Grim prospects on the horizon for Irish dairy as Covid-19 bites

The impact of coronavirus Covid-19 on international dairy markets is resulting in difficult market conditions and a downward pressure on prices, according to the Irish dairy industry.

Speaking to AgriLand, director of Dairy Industry Ireland (DII) Conor Mulvihill warned that the coronavirus is leading to a number of factors which will make for challenging times ahead of the sector – but highlighted that efforts are being made to limit the negative impacts of this.

‘Huge supply chain issue’

First noting the issue with the supply of shipping containers for trade, the director said:

That’s not improving; in fact, the costs are even increasing. It’s a huge supply-chain issue.

Continuing, Mulvihill highlighted that Irish dairy is much more dependent on the food service element than it is on the consumer end of things.

“The spike in consumer demand for dairy that we’re seeing in other countries – which is helping the dairy processing industries of the likes of Italy, Germany, France, Spain – isn’t really happening here.

“We’re getting a spike in consumer demand for dairy, yes, and very welcome; hugely useful at the moment.

But ‘Ireland Processing Inc.’ very much supplies the B2B [business-to-business] food service lines – and that is what has collapsed across the world.

Describing the situation as a “double whammy”, the director explained that, as well as this nosedive in demand, Ireland is entering peak production, and will continue to produce the vast bulk of milk over the next six weeks.

‘Keep the wheels moving’

“We’ll be hitting a peak of 250 million litres to be processing once we hit peak,” Mulvihill noted.

That peak moves depending on weather but that is what we do – and we’re confident we’ll be able to process that, all going well.

Using the phrase to “keep the wheels moving” in the processing side of things, the director noted that, production-wise, “things are moving remarkably well”.

“People across the industry and farmers are really stepping up to the plate, and Government. I know it’s kind of a cliché to be saying that…but things are actually going quite well thus far.”

Limiting Covid-19’s impact

Commenting in terms of Ireland’s “nearly unique exposure” in the dairy market compared to European peers, Mulvihill highlighted that DII is taking action, with the aid of the Department of Agriculture and others, to limit damage.

“I’m positive processing is going well, but we have to look at the various scenarios coming on, and also recognise that Irish dairy has particular challenges that aren’t reflected elsewhere in Europe.

Following on from DII’s application to the European Commission earlier this week to open Private Storage Aid for Irish dairy, the director added:

The minister has confirmed that he’s going to support us and has already made moves with the EU regarding the opening of tools such as private storage aid. That’s very welcome that that’s been confirmed.

“As processors we’re looking at a scenario of planning regarding our own financing, banking and cash-flow, just to ensure that the lights are kept on; that farmers are paid and suppliers are paid; that kind of thing.”

Turning to certification in the sector, Mulvihill commended the Department of Agriculture for its work in this regard:

“It’s been doing hugely Trojan work on making sure the certs and the technical elements on keeping the supply chains going, it’s been doing great work on that.

“We’ve been highlighting case studies as they arise and the department, in fairness, is driving that on.”