Growth in the Irish dairy industry will not be driven by “rapidly increasing volumes of milk processed to fill demand in the commodity markets” – as it was over the last decade, Bord Bia’s chief executive, Jim O’Toole has warned.
Instead, O’Toole believes growth will be achieved by adding “more value throughout the supply chain”.
The Bord Bia chief executive told the audience at Bord Bia’s annual Dairy Markets Seminar in Co. Kildare today (Tuesday, April 18) that Ireland is “one of the best places in the world to produce grass-fed dairy”.
However, he said the dairy sector also faces challenges and the strong performance it enjoyed in 2022 is unlikely to be repeated in 2023.
But O’Toole also highlighted that the contribution the sector continued to make overall to the Irish economy should not be underestimated.
“We have seen a positive profitability trajectory over the last five years.
“This means that the work that this sector is doing on a day-to-day basis is having a positive impact on rural economies across the land as that money is spent in local business and supporting local jobs outside of agriculture,” the Bord Bia chief executive said.
According to O’Toole, Ireland’s estimated 17,000 dairy farmers currently produce up to 8.8 billion litres of milk a year.
“Although herd expansion has been a feature, growth has also been driven through improved productivity through breeding, better grassland management and optimal animal husbandry,” he explained.
“It is a sector that’s done this while reducing its greenhouse gas emissions per kg produced since 2014 by 9% to 0.91 carbon equivalent,” he added.
O’Toole said despite the high input cost that characterised 2022, dairy farmers had enjoyed record levels of profitability.
“Our colleagues in Teagasc have estimated that margins on Irish dairy farms increased by 70% in 2022 where the average family farm income reached a record €148,000.
“Dairy Industry Ireland estimates that the sector has a wider €16 billion economic value in Ireland,” he told the audience in Co. Kildare.
According to the Bord Bia chief executive one of Bord Bia’s key objectives is to “leverage our natural advantage” by building a “premium reputation for Ireland through Origin Green (the food and drink sustainability programme) as one of the best places in the world to produce grass-fed dairy”.
But O’Toole also acknowledged that the sector also faces challenges as part of the wider agri-sector’s target to reduce carbon emissions by 25% by 2030.
“We are working proactively with the dairy sector to assist that transition,” he continued.
“We know through the sustainable dairy assurance scheme that Irish dairy farmers are embracing technology like low emission slurry spreading, use of clover in pasture and managing their fertiliser usage,” he said.
The challenges facing the sector were also highlighted by the Minister of State at the Department of Agriculture, Food and the Marine, Martin Heydon, today at the Bord Bia event in his constituency.
Minister Heydon said the issue of water quality was hugely important for dairy farmers and that he was very conscious of the “real concerns around nitrates” that farmers currently shared.
He highlighted that 85% of dairy products produced in Ireland are sold abroad and said the future for the sector will revolve around growing “value not volume”.
According to Bord Bia’s chief executive the “sustainability” of the Irish dairy sector will be an important factor in its immediate future.
“The winners in global dairy markets will be the ones that can add more value throughout the supply chain and provide sustainable nutrition to a growing global population.
“The decisions we make now should be with the long-term in mind, putting in place the infrastructure and the sustainability proof points that will protect our industry and position it advantageously,” O’Toole added.