Dairy farmers must act now to milk opportunity

Where is Irish dairying coming from, and where is it going?

According to staff at the Teagasc Moorepark research centre, gradual expansion and ultimate removal of milk quotas in 2015 gives Ireland the opportunity to claim a disproportionate share of the expected 2.5% per annum growth in worldwide demand for dairy products (based on projected global population growth and increase in per capita disposable income).

Irish dairy farmers must act now to develop their farm systems, planning for increased milk production while at the same time cushioning against the potential volatility expected in milk price. The Food Harvest 2020 document predicts a 50% increase in milk production deliveries by 2020.

A rise from an average of 5.1 billion litres over the 2007 to 2009 period, to 7.66 billion litres in 2020 is anticipated.

In addition to productivity increases, this will necessitate an increase in the size of the national herd from its current 1.1 million to about 1.4 million dairy cows.

This additional production, combined with value added at the processor level, is expected to be worth in excess of €1 billion to the Irish agri-economy.

When EU milk quota is abolished, farm profitability will depend on profit per hectare being maximised.

But any expansion in the dairy farm business should only be undertaken if it increases profit and provides a better lifestyle to the farm family.

In 2011, a very successful year for the Irish dairy industry, driven by relatively high milk price and favourable climatic conditions, just over 23% of dairy farms earned €30,000 or less, while 22% earned €100,000 or more.

Based on the National Farm Survey, there were about 15,600 specialist dairy farms with an average family farm income of €68,570, a 36% increase on 2010.

The income increase was entirely market driven, with market gross output up 15% on dairy farms, as the annual milk price increased by 15%. The value of direct payments on dairy farms comprised just 13% of total output and 34% of income.

In 2011, there were over 1.1 million dairy cows producing milk on 18,548 Irish dairy farms.

Total Irish milk output amounted to about 5.6 billion litres of milk, with an estimated farm gate value of €1.8 billion.

Exports of Irish dairy products and ingredients were valued in the order of €2.7 billion, making Ireland the 10th largest dairy export nation in the world.