Global economic trends will determine the fortunes of Irish milk producers in 2015,” according to Dairy Ireland Chairman David Murphy.
“I am concerned about the impact which falling oil prices will have on the economies of countries that are key export destinations for Irish dairy products,” he said.
“There are also some indications that economic growth may not be as strong in China this year as was the case in 2014. Some analysts are now predicting that farmgate milk prices could be under pressure for all of the next 12 months with some respite kicking in towards the end of the year.”
The Co. Waterford milk producer went on to say that dairy farmers must seek to reduce their cost base in response to these challenging times.
“This will prove difficult for new entrants, who have invested significantly in getting their new ventures off the ground. In their case, a baptism of fire could await them, as they gear up for a world without quotas.
“But the future prospects for dairying remains extremely positive and, as a consequence, the steep learning curve which these farmers encounter in 2015 should stand to them in the long term.
“Existing dairy farmers have the option of selling surplus breeding stock. I know this market has weakened recently. But moving animals of this type still represents a substantial cash flow boost.”
From a production point of view, Murphy stressed the need for all producers to cut their cost of milk production by making optimal use of grazed grass.
The Dairy Ireland Chairman confirmed that the organisation will host an annual conference in 2015.
“This is still a work in progress,” he said.
“Speakers will be confirmed later in the year. However, a key theme will be that of learning the lessons of 2015, particularly from a processing point of view.
“The need for rationalisation within the dairy sector has been obvious for some time. I am firmly of the view that the next few months may see this subject coming to the fore again, given the financial pressures all of the co-ops look certain to come under.”