November 27, 2008

The planned dismantling of the EU milk quota system will open up new opportunities for Irish milk producers to expand, said the Irish Agricultural and Food Development Authority (Teagasc) yesterday (Nov 26).

At a national dairy conference in Cork, Ireland, delegates heard how Ireland is one of just six countries in western Europe that is expected to be able to expand milk production in line with the quota increases, agreed as part of the CAP "health check".

Preben Mikkelsen, a Danish dairy and food consultant, told the conference the structure of milk production in Ireland is a major challenge to expansion, and that the Irish dairies have to combine to be competitive.

He also said it is essential to establish an efficient quota allocation system, without restrictions, to allow the structure of milk production to improve.

Predicting a positive future demand for dairy products, Mr Mikkelson said consumption in the EU is expected to increase by the equivalent of 8 million tonnes of milk by 2014, while global demand is expected to increase by 2.5 percent per annum.

Teagasc director Prof Gerry Boyle said milk price volatility is now a fact of life due to the reduction in market supports. But Teagasc research has shown that with "best management practices" expansion can be profitable.

He said farmers will need to start strategies to deal with price volatility to expand milk production. Relentless cost containment will be critical to any strategy, he added.

Prof Boyle said even looking at a conservative expansion scenario of a 23 percent increase in quota by 2020, it could add EUR750 million to Ireland's GNP.