Irish Dairy Industry at a Critical Crossroads
Issued 16th May, 2002
Irish dairy farmers have suffered most from the slump in world dairy markets, due to our heavy dependence on non-EU markets and our higher reliance on intervention products, according to a Teagasc dairy expert.
Dermot McCarthy, Chief Dairy Adviser with Teagasc, told the Teagasc National Liquid Milk Conference that milk prices in Ireland have dropped by almost 3 cent/litre (10p/gallon) this year. In contrast, producer prices have remained relatively stable in other EU member states.
''In Denmark, dairy farmers have been cushioned against the world dairy markets decline due to the Danish dairy industry's concentration on exporting value added products to the European market.
''Ten years ago, two-thirds of Danish dairy exports went to countries outside the EU. Now just one-third of exports go to non-EU markets. The composition of Irish dairy exports at present is similar to the Danish situation ten years ago. We are therefore highly vulnerable to any upheavals in the world dairy scene'', he said.
''The industry is now at a critical crossroads and the direction it takes over the next five to six years will determine its long-term viability'', he added.
He said huge strides have been made by dairy farmers in controlling costs and increasing milk quality. In recent years, protein levels in Irish milk have increased substantially as a result of intensive advisory programmes run jointly by Teagasc and dairy processors.
''Our top performing dairy farms have achieved cost reductions and milk protein increases worth in excess of €3000 per year, which has helped to counteract the worst effects of the current milk price decline. However, improved productivity at farm level must be accompanied by an increase in the volume of value-added products and a greater concentration of exports to European markets if the long-term future of milk production is to the assured'', he said.
He said the typical dairy farmer in Ireland is producing 40,000 gallons (180,000 litres) of milk per year. Production will need to be increased by 50% over the coming years just to maintain income.
''With a limit on national milk output due to the EU milk quota regime, the additional production at farm level can only come from a distribution of milk from farmers who cease milk production. It is critical that the cost of additional milk remains at the current level. Otherwise, the typical 40,000 gallons committed dairy farmer has no hope of increasing'', he said.
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