Ireland set to be No 1 low-cost milk producer as quota restrictions end

Ireland is ideally placed to become the most successful low-cost producer of milk for the northern hemisphere upon the end of the EU’s quota restrictions in 2015, according to a new report from Rabobank.

Senior Rabobank global dairy analyst Kevin Bellamy has done extensive analysis on exactly where demand will emerge for all the new milk to be produced post-2015. His analysis points to Ireland as a primary beneficiary of the widely predicted surge in demand promised by the post-quota era.

Mr Bellamy said: “Removal of milk quotas in 2015 will allow the Irish dairy sector to establish itself as the low cost source of production for the northern hemisphere, taking advantage of the growing demand for dairy products around the world. We would see Ireland as one of the key beneficiaries of the removal of the quotas.”

The Rabobank expert believes that the cost of producing versus buying milk in developing markets will maintain import demand and that demand from low cost, growth markets will help to absorb the additional milk globally in the medium to long term, but competition will still be stiff.

However, while European players are gearing up to quota abolition, potential issues for the industry to solve are access to markets, seasonality of production, and price and currency volatility. Capital investment will be required across the supply chain, he said.

A recent Rabobank Dairy Outlook predicted that the global dairy market will expand at 2.4% per annum over the next five years, to some extent making dairy the envy of the food world. But that growth will be unevenly spread, generating some important market dynamics, noted the Rabo report, of which Kevin Bellamy was one of the authors.

Growth will be highly skewed to emerging markets, with countries like China, India and South East Asia expected to account for more than 80% of market volume growth, while western markets continue to mature, notes the Rabo report.

Supplying these growth markets, many of which are already in supply deficit, with safe and affordable milk in coming years will require considerable advancement on many fronts: including the development of safe domestic supply chains in emerging markets and the expansion and marketing of surplus production in export regions.

Mr Bellamy is due to expand on his views on the opportunities for Irish dairy in some depth at next Wednesday’s National Food and Agribusiness Conference in Croke Park, Dublin.

The speaker line-up for the conference includes: Minister for Agriculture Simon Coveney; chief executive of Bord Bia Aidan Cotter; European Commissioner Dr Martin Scheele; Kevin Bellamy, senior global dairy analyst, Rabobank International; Ronnie Wilson, chief executive Monaghan Mushrooms; and Professor Damien McLoughlin, professor of marketing, University College Dublin.

For further information on the conference visit www.agribusinesssummit.ie