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Catherine Lascurettes , Executive Secretary National Dairy and Liquid Milk Committees Irish Farmers’ Association

Dairy Ireland post 2015: planning for sustainable growth Milk Forum Estonian Chamber of Agriculture and Commerce Tartu, Estonia 5 th November 2013. Catherine Lascurettes , Executive Secretary National Dairy and Liquid Milk Committees Irish Farmers’ Association.

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Catherine Lascurettes , Executive Secretary National Dairy and Liquid Milk Committees Irish Farmers’ Association

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  1. Dairy Ireland post 2015: planning for sustainable growthMilk Forum Estonian Chamber of Agriculture and CommerceTartu, Estonia 5th November 2013 Catherine Lascurettes, Executive Secretary National Dairy and Liquid Milk Committees Irish Farmers’ Association

  2. Dairy Ireland: the vital statistics • 18,000 farmers • 1.1m cows, producing 5.2b tonnes milk • Grass based production • 7/1 peak-to-trough seasonality • Product mix: butter, powders, cheese (cheddar), casein, whey-based products, infant formulae • 85% of production is exported

  3. Dairy Ireland’s expansion ambitions: Context • End of quota regime after 30 years of restrictions (Irish farmers have paid €55.5m superlevy in the last 10 years alone) • Global market opportunities linked to demographic developments • Real expansion potential and enthusiasm on farms • Political/Government support: Food Harvest 2020 report (2010) => expansion target of 50% for dairy • Economic potential of the exporting agri sectors (especially dairy) deemed of great value to an ailing economy

  4. A growing population needing more food… Source: IDB based on OECD

  5. …with a growing affluent middle class in emerging countries Source: CNIEL France based on OECD

  6. Rising global dairy consumption Source: IDF

  7. Strongest demand growth from emerging countries Source: EDA

  8. Most supplies will come from surplus countries… Source: CNIEL, France

  9. Especially those where water scarcity is not an issue.

  10. Hence, Ireland is well placed to capitalise on global market opportunities.But while it has assets, there will also be some significant challenges to be overcome.

  11. Dairy Ireland’s expansion ambitions: Assets • Relatively low production costs • Good grass, lots of water, good sustainability record • Cohort of relatively young, well trained farmers (1/3 <45 y.o., 54% formal education (v. 33% in general farm population) • Intent and enthusiasm (detailed co-op surveys) • Democratically run farmer-owned industry supportive of farmers’ growth plans • Clear industry plans being developed • Good research/data collection readily available to farmers (Teagasc, ICBF, etc.) • Fast-improving genetic merit of herd • Supportive government (at least politically)

  12. Dairying is most viable farming sector in Ireland Source: Teagasc NFS 2011

  13. Larger Irish farms are internationally cost competitive Source: Teagasc, based on IFCN & own work

  14. Rising number of heifers Source: ICBF

  15. Fast-rising genetic merit of national herd Source: ICBF

  16. Investment plans by the main players • Glanbia Irish dairy business => GII • 60/40 JV Glanbia Co-op/GlanbiaPlc • €150m in new scaleable greenfield site (powder plant) • Dairygold • €120m capital invest in brownfield site (powder plant) • Others with clear expansion plans, but limited investment plans due to adequate short/med term capacity • Kerry (recently expanded cheese capacity by buying Newmarket) • Lakeland Dairies (recently expanded powder capacity) • Carbery Group (developing whey related products) • Connacht Gold (recently bought Donegal Creameries) • Irish Dairy Board • Planning with member co-ops for expanded exports/new markets

  17. What to do with this extra milk? • Markets: mostly emerging countries • BRIC • Asia • North and Sub Saharan Africa • Consolidation and expansion where possible on existing markets in Europe • Products: • Butter • Cheese/whey • Powders

  18. Dairy Ireland’s expansion ambitions: On-farm challenges • Financial resources - €1.5b investment needed to deliver 50% extra milk. Significant contributions expected to co-ops’ plans. • Fragmentation of farms, expensive/unavailable land • Access to credit • Quota to 2015: expensive and unavailable, high risk of superlevy • Business management skills in the context of expansion • Variations in farm efficiency levels • Regional variations in expansion potential • Uncertainty on CAP reform impact on SFP – convergence bad for productive sectors – inadequate provisions on risk management • Volatility of margins as well as milk prices (input prices) • Environmental/climate change-related regulations

  19. A highly seasonal milk production Based on: CSO

  20. Volatile milk prices Source: CSO

  21. Volatile and rising costs (feed, fertiliser, energy)

  22. So, how realisticis a 50% increase by 2020? • Real production potential, real determinationatprocessinglevel, despite challenges: • Quotas to 2015 • Dairy and input pricevolatility • Availability of finance • 50% isachievable, determined by margins and profitability • Might 25-40% be more realistic by 2020? • Irish dairyfarmerswill not producemilkat a loss!

  23. Thankyou for your attention!

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