Longterm outlook promising despite looming price pressures says co-op boss.
By: Claire Fox
Source: Indo Farming
A 10-billion-litre dairy industry is in sight in the south of the country but it won’t occur without challenges, Dairygold chief executive Jim Woulfe has warned.
Mr Woulfe told the Positive Farmers Conference in Cork it would face a number of problems, such as volatility and ensuring farmers adhere to the sustainability agenda.
“In the long term the demand for dairy and emerging markets will grow,” he said.
“We will have fluctuations and volatility but we have measures in place. I see a 10 billion south-of-Ireland dairy industry in sight if we follow the sustainability agenda. There will be downward pressure in prices in the short term but I’m optimistic for the long term.”
Alternative dairy trends, lobby groups, oil prices and Brexit were highlighted as some of the biggest challenges facing the growth of the dairy industry.
In order to overcome these challenges they would have to focus on Chinese markets and milk-deficit regions such as Asia and Africa, he said.
“The demand growth will be from the milk-deficit regions in Asia and Africa. They will underpin global dairy demand, which is predicted at 72pc on a straight-line basis for the year ahead,” he said.
Mr Woulfe said the diet in those regions was becoming increasingly westernised.
“From a global supply point of view, we’ll be following demand; there will be short-term imbalances but from an Irish perspective we’re well positioned to capitalise on that demand. We have the cost base and grass producing milk which is so important,” he said.
Mr Woulfe said plans for an investment by Norwegian dairy company TINE and Dairygold in a cheese plant were being examined by An Bord Pleanala.
Speaking at the Irish Co-operative Organisation Society’s Conference at University College Cork last week, EY Partner John Higgins stated that the national dairy industry has the potential to grow to 10 billion litres in value by 2020.
“It was 5bn litres at quota abolition. Figures suggest it will be 8bn litres in 2020 and there’s talk of even as much as 10bn litres by 2022, which would be double the time of milk quotas,” he explained.
He said that every additional litre of milk is worth 90c to the economy and that this increase will have an impact of €2.7bn on the country in the lead-up to 2020, and the average economic impact per dairy farmer from 2016-20 is €150,000.
Mr Higgins added that the growth in the milk pool isn’t evenly spread throughout the country, with Munster seeing the biggest increase in supply.
“88pc of farms are in Munster and Leinster, with 54pc of those in Cork, Limerick and Tipperary. So there’s more of a concentration of milk growth, it’s not even,” he said.
Teagasc’s Trevor Donnellan said dairy incomes for the year ahead are forecast at €80,000 and urged that we rethink our agriculture structure here.
“The gap is growing between dairy and drystock. The day isn’t far away where dairy farm incomes will be 10 times that of the drystock system,” he said.
“We’re facing major decisions into the future as to what our agriculture sector may look like because the level of profitability that’s being achieved by dairy versus the other systems per farm basis is growing and growing.”