In the post-quota milk world, social and geopolitcal upheavals from Shanghai to Moscow will be felt in Irish farms and fields.
Ralph Haslam makes the universal sign for crazy by tapping the side of his head with his finger when asked what his neighbours make of his farming methods. We’re standing on Mossfield Farm, six miles outside Birr, Co Offaly, looking out to the misty Slieve Blooms.
This is one of a handful of organic dairy farms in the country. Later he’ll be working past midnight turning the new cheeses made today from the huge vat of creamy milk waiting in the cheese plant behind us.
Organic dairy farmers like Haslam are mavericks, out of step with the mainstream. Next month he’ll swim against a stronger tide as a new chapter in Ireland’s milk story begins. On the morning of April Fools’ Day, dairy farmers will be able to milk like they’ve never milked before. Overnight the quota system in place for more than three decades will evaporate in a puff of EU reform.
The shackles, as Agriculture Minister Simon Coveney put it, will be off. Farmers will be free to march into a volatile and bizarre global commodity milk market. The Government wants to increase annual Irish milk production by 2.75 billion litres in the next five years. Reaching that target means adding 300,000 dairy cows to the 1.1 million herd being milked today. Farms are expected to get bigger and more intensive, a plan that will require more chemical fertilisers, more silage and result in a lot more manure as well as milk. It’s a move that could change the landscape, economy and smell of large parts of rural Ireland.
Each of Haslam’s 60 sturdy Rotbunt cows has roughly a hectare of grazing land. To keep his grass growing, he rests fields, rotates crops with a mix of grain and peas to fix nitrogen in the soil and reseeds with grass and clovers. He turned to organic farming in 1999 because he was spending money overstocking animals to buy quota and watching the milk price drop.
“The animals were sick. We were sick. Everyone was sick.”
The first two years without artificial fertilisers were terrifying and he thought he might have made a terrible mistake. “The land takes a shock for the first year and the second year you wonder what you’ve done. Then the land comes back to life. It doesn’t get as wet in winter here and it doesn’t dry out too much. The roots are going deeper into the ground.”
His cows each give him around 5,500 litres of creamy, high protein milk every year.
Sounds impressive until you look at the Holstein-Friesians which make up the majority of the Irish dairy herd. The American-bred Holstein-Friesian is a phenomenal milk machine, producing more than 11,000 litres of milk a year, thanks to intensive breeding, feeding and farming methods.
Three-quarters of the milk produced on Mossfield Farm is made into cheese, most of it sold in Europe. They make a batch of yoghurt and the rest of the milk is pasteurised and bottled, unhomogenised so a creamy layer sits on top. The liquid milk is not as profitable as the cheese. It’s more of a loss leader for the farm. There are plans to experiment with a frozen yoghurt.
Milking your own cows and turning that milk into a product you can sell is not how things are done on most of the 18,500 Irish dairy farms. Almost the entire Irish dairy herd is milked for the wholesale market, run by a handful of major dairy processors. The extra post-quota milk will not be poured out on Irish breakfast tables. We already produce enough milk and dairy produce to feed 52 million people and the pressure is on to produce more of it, even more cheaply, to feed new markets.
A large part of the future of an expanded Irish dairy industry is in the small hands of Chinese babies.
“The Chinese leadership decided 20 years or so ago they wanted to create a dairy economy,” Richard Dillon, a dairy analyst with Agra Informa, says. “This in a famously lactose intolerant nation.” The campaign was incredibly effective, especially in the baby food market. Then it was derailed in 2008 when melamine contamination of Chinese infant formula killed at least six and hospitalised 50,000 babies. Parents recoiled from infant milk formula. So China threw open its doors to foreign baby formula imports, slashing import duties to plug the gap.
The melamine catastrophe pushed Chinese consumers into the arms of foreign dairy processors. Seven years later the idea that expensive imported infant formula is the only safe food for babies holds strong. China imported 7,800 tonnes of infant milk formula in 2013, 18,500 tonnes last year. “It’s an astonishing rate of growth,” Dillon says.
Bord Bia has had an office in Shanghai for five years, headed by James O’Donnell. If he has a mission statement, it would be to get Irish rather than Danish, New Zealand or German infant milk formula into the tummies of as many newly-minted Chinese consumers as possible.
New Zealand effectively owns the Chinese imported dairy market, O’Donnell says, controlling around 90 per cent. But Ireland is taking a larger bite out of the other 10 per cent. Last year, Irish dairy exports to China hit €400 million (compared to just €50 million in 2011). Three-quarters of that €400 million was baby formula, made in Ireland, mostly by the three infant formula giants Wyeth, Danone and Abbott.
“Around a third of the Chinese population drinks milk,” O’Donnell says.
Ninety per cent of those milk-drinking Chinese people live in cities. Consuming dairy is associated with middle class prosperity. The astonishing ramping up of dairy in China has happened in less than a decade. “It all goes back to Wen Jiabao’s famous statement in 2006,” O’Donnell says. The then Chinese prime minister said he had a dream that every Chinese person would be able to drink half a litre of milk every day.
That dream of a prosperous milk-drinking nation means Chinese parents spend 26 per cent of their disposable income on infant formula. Illuma is the top-selling foreign baby milk brand in China, a product made in the Wyeth plant in Askeaton, Co Limerick. A 900g can retails in Shanghai supermarkets for the yuan equivalent of a jaw-dropping €50 to €60 a can, according to O’Donnell.
This compares to around €14 for the Chinese-manufactured formula. Illuma isn’t sold as an Irish product, much to Bord Bia’s dismay. O’Donnell would like to see that change. But Kerry Group’s new infant milk brand aimed at the Chinese market is called Green Love Plus, and comes with a shamrock logo on the tin.
Breast feeding is not part of the conversation in China’s dairy market. Infant formula seems unstoppable. China now consumes 30 per cent of the global infant formula market, making it the largest consumer of infant formula in the world. “Chinese women do not get enough maternity leave. Food safety is the primary concern,” O’Donnell says. Exclusive breast feeding rates in the first six months of life are estimated to have dropped from 80 per cent to 28 per cent, well below the 40 per cent global average.
Irish dairy companies might target the growing Chinese middle class, but the arrival of infant formula in poorer parts of China is not a happy story. The World Health Organisation expressed “major concerns” with infant feeding practices in 26 poor rural counties in central and western China in 2010.
It said one of the reasons could have been “laissez-faire regulation of breast milk substitute advertising.” Mothers not exclusively breastfeeding in the first six months of life accounted for 10 to 15 per cent of deaths in children under five in developing countries, the WHO says.
Elizabeth Bradley doesn’t have to worry about the brand loyalties of Chinese consumers or the ethics of baby formula as a tool to fuel economic growth. She milks 35 sheep and 42 goats in Carlow and turns the milk into Carlow Cheese, which she sells at Carlow Farmers’ Market. “There’s a certain feeling that you’re not going to be allowed to stand still,” as an Irish dairy farmer with the lifting of the quota. “I feel more connected to what I’m doing. I can respond to the ups and downs and if someone rings me up and asks for a soft fresh cheese, I can make that.”
She grew up on a dairy farm and sees other farmers faced with the dilemma of whether to grow big or leave. Big dairy means a huge investment in equipment and stock. “In Denmark you have farmers who are so heavily borrowed they’re owned by the State bank and they’re just the manager for the capital investment.”
She buys cows’ milk from her neighbouring farmer in Bagnelstown, Sven Harenberg. He milks 50 Holstein-Friesians year round, with high yields of around 11,000 litres per animal. Will he be expanding his herd to take advantage of quota abolition? “I’m a one man operation so I don’t see the point. If you get too much bigger, you have to employ someone.” From where he sits, the global market looks too volatile to take that leap. Until last year, the milk that he wasn’t selling to Elizabeth Bradley was going to Glanbia, until he got fed up with the price they were paying for his milk.
Now he sells to Omagh dairy, Strathroy, which produces bottled milk for supermarkets. They’ve guaranteed him two cent more a litre than the Glanbia price. “Liquid milk is a more consistent price. Commodities go up and down like yo-yos.”
The son of a German who came to Ireland in 1962, Harenberg didn’t come from a farming background. What made him turn to farming? “Being independent, being your own boss has its rewards. To make the most out of the land dairying was the only option.”
He thinks lots of people thought about becoming dairy farmers when the news about quota broke. At a Teagasc meeting he saw 23 potential new entrants. That shrank to 12 and “only four went through with it.”
Some industry watchers compare the rush into dairy last year to a potential milk bubble, similar to the property bubble, where farmers would be left with huge bank loans and falling incomes. But a combination of a fall-off in demand from China and the Russian ban on European imports knocked prices back. Then drought in New Zealand stabilised the market. In the post-quota milk world those uncontrollable factors – rainfall in New Zealand, the battle for hearts and minds in Shanghai and geopolitical upheaval – are all going to be felt in Irish fields and farms.
Source: The Irish times