Irish dairy's elevated position across range of global metrics

The peaceful scenes of cows munching grass increased 43% (454,267 extra dairy cows), and average milk production per cow increased by 15%.

From those lowing herds in the dairy fields came the milk for exports of Irish dairy products and ingredients which increased in value from €1.8bn to over €5.2bn in 2020.

It was a successful dozen years, and the global pandemic which emerged at the end of 2019 hasn’t halted dairy progress. Covid-19 made 2020 an unprecedented year of challenges for the dairy industry, with retail and foodservice disruptions, and changing consumer behaviour. But the dairy sector resiliently sailed through, faring better than many feared.

At consumer level, dairy foods came through the lockdowns with flying colours. We ate more breakfast cereal with milk, and returned to our kitchens, resulting in record global retail sales for milk, cream, butter, and cheese.

Irish dairying woke from its slumbers in 2015, having been restricted by EU milk quotas since 1983. It hasn’t looked back since, thanks to our dairy farmers who achieved a 25% increase in milk deliveries after the quotas were lifted, post-quota, one of the highest growth rates in the EU.

The region made up of Carlow, Clare, Cork, Kerry, Kilkenny, Limerick, Tipperary, Waterford, and Wexford has become the EU’s second most productive dairy region.

By 2019, it was producing 5.4 million tonnes of milk, surpassed only by 5.6m tonnes in the Brittany region of France. Next best is the Lombardy region in Northern Italy with 4.9m tonnes, of the 281 regions in which the EU is divided for administration and statistical purposes.

South Leinster and Munster together make up one of the 14 regions that contributed 29% of the EU-28’s milk production in 2017.

In the doldrums since 1983, booming since 2015, navigating Covid-19 safely, what is the next era for Irish dairy farming? Can its momentum continue?

It will, if competitiveness counts for success in business.

Ireland has been ranked No 1, best for both total costs and total cash costs per kg of milk solids, in the analysis of competitiveness in eight leading EU member states by researchers Lungelo Prince Cele and Thia Hennessy of UCC, and Fiona Thorne of Teagasc.

But, along with being competitive and financially profitable, our dairy farmers must be environmentally sustainable and socially acceptable, said Teagasc’s Pat Dillon, Head of Animal, Grassland and Innovation, at the recent Moorepark 21 open day for farmers.

He said the industry has contributed greatly to rural economic prosperity but is a focal point for discontent among commentators who perceive that expansion is achieved at the cost of climate change, and reduced water and air quality and biodiversity.

The dairy industry knows that consumers of its products are more aware than ever of the world’s environmental challenges, and has responded worldwide with sustainability commitments for 2030, and carbon-neutrality commitments for 2050.

In the US, sustainability-marketed milk sales grew more than 20% from 2013 to 2018, compared to negative growth for all dairy products. Sustainability-marketed natural cheese and yoghurt sales grew over 30% and 20%, respectively, compared to near 10% growth for those categories overall.

In its recent Global Dairy Top 20 report on the biggest companies globally, Rabobank said dairy's nutrient density will keep it a dietary staple, but warned the sector must be part of a global carbon-reduction solution that resonates with climate-sensitive consumers, and prevents food manufacturers and foodservice operations from taking natural dairy out of their products and off their menus.

Laurence Shalloo of Teagasc said at the Moorepark 21 open day that growth of Irish milk production is slowing down now, and if it continued at recent levels, it would not be sustainable. He said any further expansion must not add to greenhouse gas emissions or nitrogen loss, while improving “enriched” areas on farm. 

“All of this is possible, and will be the focus of technologies that are introduced onto farms in the coming years.” 

Torsten Hemme, founder of the International Farm Comparison Network of dairy researchers, said: “The greenhouse gas emissions of dairy farming account for about 2.2% of global GHG emissions. IFCN research shows that emerging countries account for 75% of those emissions, and for approximately 100% of its growth over the past 20 years”.

IFCN predicts that GHG emission per kg of milk globally in 2050 will have declined by 28% worldwide, driven by higher milk yields per cow. As a result, 50% extra milk would increase GHG emissions in dairy farming by only 8% in the next 30 years.

For dairy to pass the sustainability test, there will be limited growth in milk volumes, which poses another big challenge for dairy co-ops in the EU and New Zealand.

EU milk production is forecast by Rabobank analysts to grow by just 0.6% annually during the coming decade, compared to 1.2% from 2016 to 2020.

The slowdown on the milk supply side will be matched by limited growth in their domestic consumer markets. The EU-27 market will have only 2.3m extra consumers in 2030.

Meanwhile, the largest dairy operations in North America, China, and Russia will power ahead in milk production.

Last year, China’s largest milk processor announced plans to build an eco-friendly dairy zone that will house 100,000 head of cattle in Inner Mongolia.

In the US, the average dairy herd is 300 cows; it’s about 80 in Ireland. The states with the biggest herds are New Mexico (averaging 2,357 cows) and Texas (1,653 cows).

Still, Ireland is competitive enough to be the No 2 dairy exporter worldwide to the US (New Zealand is No 1).

Over the next decade, the US will remain an important market for us, with its population forecast to grow by 18.6m, an ageing and affluent market.

But our export focus may need to be more and more on the regions where 60% of the world’s additional 750m consumers will be found.

More than 35% of the population growth will occur in Africa, followed by India with 16%, Pakistan with 5.6%, Indonesia with 3.4%, and China with 3.3%.

China will remain the world's largest dairy importer, with 25m extra consumers. But those aged under four will decrease by nearly 13m, while those aged over 50 will increase by 100m. That has major implications for Ireland’s annual export of €896 million of infant formula, our third most valuable dairy export commodity.

The top EU dairy companies, short of milk and EU consumers over the next decade, will focus on dairy alternatives, rationalisation of plant, and global marketing alliances, according to analysts at Rabobank, which is a major lender to the international food and agri sector.