Food & Beverage

Oct 1, 2015

Dairy Ireland

Ireland has a rich history in the dairy sector. Operating between 1770 and 1925, the Cork butter market was, at its peak, the largest butter export market in the world. The Irish co-operative movement spawned by Sir Horace Plunkett started with the formation of village creameries converting milk into butter in the 1890s.

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In 1889, Ireland's first co-operatives were established in Doneraile, under the name Co. Cork and the first co-operative creamery was opened in Dromcollogher, named Co. Limerick. Adopting the Danish Co-operative Model, the Irish Agricultural Organization Society Ltd. (later renamed the Irish Co-operative Organization Society Limited - ICOS), was formed in 1894 by Sir Horace Plunkett and his friends.

The Irish dairy industry has operated within an EU quota system since 1983. Volumes were fixed but the EU effectively provided a minimum price for milk through a complex system of intervention purchasing, export refunds, aids for storage and subsidies for industrial use. Farmer milk prices were relatively stable, but this did not prevent a dramatic reduction in numbers of milk suppliers, with a drop from about 65,000 in 1983, to about 18,000 today.

These over 18,000 milk producers in Ireland produce about 5.5 billion litres of milk per year, while the total world production of milk is about 720 billion litres. About 600 billion litres of these come from cows, about 93 billion litres come from buffalos and the rest comes from sheep, goats and camels, among others. Ireland produces enough milk and dairy products to feed 52 million people, and the country's dairy farmers produce on average 300,000 litres of milk each, from herds averaging around 50 cows. There are approximately 1.1 million cows in Ireland, and the country's pasture-based production system makes Irish dairy farming amongst the most efficient in the world, helping to maintain environmental, social, and economic sustainability, while ensuring high levels of animal welfare. The milk is produced almost exclusively off grass, with cows grazing outdoors for around 227 days per year.

85% of Irish milk production is exported across the world in various dairy products such as cheese, powders and butters. Exports of dairy products and ingredients accounted for 29% of agri-food exports. Ireland produces more farmhouse cheese varieties per capita than any other country in the world and the National Dairy Council (NDC) has a vital role to play in supporting the sector by driving the consumption and positioning of milk and dairy in the Republic of Ireland

Ireland has the third-highest per capita consumption of liquid milk in the world, at 130 litres per person per annum. Only Finland at 183 litres per head and Sweden 143 litres per head has a greater per capita consumption. In comparison, the fastest growing market for milk consumption, China, consumes only 9 litres per head.

The world market for dairy increases by 15 billion litres every year, almost 3 times Ireland's total annual production. Ireland produces enough milk to feed 52 million people. Farmers and their co-ops are gearing up for an increase in milk supply of the order of 50% by 2020 and they are making the investments necessary to produce and profitably process and market the milk. Given that European population and their dairy consumption is largely stable, it is envisaged that the additional production will largely be targeted at the growing world market, particularly in Africa and Southeast Asia. The challenge faced in these growing markets will be tough. Their international competitors, particularly those from the Southern hemisphere, benefit from low-cost milk production, on huge farms, processed in a massive scale. However, the efficient grass-based production system, enthusiastic young farmers and the fact that Ireland has a seasonality curve that almost exactly mirrors that of main competitors should allow the country to trade profitably on those emerging markets.

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