Is Ireland’s dairy sector over-heating?

In recent commentary from EU Commissioner for Agriculture and Rural Development, Phil Hogan, he indicated that dairy sectors in countries such as Denmark and Ireland are over-heating.

And he’s correct.

Ireland does not have the right to expect that the more-than-significant expansion of our milk industry over the past three years should be without consequence.

In any event, we don’t do cheap food in this part of the world.

Let’s hope, then, that the upbeat market news received from New Zealand since the turn of the year, is a harbinger of equally positive developments for the dairy sector here in Ireland.

There’s no doubt that the lift in milk prices recorded at the most recent Global Dairy Trade (GDT) events has been well received. But should we be surprised at this?

Back in 2014 no one had predicted the strengthening of world dairy markets which, subsequently, led to Irish farm gate milk returns breaking through the 40c/L barrier.

The reality is that, by its very nature, commodity markets are extremely hard to predict.

Following the depression that came after the boom of 2014, commentators expressed the view that the dairy industry should prepare itself for ongoing market conditions that would be extremely volatile in nature.

Yes, there will be good times. But farmers can also expect periods when prices will plumb the depths.

And there’s no doubt that the experience of the last twelve months has brought home to farmers the reality that markets can rise and fall in equal measure.

But there are some fundamentals that will not change – chief among them being the fact that the world’s population is set to increase dramatically during the period ahead.

All those extra mouths will need to be fed. So, is agriculture a sunset industry? I don’t think so.

‘Masters of destiny’

The key challenge facing local farmers is that of producing high quality food at a competitive price.

Individual producers can do nothing to control world food markets. But they are total masters of their own destiny when it comes to determining what goes on within the boundaries of their own farms.

The hike in prices recorded at the most recent GDT events represents a much-needed shot in the arm for every Irish dairy farmer.

But one swallow doesn’t make a summer. The real question is: Can this trend be maintained over the coming months? We will soon find out.