and able to lend to area farmers for chattel loans.

These were just a few of the ideas on their list to bring back to Ireland. In a few weeks, I hope to share what is going on in Ireland with farm business plans.

Today we spent the day visiting with “technologists” and seeing their state of the art demonstration farm at the Greenmount Campus. College of Agriculture, Farms and Rural Enterprise (CAFRE) at Greenmount provides various levels of vocational, technical and advanced agriculture degree programs in Northern Ireland. http://www.cafre.ac.uk/index.htmThey have just completed work on a nee dairy demonstration facility. The 150 cow herd has moved off grazing land and into the barn for the winter season. The facility features padded floors at key spots, robotic alley cleaners and an innovative manure/urine separator floor (see image below). The floor scraper separates urine and manure to reduce the mixing that promotes ammonia volatilization. They expect this is several years ahead of an industry that is soon approaching numerous innovations to reduce greenhouse gas emissions on farms.

low ammonia alley scraper

On the greener side, we saw horticulture demonstrations, testing numerous late season and winter ornamental crops that could add off season cash flow to nursery and greenhouses. It is not uncommon here for a live

stock farm to also manage an ornamental hoop house for another source of income. Crops include: ornamental cabbage, winter rose and cyclamen(see below)

Local high school vo-ag students, Jim White is on far right

Jim and Teresa White know how to raise heifers.  They just won the National Heifer Rearing Competitionhere in Ireland.  There was a farm walk at their farm in County Tipperary on the 10^th of September.     

Calves at the White’s farm

What is unusual about the White’s farm is not that they weigh calves and heifers 4 or 5  times per year.  What is unusual is that then they do something about it!  They remove the quarter of the animals that are the smallest and put them into their own group.  These heifers get special treatment:  extra feed and the freshest paddocks.    

The White’s milking herd

 Jim and his wife have a milking herd of 106 cows, mostly Friesian, with some Jersey crosses.  They produce spring milk, so their herd is dried off for about 6 weeks, starting in December.  One of their big goals is ‘compact calving.’  They are able to have 78% of their herd freshen within 6 weeks, starting on January 14.  In order to do this, they must really concentrate on breeding cows within a short period of time.  Cows that do not fit the calendar are culled.  (These might be great cows for someone else’s dairy herd).  They also select bulls with shorter gestation periods. 

Emer Kennedy, Teagasc calf specialist

Calves get a good start: they are offered 3 quarts of colostrum within the first hour of birth, the first half hour is their goal, and the calves usually drink 2 quarts or a little more. Then Jim and Teresa continue to take top care of them. Calves are weaned when they are double their birth weight.  The goal is to have the heifers at 60% of their mature weight by 13-14 months to begin breeding so they freshen at 24 months of age. 

George Ramsbottom and James Mullane, Teagasc

The Whites have an interesting system.  They are milking 106 cows now.  But 139 cows and heifers calved this spring and they had 141 calves born.  There were 56 heifers and 58 calves on the farm on the day of the farm walk.  All male calves are sold at about 2 weeks of age, and fresh cows that might not quite fit his breeding program or that have some kind of a problem are culled.  Their goal is to be milking about 150 in 2015, and then raise just enough calves to keep the herd size stable.  They focus on keeping the earliest born calves, with the best genetics, that come from easy-breeding cows for the herd.  And because they have a good herd, other dairy farmers are quite interested in buying dairy cattle from this farm.

Local Vo-Ag students and their teacher

The Whites attention to detail and is what earned them the Heifer Rearing award.  Feeding colostrum, a vaccination plan, weighing heifers to sort and group them, keeping heifers growing, breeding them to freshen at 24 months, and compact breeding and calving were the main points stressed at the farm walk. 

Farmer’s at one of the ‘stands’

The last ‘stand’ at the farm walk was an opportunity to talk about fodder (forage) budgeting with farmers.  According to a survey done in early September by Teagasc, about 20% of the farms in Ireland are short of hay or silage.  Results further showed the country to be about 8% short.  Teagasc advisors are recommending that farmers count and measure their forage supplies.  Then calculate how many head are on the farm now, and are likely to be on the farm come spring.  Farmers surveyed were counting on 140 day barn-feeding period, which seems like a bit of wishful thinking, as 150 days might be more like it (in Vermont it is more like 200 days).  No matter how long the winter might be, the point is to do some figuring now in order to do some buying of feed or selling of animals.  There is a good supply of straw from the wheat and barley crops that can be fed with haylage in a ration for tail enders and dry cows, in order to stretch the home-grown forage supply.

Teagasc Dairy Scientist Padraig French welcoming farmers to the workshop

Last week I attended the Dairy Business Expansion Conference near Kilkenny.  I thought it was great!   About 175 farmers, all clients, attended this Teagasc day-long event.  It was actually a test of the method and topics.  The week before, about 15 Teagasc dairy advisors (extension agents) met at the site with researchers to discuss how best to teach the topics on the day.    

One of Ireland’s stated goals is to expand milk production by 50% in the year 2020 over the 2007’s production.  The European Union’s dairy marketing quota ends on April 1, 2015.  Dairy farming, on average, is the most profitable type of farming in Ireland.  So, many dairy farmers are looking to expand, and non-dairy farmers are thinking about getting started.  The point of the Conference was to get farmers thinking about and working on the nuts and bolts of a possible expansion.   

The main topics for the day were:  1) Return on your investment; 2) Managing cash flow; and 3) Dealing with risk.  Farmers were made up into groups of 15-10 people, and they stayed with their group for the day (which ran from 10 am to 3 pm).     

Last minute preparations in front of the shed with calf pens. Note hay bales used as sound-deadeners in front of shed, there is an identical shed to the right of the bales.

The day began with a short welcome.  Farmer groups moved into the calf sheds for a 1-hour session:  Return on Investment.  There was plenty of discussion as farmers figured how much a given farm would need to invest for a certain expansion.  We found plenty of places to invest:  soil fertility and reseeding; water, fencing, and roadways for grazing infrastructure; milking facilities; wintering facilities and manure storage; and cows and heifers.  Next:  how much of your own money do you put in versus how much to borrow?  Would your bank lend you this kind of money?  Do you need to invest that much?  Our group had a good discussion on how much overrun to plan on.  Experience at the Greenfield Farm shows at least 10% is a good figure.  One farmer in our group said that any overrun shows poor budgeting and estimating!  Then the groups worked on a partial budget to calculate potential profit from the additional cows, and compared that to the additional assets and equity put into the expansion to calculate a return on assets and return on investment.  We were plenty busy for an hour!    

The modest milk room at Greenfields farm, with milking parlor in shed behind the green building

Farmers headed outside to look at cows and pasture and hear about how the Greenfield Farm is doing compared to their plan of 3 years ago:  budget versus actual.  Then back into the sheds for Cash Flow work.  The groups estimated milk income, and several of the important costs.  They used 1 year of actual figures and estimated for the next 5 years.  They had to estimate principal and interest payments, add up the columns and look at the Bottom Line.  Which years were negative?  How much?  What could be done to either fix that or live with it?   

Next- lunch!  Then a look at how physical production of grass and cows are doing compared to the original plan, and in the very wet year last year and very dry summer of 2103. The last small group work was on Risk.  Farmers brainstormed the risks involved with this expansion.  Then picked 4 of the risks and thought about the likelihood of it happening, the impact of it happening, the cost if it happened, what the owner could do to minimize that risk or deal with the occurrence, how much would it cost to manage that risk, and what would be some early warning signs of a problem coming?    

Teagasc Dairy Advisor Catherine Colfer with dairy farmers at Greenfield farm

Farmers left with the worksheets they had filled out during the day and blank worksheets to work with for their own farm.  They were directed to where some of these tools are located on the Teagasc Client website.  The conference was full, and there may be a second one.  The dairy advisors who ran the small groups now have better skills to work with their clients who are considering an expansion.    

To me, the day was a big success:  farmers were definitely discussing what capital improvements were needed, what they might cost, how to do it cheaper, talking about borrowing money, and really thinking about what risks an expanding dairy faces and what could be done about those risks. 

Intro to the Monitor Farm walk

 Last week I had the opportunity to attend a Monitor Farm Walk in County Wicklow.  A Monitor Farm is a farm agrees to work closely with Teagasc and their milk coop, in this case Glanbia coop.  A Teagasc Advisor works with the farmer to measure grass and cow productivity, soil testing, milk testing, and financials.  The farmer agrees to make changes that will show the use of best practices, and to open the farm up for articles, newsletters and ‘walks.’  On 8/28, about 60 farmers visited Fortgranite Farm.

Pier Dennis, owner and partner, watching the discussion about the new parlor

Pier Dennis owns the real estate of the farm, and is in an operating partnership with John Roche.  They are milking 125 cows now, with the plan of getting up to 170 cows in 2015 (when the EU dairy marketing quota ends).  Dairy farm partnerships are a pretty new idea here in Ireland.   

Dairying in Ireland is much different than in Vermont.  Dairy marketing quota has been the limiting factor, putting a limit on the amount of milk that could be sold.  So making milk as cheaply as possible has been the way to increase profits.  This farm is planning on expanding by keeping all dairy heifer calves.  They plan on shipping more fat and protein per cow from their breeding program (they are paid for this, not for volume, since most milk is turned into dairy products for export).

a nice Friesian heifer

The second stop for the day was grass growth.  The farmers had a budget for the supply and demand of grass by week though the end of October.  The plan includes how many cows would be on the grass, and amount they would be eating.  As grass growth slows down in the fall, they have will be removing late lactation cows from the pastures and putting them into a free-stall barn and begin feeding them grass silage.  The budget included how much grass they wanted left in the fields at the end of the season, because the grass continues to grow very very slowly during the winter, and the grass needs leaf surface area in the early spring to start growing again.  The ground is not covered by snow for a couple of months here.  The Gulf Stream usually hits Ireland head-on, making for a mild winter.

Talking about low P soils

Next stop, Soil Fertility.  There was a soil test comparison report from 2008 and 2013.  This report was set up so that you could see the % of fields testing high medium and low for pH, P, and K.  It was very easy to notice that the pH of the soils had moved from nearly half below a pH of 6, to over 90% having a pH of over 6.  Advisors said that this change in acidity ‘released a bag of urea per hectare per year.’  The news for P and K was just as obvious, but not as good.  They had moved from no soil tests being deficient in P to over half being deficient.  And K had moved in the same direction, but not so bad. 

In general in Ireland, the P levels in the soil have dropped.  People are speculating that this is due to the Nitrate Directive from the European Union 7 years ago that limited the amount of N that could be applied.  Farmers began applying less manure and purchased fertilizer per acre.  As this happened, the amount of P that the soils were receiving from manure went down.  And to make matters worse, farmers were reading the target rates of P application as limits, so were buying fertilizer with a lower level of P.   Advisors said that moving a soil P test from level 1 (low) to 3 (a high average) would ‘feed a cow for the winter, provide another 1.5 T more grass per hectare.’  (There is a shorter winter feeding season here than in Vermont!)

Bulk Milk Disease Screening.  A veterinarian with the Glanbia dairy cooperative spoke about tests that the coop conducts on milk samples from each member farm.  They test for BVD, IBR, Lepto, Salmonella, plus stomach worms, liver fluke, and the Schmallenberg virus (that is relatively new in the country).  The vet described what the readings on the tests meant, how the readings varied by season, the impact of the diseases, and what additional treatments or vaccinations this herd could be doing for these diseases.  One question about Johnnes disease brought the response that they cannot test bulk milk samples for Johnnes, it is too dilute in samples from the bulk tank.  There is a voluntary Johnnes program now in effect.

Outside the new parlor, note: no exterior wall!

The last stop was milk quality and the new milking parlor.  The advisor pointed out the strengths and weaknesses of the new parlor.  He made the suggestion that the best thing to do with hi cell count cows is to cull them, ‘give them to God.’  Or if you needed the milk, you could dry off the quarter.  He gave high praise to the California Mastitis Test, the paddle with 4 test pits.  Make sure that people were using gloves while milking to avoid spreading bacteria from cow to cow.  And advised people to be aware of how hard their water was if they were mixing teat sprays, and when washing dairy equipment.

These Monitor Farms exist around the country, with many different coops involved.  They are a means to get information out to farmers via ‘show and tell.’  Farmers have plenty of opportunity to talk while walking from one stop to another.  And there is plenty of time for questions, comments and discussion.  This is the home page for one group of Monitor Farms, http://www.teagasc.ie/areaunits/teagasc_glanbia/index.asp

Follow this link to a recent post written for the VT New Farmer Project:

What is Your Competitive Advantage?

Last week’s weather gave enough rain to keep crops growing and enough dry weather to get grain in. Unfortunately there were enough hours of wet weather, that Met Eireann, the national weather bureau, had a ‘National Weather Warning’ on their website. ‘Status Yellow. Blight warning. Blight conditions are expected to continue through Wed and Thurs, with very limited opportunities for spraying. Issued Wed, 8/14/13.’ People here take their potatoes very seriously.

Grain in dealer’s yard, Tullow

Apparently the hot dry weather encouraged spring grains along in good shape, making them ready for harvest a little early. Livestock farmers are aware of a looming shortage of feed. So, there has been a good market for chopping grain before it is ready for the combine and putting it into bunker silos. Another option has been to buy grain from the neighbor’s combine and treat it with urea or a preservative to mix with forages come winter. And the straw market is busy too. Livestock farmers are buying straw for winter bedding and, perhaps, as a forage. As you can see from these pictures, a lot of grain is being delivered into grain depots, with huge piles of grain on paved yards, waiting to go into driers, then into storage. Some farmers have their own driers, and then can store grain at home to sell later. Most put the grain from the combine into a trailer, and haul the trailer to the mill with their tractor. So it is common now to see tractors and trailers on the roads moving grain to market.

Grain in mill’s yard

With world-wide grain prices moving downwards due to what looks like a huge US corn (maize) crop, harvest-time prices for grain are less than what Irish tillage farmers were hoping for. At Teagasc this week, a friend told about her husband taking a load of winter barley to the mill. He had planted the right variety, and fertilized it right, in order to meet the standards for malting barley. It was rejected because it was a little too high in protein. And the mill would not give a price on buying it as feed barley- he could unload it, and find out the price later. A couple of loads of his, and other farmers’, were rejected due to high protein. This farmer did bring in loads later in the week that met the malting specifications. Barley that will be used to make beer is malting barley. The protein has to be just right in order for the beer’s head to form properly and the fermentation to be just right. Higher protein would be good for a barley going to feed animals, but there is a good premium (about $25/T) paid for malting barley- the feed market is a poor second. Some tillage farmers have contracts with grain buyers, or maltsters, but the grain must meet the specifications. Maltsters take barley and allow it to germinate, and then dry it to stop the seedling from growing any further. This gets the chemical process going to turn the starch in the grain into a sugar that yeast can ferment and turn into beer. Beer and whiskey are big industries here in Ireland, with lots of jobs depending on moving these ag-based products onto the world market.  And this foreign trade is just what the Irish economy needs.  Think Guinness stout and Jamison Irish Whiskey, to name just a couple.

Nice group of Freisian heifers

There is high interest from farmers with suckler cows to switch to dairy: there could be 20 times more profit per acre. Suckler cows are the same as a beef brood-cow operation. Cows are bred to produce a calf, and then usually the calf is sold in the fall, so only the pregnant cows are over-wintered on the farm. The cow may be a dairy cow, or part-dairy so they will produce a lot of milk, then bred to a beef breed to get some meat onto that calf.
A big article in the ‘Irish Farmers Journal,’ 17 August, 2013, page 28, ‘Profit driven suckler to dairy conversion,’ describes one farmer’s experience. David Kirwan had been a suckler farmer for 32 years, and had developed a good herd of 120 cows. He has been working with Teagasc and the Irish Farmers Journal in a beef production demonstration program. A son will be starting at one of the Teagasc ag-colleges this fall, and David is wants to set up the farm so it could create an income for a second family, in case after graduation, the son wants to come back and farm. If not, he would hire a full time employee or manager.
David applied for dairy quota, and got enough for 55 cows in the first year, and 75 cows this year. He plans on milking 150 in the next few years. Dairy quota ends in April, 2015. The barn was in good shape, but he had to add on, put in a parlor, milk room and calf barn. Plus he made some improvements in lanes and roads to get cows to all of the paddocks, and to get additional drinking water into the paddocks. So far that has cost him about $160,000. Quota was another $80,000, dairy cows cost $200,000 (about $1800/head). He sold his beef herd for $250,000. So, his total investment now is about $1300/cow.
David’s familiarity with cows is obvious when you get into the details. The first batch of dairy cows that he bought was 55 pregnant dry cows, all from one herd. This year he bought another 29 cows, plus 27 heifer calves this year (so they freshen in spring 2015- when the dairy quota ends). In the first year of selling milk, he averaged over 14,000 lbs of milk/cow, while feeding 1.1 T of concentrate per cow. (The national average is about 11,500 lbs of milk/cow, so the difference is due to pasture and cow management.)
David and his wife Isobel thank their Teagasc advisor, Seamus Kearney for helping to guide them. They do not think they should be held out as a ‘how-to’ example of converting to dairy. But they are hopeful that the changes they are making will improve the long-term profitability of their farm.