California dreams soar highest
Obviously, the Dutch-based cooperative multinational financial services provider is interested in financing the dairy industry, an ideal fit for them because of their international standing as a food and agribusiness bank.
Rabobank has been triple-A rated since 1981, and are a very welcome presence in Ireland in the form of Rabobank Ireland, who have recently increased their involvement in food and agri-banking here by deciding to get involved as a sponsor of Bord Bia’s Food and Drink Industry Awards.
Internationally, Rabobank’s food and agribusiness research advisory group says future growth in the dairy industry — challenged by volatility in milk prices and high feed costs — will depend upon its willingness and its ability to fill a growing global demand for milk products.
But the expectation is that the dairy industry is uniquely positioned to take advantage of opportunities in growing markets, said sources at the bank.
Unfortunately, they were not talking about Ireland, they were talking about California.
It highlights the challenges on world dairy product markets when a region we associate more with movies and cutting edge IT can be a milk production competitor.
However, the good news is that Ireland shares many of the advantages which Rabobank experts see for California’s dairy industry.
They are mostly summed up as “not the lowest cost producer of milk in the world, but the lowest cost producer that is capable of significant expansion in the medium term with acceptable investment risks”.
Here in the Irish dairy industry, we would like to think that we fit the bill in that regard as well as California does.
California is seen as free of the constraints that prevent New Zealand, Australia and the EU from satisfying growing global demand. Ireland, however, is primed to go after growing markets after 2015.
As in California, growth in our domestic market is limited. And Ireland has the advantage over the Golden State of the US because we are seasoned exporters, whereas the US dairy industry has traditionally viewed the global market as an outlet for excess production, rather than a primary target.
Rabobank experts have identified a window of opportunity for US dairy export growth for the next five years. Irish exporters must hope they are slow to become a big dairy exporter, and miss the boat.
They may be a bigger competitive worry for New Zealand and Australia on the Asian markets which California processors can reach less expensively.
For the record, while Hollywood and Silicon Valley have been doing their own thing, California was becoming the leading dairy state since 1993 in the US.
In 2010, California produced 40.4 billion pounds of milk — more than three times Ireland’s production.
The average California dairy cow produces a very impressive 2,300 gallons.
More to the point, the state of California already produces more than one third of US dairy product exports.
Roll on 2015, and Ireland versus California... and the world.
