The abolition of quotas represents a massive opportunity for the Irish agri-food sector. Dairy exports in 2013 were valued at €3.1 bn and the dairy sector is by a number of measures the country’s largest indigenous industry. Due to its reputation and significant global footprint, the dairy sector in Ireland retains significant future growth potential. The removal of quotas will be a key driver in this respect. Ireland strongly supported the decision to abolish milk quotas with effect from 1st April 2015 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. The abolition of quotas will facilitate an expansion in the sector and through the Food Harvest 2020 Report the industry has set itself an ambitious target for a 50% increase in milk production by 2020.
The projected increase in milk production under Food Harvest 2020 from 4.9bn litres in 2007/2009 to 7.4bn litres in 2020 will come from the two obvious sources, namely increased cow numbers and also increased yield production per cow. Increased milk yield per cow, in turn, will come from two main sources, namely improved breeding (EBI) and greater on-farm efficiency. It should be noted that 0.5bn of the required 2.5bn litre increase has already been achieved.
A comparison with New Zealand highlights the expansion potential. Dairy production in Ireland rose at a rate of 5.6% per annum in the years from 1975 to 1984, to a total of 5.2bn litres. Today, Ireland’s dairy production, at approximately 5.4bn litres in 2013, is roughly the same as that in 1984. In that same period, production in New Zealand, with a grass-based system similar to Ireland’s, has increased from 7.6bn litres to about 19bn litres. This illustrates the latent potential inherent to the sector and the massive opportunity that now presents itself. Based on industry, farmer and stakeholder responses to date, I fully expect that this potential will be wholeheartedly embraced.
I am also acutely aware of the need to develop as many market outlets as possible for Irish Dairy Products. Notwithstanding this successful trade performance, I am working with industry to raise the profile of the Irish dairy sector, and the Irish agri-food sector generally, in emerging markets in the Far East, North Africa, the Gulf States and elsewhere. China is an obvious destination for certain dairy products and in particular for dairy based infant formula. My Department is working very closely with the industry to build on our presence there. I have been very active in developing relationships in new and expanding markets in order to build the kind of confidence in Irish production and control systems that provide a platform for long-term trading relationships in the future. Most market analysts predict that medium term prospects for global dairy markets are good, with growth in world population and wealth expected to stimulate strong levels of demand for dairy products. My aim is to help position the Irish dairy sector to be able to take advantage of this opportunity.