Russian food ban a reminder that volatility is outside our control

The ban on food exports to Russia, which was announced last week, could not have happened at a better or worse time for the Irish dairy industry. If nothing else, it provides a very clear example of the potential volatility the dairy industry faces to anyone still thinking of expanding of getting into dairying. Volatility has been a key word, bandied about in recent months by all concerned and here it is.

While Russia may not be a huge export destination for Ireland, €235 million is not a figure to be sniffed at and we are certainly not in a position to shrug off market losses. The Russian ban shows quite clearly how quickly markets can change or indeed disappear overnight.

That Minister Coveney says he remains confident about the future of the dairy industry is an example of positive thinking at its best. Yes, we are home to some of the world’s best dairy processors on this island and we have a very impressive clean, green image when it comes out our food exports. But we’re a very small island on the edge of Europe. And therein lies many of our problems. We have ended up on the receiving end of Russia’s foreign policy and inadvertently have been banned from exporting to Russia because of our EU membership.

Some 30% of EU cheese and 19% of EU butter went into Russia. So, while our figures might be low in comparison, the EU figures highlight that millions of euro worth of cheese and butter, and other products, will have to find space on shelves – no doubt in Europe, competing with Irish produce.

With milk quotas finishing in less than 250 days, most dairy farmers have put into motion any expansion plans they may have. But, regardless, the Russia move should be a stark warning to all in the dairy industry of the need for a buffer as so much is outside of their control.

 

 

 

 

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