The ending of the milk quota regime in April 2015 represents an exceptional opportunity for the Irish dairy sector to avail of the expanding markets that are developing around the world for dairy products. Ireland strongly supported the decision in 2008 to abolish milk quotas on the basis that quotas were widely regarded by both the Irish dairy sector and market analysts as a brake on the potential of the sector to respond positively to market opportunities. However, as I have stated on many occasions previously, I do not want any post-quota expansion to occur at the expense of our valuable and long-standing beef suckler herd.
The ending of the quota regime, which has existed for 34 years, is such a significant policy change that it will obviously have an impact on other agricultural enterprises and on markets in the dairy sector. Analysts have been examining the effects of this policy change from many different angles, both from an EU perspective and an Irish perspective. The analytical reports of most significance to the Deputy's question are in an EU study titled Prospects for Agricultural Markets and Income in the EU 2012-2022, and in reports based on Teagasc’s FAPRI-Ireland model.
Since the abolition of the EU milk quota system was agreed in the 2008 CAP health check, the increases in milk quota and the ultimate abolition of the milk quota in 2015 have been a part of the baseline set of assumptions of FAPRI-Ireland analyses carried out by Teagasc. In all such analyses, the cross-sectoral impacts of policy changes are examined. Some recent reference papers based on the FAPRI-Ireland model are available from Teagasc.
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Teagasc's FAPRI-Ireland modelling anticipates that, while an increase in the number of dairy cows could create some extra competition for grassland, most of the surplus dairy calves produced will go into the beef production chain. While it could be argued that the extra competition for grassland could have some negative impact on suckler cow numbers, much of the anticipated growth in milk production is likely to come from higher milk yields, which would have no consequences for competition for land.
I am confident, nevertheless, that in overall terms both the beef sector and the suckler cow sector will not be hugely disadvantaged by the additional focus which Ireland is placing on milk production after the abolition of milk quotas, but will in fact enhance the sectors. To demonstrate this confidence and also to assist the beef sector, I have ensured that some €40 million will be available in 2014 for the sector, which is made up of €23 million for a new beef genomic scheme, €10 million for the beef data programme, €5 million for the BTAP, and €2 million to meet outstanding payments under the suckler welfare scheme.
In relation to the effect on markets for dairy products, the Deputy will be aware of the recently published EU Commission report on how markets are evolving as the ending of milk quotas approaches. It found that medium and long-term prospects for the dairy sector are favourable due to the continuing expansion of world demand. Global population and economic growth and an increasing preference for dairy products are expected to be the main drivers, fuelling EU exports and sustaining commodity prices.
Ireland is well placed to respond to this increased worldwide demand for dairy products and this is reflected in the fact that the value of Irish exports to emerging dairy consuming regions in the Middle East and North Africa, the rest of Africa and Asia jumped by almost 90% or €330 million to reach €710 million in the period 2006 to 2012. I am working with industry to raise the profile of the Irish dairy sector, and the Irish agrifood sector generally, in international markets. On this note I recently returned from a very successful trade mission to the Gulf states where there was a number of launches by Irish dairy companies marking an expanded presence in the region. The visit also saw the opening of an office by Bord Bia in Dubai to assist Irish companies in the region. I also visited the United States last week for discussions around initiatives in the dairy sector in addition to significant trade missions which I led to China and the US in the last year.
In summary, I am confident that the significant investment under way in both the dairy and beef sectors do not place these sectors in competition with each other but rather are complementary and will contribute to a flourishing agrifood sector as envisaged in the Food Harvest 2020 strategy.