Dairy prospects in the balance for now: McCullough

The recently announced Brussels aid package is to be welcomed, according to Danske Bank's head of agribusiness, Robert McCullough.

Wednesday, 27th July 2016, 9:17 am
Updated Wednesday, 27th July 2016, 10:19 am

“Any measures that have been designed to improves the viability of farm businesses represent a step in the right direction,” said Mr McCullough.

“But we need to see a lot more of the detail. Only then will it be possible to fully gauge the full impact of the EU deal on local agriculture,” he said.

Mr McCullough added that the fortunes of the beef, pig and lamb sectors had picked up over recent weeks.

“The recent slide in the value of Sterling should help boost exports from Northern Ireland. And this is, potentially, positive,” he said.

“However markets remain extremely volatile. And this is particularly the case, where dairy is concerned,” he said.

Mr McCullough confirmed that his team of advisors are using a base price of 18p/l for the purposes of projecting cash flows on dairy farms over the next 12 months.

“But this is only a guide,” he stressed.

“The reality is that producers can make significantly more if they commit to improving milk solids. Volume bonuses are also available.”

However the Danske representative also pointed out that simply making more money available to dairy farmer clients is not the solution to the challenges now facing producers in many instances.

“A fine line has to be drawn between that of gauging a farm’s future scope to trade out of current difficulties and looking at other options,” he added.

“A significant number of dairy farmers received additional bank support back in the spring. The willingness at producer level to look at such finance packages again has greatly diminished.

“It remains a fact that dairy markets are not delivering returns that will allow many local milk producers break even, never mind make a profit.

“This leaves farmers in a difficult situation. It may well be that they have to look at options, such as selling assets that are not vital to the core running of their businesses.”

Mr McCullough made it clear that the banks will not be prescriptive in telling farmer clients how they should manage their affairs.

“But we will be available at all times to provide advice and to work with clients in order to ease any financial challenges they may be facing,” he concluded.