Losing derogation could force one in eight families out of dairying
The assessment concluded that the loss of derogation would result in a €45bn cumulative loss in economic output between 2026 and 2035.
Industry figures warn that losing the nitrates derogation could cost the Irish economy €45bn, devastating rural communities, and forcing up to one in eight dairy farming families to quit the industry.
The warning comes as Brussels negotiations enter a decisive phase, despite evidence of progress on water quality.
Recent reports from the EPA and EEA show nutrient levels in Irish rivers at their lowest in eight years, and a 10% fall in nitrate concentrations in 2024 alone.
Dairy Industry Ireland, the Ibec association representing Ireland’s dairy sector, said that despite clear evidence of environmental progress, the future of the derogation, a cornerstone of Ireland’s grass-based farming model and rural economy, is under serious threat.
An independent impact assessment conducted by EY warned that scrapping derogation from 2026 would have severe consequences.
The assessment concluded that the loss of derogation would result in a €45bn cumulative loss in economic output between 2026 and 2035, driven largely by a 15% fall in dairy exports, including 24% in butter and 21% in milk powders — key exports for Ireland.
It also projected a €555m annual fall in milk cheques paid to farm families and, most worryingly, suggested 12% of dairy farming families would not be able to continue.
It would leave 29% of Ireland’s dairy processing capacity idle during what should be peak months of production.
The €60m farming for water initiative has already drawn 4,000 farmer applications, building on earlier nationwide water quality measures.
Ireland now has some of Europe’s cleanest rivers and groundwater, with 83% of rivers at high, good, or moderate biological quality and 98.5% of groundwater sites compliant with EU nitrate standards.
Despite this progress, the nitrates derogation, vital to Ireland’s grass-based farming system and rural economy, is at risk. Experts warn its removal could harm, rather than improve, water quality by reducing regulatory safeguards.
Conor Mulvihill, the director of Dairy Industry Ireland, said: “Across Ireland, thousands of farm families are quietly leading a revolution, protecting rivers, reducing emissions and sustaining rural communities. Their work is delivering cleaner water and a stronger economy, but their future is now at risk.
“The derogation has safeguarded water quality for more than 30 years by imposing additional environmental conditions.
"It would also undermine Ireland’s global reputation as a leader in sustainable food production, just as the UN projects a 29% increase in dairy demand by 2050.
“Farmers have done everything asked of them, investing more than €2bn in climate and processing infrastructure, adopting catchment-based water strategies, real-time nitrate monitoring and world-first sustainability-linked payments. Yet despite this, they face shifting goalposts and continued uncertainty.
“Losing the derogation would be a disaster socially, environmentally and economically. There is no scientific evidence that its removal will improve water quality. On the contrary, it risks undoing the progress already achieved.
“Irish dairy is a cornerstone of our economy and our identity. We must balance environmental ambition with economic reality to protect farmers, rural communities and Ireland’s global reputation. Generational renewal is already under threat because of this uncertainty, and farm families deserve a future."
