I thank the committee for the opportunity to make this presentation on behalf of the Irish Dairy Industries Association. Unfortunately, Ms Audrey O'Shea, who was supposed to attend the meeting as part of the delegation, is unable to be here. In her place, we are joined by Mr. Paul Kelly, director of the food and drink section of the Irish Business and Employers Confederation, IBEC. My colleague, Mr. Barry, is the director of the IDIA, which is part of IBEC's food and drink section. I am chief executive officer of the Town of Monaghan Co-operative but am here today in my capacity as chairman of the IDIA. This is our first time to make a presentation to the Joint Committee on Agriculture, Fisheries and Food, so it is an historic event for us.
The IDIA supports sustainable agriculture as defined by the Sustainable Agriculture Initiative, SAI, Platform, which refers to producing safe agricultural products in a competitive, productive and efficient way, while protecting and improving the natural environment and the socio-economic conditions of local communities.
I will begin with a brief overview of the Irish dairy industry. There are currently 1.2 million dairy cows in the State. The country has a milk quota of 5.5 billion litres. Traditionally, our product mix has been heavily commodity loaded but it is a changing product mix, of which we still export 85% to 90%. There will always be a high emphasis on commodity products. This is an industry in which milk quotas will end in 2015, and we are working towards this.
The dairy industry is an important part of the Irish economy and contributes approximately 3% of gross domestic product. Dairying has been identified within all sectors of the economy as an area of strategic growth. Our overall industry is one of the best internationally in terms of class and has been identified as a sector which has much potential for the future. Also, we have many world-class companies in this sector that do valuable work in terms of dairy products.
The pie chart shown provides a breakdown of the product mix ranging from butter, of which 140,000 tonnes are produced, to cheese, which is identified as an area of significant growth in the future and of which 127,000 tonnes are produced, to skimming powder, which incorporates the infant formula sector in Ireland. Three of the biggest infant formula manufacturers are based in Ireland and 15% of the world's infant formula is produced in Ireland from Irish milk.
As regards the dynamics impacting on the market at the moment, the chart shows Irish exports or our market share by value and the continental EU figure, which is approximately 50% of Irish exports, by value. It is important to note that this is now a global market for EU and international markets. Anyone who has looked at products on supermarket shelves will have noted the many imported products on the domestic market with which we are now competing.
The Common Agricultural Policy is undergoing serious transition. Removal of many of the support measures has led to volatility in the market. This time last year the industry was stronger with milk returns to farmers averaging in or around 40 cent per litre. While milk prices to farmers have not yet reached as low as 24 cent per litre, based on current market returns, prices could go this low. We are competing with New Zealand and the United States, countries that can chase markets below this price level and remain competitive.
Global trade in dairy is increasing. Again, this time last year, the United States was practically negligible in terms of its international exports. However, as a result of serious increases in output and the weakness in the dollar, a major factor in the US during the past year, dairy exports from the United States to the European Union have grown by 142%. The dynamics of the market have changed rapidly during the past 12 months.
As to whether the industry is in crisis, we are questioning whether there is a need for debate on this issue at this point in time. Global dairy markets have collapsed during the past six to nine months. While this is not an issue on today's agenda, I will give members a couple of figures in this regard just to put the situation in context. In Northern Ireland, milk is sold at an auction system. This time last year, purchasers were paying 34p a litre for milk. Last week, that price dropped to 18p, a drop of almost 50%. This reflects the market.
The figure for the Irish Dairy Board is reflective of the returns to processors in Ireland. One can see that this time last year the Irish Dairy Board was paying €4,100 per tonne of butter. It is currently paying €2,050, exactly half that amount, per tonne of butter. The price for skimming powder this time last year was €3,600 per tonne compared with the current price of €1,750 per tonne. Unfortunately, we cannot be certain at this point that this will be the final price. The industry is in a serious situation.
Ireland is operating in a global market as a result of changes in the CAP. The market supports put in place a few years ago to alleviate the current crises in respect of export refunds, intervention and the internal support measures are all gone. They may remain on the Commission's books but it chooses not to use them. We are exposed to what is happening in the global market.
Any policies that will increase our production costs will reduce our global competitiveness. Recent data show that Irish exporters are 34% less competitive than they were in 2000. I draw the committee's attention to policy in regard to the EU climate change package which, if implemented, could have serious implications for us. The industry must meet its environmental commitments as obviously we benefit from the marketing of Ireland on a green and natural basis. All dairy processors are signed up to the International Climate Change Partnership, ICCP, licensing emissions trading scheme and nitrates directive in respect of the disposal of sludge, etc. This is a highly regulated sector with strong commitments to the environment.
I will hand over at this point to Mr. Michael Barry who will make the second half of our presentation on greenhouse gases and climate change.