Policy uncertainty a ‘contributing factor’ to ‘worrying’ milk supply trends

With global dairy demand “still accelerating year by year”, dairy production could “move to regions with multiples of the carbon footprint of Irish dairy” if policy negatively impacts production here.

Policy uncertainty is a “contributing factor” to milk supply trends, with there being a “worrying change” in Irish supply, Dairy Industry Ireland has warned.

Director Conor Mulvihill said milk supply was down 4.1% in 2023 and has already dropped by 9% this year.

Mr Mulvihill said that with global dairy demand “still accelerating year by year”, dairy production could “move to regions with multiples of the carbon footprint of Irish dairy” if policy negatively impacts production here, he told the Oireachtas joint committee on agriculture, food, and the marine. 

Last year across the island the “equivalent milk pool of Aurivo Co-op” was lost, Mr Mulvihill said.

“The stats are very stark with the figure of 9%. We do hope to recover, with the good weather, perhaps good sentiment coming back, and the dairy markets recovering. However, the costs are phenomenal.”

DII chairman Pat Sheahan said that a loss in milk volume leads to “inefficiency with milk going through plants and the cost of production increasing”.

“There is much capacity in the dryers, of six and eight tonnes. They will not be viable to run with reduced volumes of milk. There will potentially be casualties in that. The costs of production will go up, which will back up to milk prices,” Mr Sheahan said.

Commitment

Conor Mulvihill said that DII welcomes the recent Government commitment to retaining the nitrates derogation post-2025.

“As an industry, we are fully committed to working with Government to formulate a clear plan to enable the EU Commission to extend Ireland’s nitrates derogation for at least another four-year period beyond 2025, but preferably an indefinite solution reflecting Ireland’s unique outdoor, grass-based, family-farm system,” Mr Mulvihill told politicians at the recent meeting.

“The current lack of certainty is doing little to improve our already high water quality standards but is playing sheer havoc with the fundamentals of Irish agriculture at present. We fear it could instigate structural, social, and economic decline if we do not address it.

“There is a real concern within the industry that the Government has not yet allocated the necessary resources to address this critically important issue.

“Unless we collectively work to an agreed action plan to improve water quality across all sectors, and thereby preserve the derogation, our capacity as an industry to remain efficient and competitive internationally will be fatally undermined and it will be damaging to the overall Irish economy.”

Undermined

If the nitrates derogation is not secured post-2025, Ireland’s “unique and economically competitive” outdoor grass-based model of food production may be “undermined”, Mr Mulvihill said.

There will be a risk that Irish dairy “would have to turn to intensive high-input systems like in peer economies in Europe”.

“Dairy farms may be required to endure additional farm costs to compete with other sectors to acquire more land to comply with the nitrates directive, thereby completely undermining Government and EU targets for the organic, tillage and forestry industries and even the protection of our suckler industry,” Mr Mulvihill said.

“The family farm model of food production may be undermined in favour of farm consolidation. This is evident in other parts of Europe that do not have the derogation.”

DII has proposed a 10-point action plan to be “fully resourced and driven by Government with a singular goal of securing EU Commission approval for the continuation of the derogation to give the sector clarity in the medium-term”.

Within this plan, DII is requesting that the Taoiseach chair a cabinet sub-committee “chiefly tasked with co-ordinating the crossover roles of the relevant departments that will be impacted”.

“It is not just the Department of Agriculture but also the Department of Housing, the Department of the Environment, Climate and Communications, the Department of Rural Affairs and the Department of Enterprise and Trade. They should be tasked with securing the derogation in the context of the forthcoming review.”

DII is also seeking a “clear Government-led strategy that will be built around a national farming for water movement”, and as part of this movement, “every farmer should be supported to develop a nutrient use score, with codes of practice for each sector, not just dairy but beef, cereal and others”.

DII has also urged that the closed periods for the application of organic manures to land must be respected by all farmers, and “not only should this be clearly communicated by reference to the long-term implications of failure to comply, but all stakeholders should work closely to ensure risks to water quality during the closed period are addressed and a compliance culture prevails”.

Mr Mulvihill also told the committee there must be a “clear focus” on water quality improvement within the requirements of the Bord Bia quality assurance schemes for all sectors, not just dairy.

He also said that a national nutrient storage programme is required with attractive rates of grant support to de-risk investment.

'No future'

Agriculture committee chairman Jackie Cahill said it is feared that Ireland will “end up with a farming model very similar to that of New Zealand, with very large units, and the family farm model as we know it will disappear” with generational renewal impacted very negatively.

“I see it in my neighbourhood where, this spring, a significant number of farmers have decided to exit. They mainly have typical family farms of between 80 and 150 cows. Most of them are in derogation,” Mr Cahill said.

“The paperwork and the uncertainty are making up their minds for them.

“If a person is farming with 80 to 100 cows and is told they have to reduce by 15% to 20%, they see no future in it.”