23 August 2002

Farm future hopes alive

Seeing a future in

dairying may be difficult,

but one Welsh producer

is trying to do just that.

Robert Davies reports

DESPITE a less than ideal site, Clywd producer Terrig Morgan is reducing costs, working with his neighbour and minimising expenditure on machinery to ensure his son can follow him into farming.

His son Edward, who is in his second year at university, is interested in farming, so Mr Morgan is determined not to become a casualty of the current economic crisis.

He runs 130 cows on 61ha (150 acres) of less favoured land at Carreg-y-Llech, Treuddyn.

The herd averages 7500 litres/head, but he is pushing for 8000 litres. He would also like to increase the current 3000 litres from forage, but much of the land is wet and he can rarely turn out cows before May 1.

"We have the same problem at the back end and often have to house the cows in October to avoid severe poaching," he says.

It is also difficult to make enough silage for the year round calving herd, so a neighbour is paid to grow about 8ha (20 acres) of maize, which is cut by a contractor and transported to Mr Morgans farm.

"Our land cannot be tied up for the length of time needed to grow a maize crop. My neighbour has gone out of milk, but has the land, tackle and expertise to grow maize for us.

"I know of others who are paying people to grow maize or whole-crop cereals. It is the sort of farm level co-operation which can help units expand without buying or renting land and taking on extra labour."

If his son decides to enter farming after university, Carreg-y-Llech will not be big enough. Mr Morgan worked as a part-time lecturer to help build the business and is prepared tofind off-farm work again. Alternatively, Edward might do part-time work until extra land or a larger farm can be acquired.

"Things are bad at the moment, but I am upbeat about the long-term prospects for dairy farms with committed family labour and a tight rein on input costs. Bigger herds enjoy economies of scale, but skilled labour is scarce and expensive."

The days when the export trade valued beef-cross calves at £200/head and well fleshed barren cows made good prices are a distant memory. So, Mr Morgan accepts that the market price of milk will determine whether he stays in business.

"We have to be as efficient as possible. Farms and farmers are all different, so there is no single fit-all milk price which covers costs and leaves a fair margin for producers and something for re-investment."

His personal answer is to fine-tune his cow and grassland management and optimise the businesss cost structure. He is particularly concerned about fixed costs and avoids being seduced by shiny new machinery.

"I believe in total mixed diet feeding and would love to get the latest machine. But when the time comes to change our mixer wagon, it will be a case of again going for a good second-hand one. When I had a quote for changing our 10-year-old Land Rover, I decided to give it a good wash and carry on using it."

He hopes to see more co-operation between producers both at a farm level and in the marketplace. He was criticised for leaving Milk Marque when he was the last producer in the area still supplying it, but Mr Morgan insists he is still committed to co-operative producer involvement in the market and in processing.

This could be through mutually beneficial strategic alliances or joint ventures between producers and those who process their milk.

But producers cannot go on producing milk at such low prices, he says. In his NFU role, he has found growing anger among producers that they are being paid less, while processors and retailers are making bigger profits. He acknowledges that anger, however justified, will not solve the industrys problems.

But he believes the NFU is equipped to fight for a better deal for producers. During his three-year stint as chairman of the NFUs Milk and Dairy Products Committee, he has earned a reputation for straight talking and freely admits that he has upset some union members.

"I have to be honest and not make undeliverable promises about what the NFU can achieve on behalf of producers," says Mr Morgan.

That said, he is confident that NFU is influential and that lobbying can have a big impact on those who determine EU dairy policy and set milk prices. But he admits the union does not have the direct political clout it once enjoyed. &#42

Terrig Morgan believes the NFU can help milk producers, but at home he is focused on maximising efficiency.

Spotlight on Profit

Issues Affecting Britains

Dairy Industry and the

Role of the NFU

When Terrig Morgan

addresses the Spotlight on Profit forum on the first day of this years Dairy Event – Wednesday Sept 18 – he will explain how the NFU can help milk producers.

"I am not going to stand up and promise the NFU will get 22p/litre for producers or even the 20p/litre paid when I took on the committee chairmanship."

He will not even predict an autumn increase. But he will commit the union to working with politicians, producers, retailers and anyone else to raise prices to sustainable levels.

Mr Morgan only has to look at his own accounts to see the severity of the financial damage being done to producers businesses and, regrettably, he concedes that a significant exodus from the industry is almost inevitable.

&#8226 See next weeks farmers weekly for the full Dairy Event Spotlight on Profit forum programme.

&#8226 Keeping costs down.

&#8226 Higher milk price needed.

&#8226 Consider off-farm work.