Report predicts dairy growth to continue at a modest pace

Irish dairy outputs are set to continue to increase in the coming years, though at a slower pace than in the past decade, according to the 2016-17 Annual Review and Outlook by the Department of Agriculture, Food and the Marine (DAFM).

The latest DAFM review, launched by Agriculture Minister Michael Creed, predicts that Irish dairy outputs will increase modestly in the coming years, taking account of targets to reduce carbon emissions. A likely rise in global demand will help offset the effects of specific issues such as Brexit and price volatility, the review predicts.

While EU dairy outputs have increased steadily since the abolition of milk quota restrictions in April 2015, the European Commission is now anticipating a more moderate rise in overall EU milk production during the next decade when compared to recent years.

The department’s outlook report states: “The longer term expectation is for the EU to become the world’s top exporter of dairy products by 2026 — just ahead of New Zealand. However, despite the expected strong increase in exports, by 2026 more than 85 % of EU milk and dairy products will be consumed within the EU.

“The [global] decrease in fresh milk consumption is expected to continue, but the use of cheese and butter by households and for processing is expected to increase further, which — together with expected population growth — would support consumption.”

The report notes that environmental constraints will also play role in the future, limiting production development in certain areas of Europe and globally. The EU Commission’s prediction of a modest rise in dairy outputs balances global environmental concerns with an anticipated sustained increase in world demand for dairy.

The DAFM review also notes that world dairy markets have been subject to acute volatility in the recent past, as the introduction of the Russian import ban and the sharp decrease in Chinese purchases coincided with imbalances in world supply and demand.

“Further short-term imbalances between global supply and demand cannot be excluded and could contribute to price volatility, as observed in the EU since 2007,” the review notes.

“After more than 30 years in a production quota environment, market fundamentals will the main drivers of EU supply developments.”

The decrease in fresh milk consumption is expected to continue, but the use of cheese and butter by households and for processing is expected to increase further, which, together with expected population growth, would support consumption.

Mr Creed is confident the data in the DAFM’s Annual Review and Outlook will inform policy analysis and debate over the next year.

“This very useful publication brings together information and statistics on a variety of key topics which impact on the agri-food sector,” he said.

Agri-food is Ireland’s largest indigenous industry and continues to play a crucial role in Ireland’s economy, with a turnover of €26bn, contributing 7.6% of GDP and generating 10.3% of all exports in 2016.

The value of exports increased by about 2% in 2016 to reach €12.2bn, marking growth of over 56% since 2009. The sector also makes a huge contribution to employment, particularly in rural areas, accounting for 8.6% of total employment.


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