Mr. Tadhg Buckley:

I will talk about the experience in Northern Ireland, as we were keen in our seminars to share that experience and have farmers learn from it. Since Northern Ireland no longer has quota constraints, milk output has effectively increased by just under 40% but dairy cow numbers remain static. What actually happened was that yield went up by 2,000 litres per cow. They have increased significantly their milk output but effectively this has had no effect on their net margins. Teagasc has a dairy profit monitor. If one looks at their average net margin, it is lower than what we are achieving in the South. The removal of milk quotas gives a massive positive opportunity for the sector but it is important that we do not look at expansion just for the sake of it and that it is done efficiently. We have done analysis on the reports from the Teagasc dairy profit monitor and provided it to farmers. Between the top 10% and the bottom 10% of the dairy profit monitor in 2014 and taking an average farm of 70 cows, the difference in net margin was €66,000. This is a frightening gap. The figure in 2013 was €61,500. The figure is consistent. If one looks at the figures for 2009, it was about €40,000 when we had a very difficult milk price.

If one is looking at volatility, there is a lot that we can do as banks to help farmers get through volatility. The best way to deal with volatility in farming is to try to make oneself as efficient and lean as possible. That is what we have tried to get through to our farmers in advance of the removal of quotas. While we acknowledge it is a great opportunity, we need to do it properly. When we are lending to the sector for expansion we are aware that it presents a great opportunity but we must ensure it is done in an efficient way.