Grass is the Irish dairy sector’s only competitive advantage, according to director of policy with the Irish Farmers’ Association (IFA), Tadhg Buckley.
Buckley said that when comparing costs of production with other European countries, Ireland would appear to be a great place to farm or do business.
However he said that in reality “it is not – Ireland is actually one of the highest-cost countries in the world”.
He pointed out that Ireland has the second highest minimum wage in Europe, and one of the highest electrical costs.
He also noted that milk price in Ireland is lower compared to Europe, but that this is due to our grass-based production model.
Even though Ireland is a high-cost country to do business, the overall cost of production is lower – due to our grass-based production model.
Buckley was speaking at the Irish Grassland Association (IGA) dairy conference in Charleville, Co. Cork.
He outlined analysis which compared six countries on the cost of pasture and concentrates, which showed Ireland had the second lowest pasture cost and the highest concentrates cost.
He said: “This analysis tells us that we have a significant competitive advantage, on a European and global level.
“But, the only thing that we have that is low-cost is our grass; if you look at metrics we are a high cost economy.”
He said that if grass was to go from the Irish system, you would not pick Ireland to operate a high-cost dairy system.
Buckley said that this highlights the importance of the nitrates derogation, which he said is effectively our competitive advantage.
He said that maintaining the derogation is priority for the IFA as an organisation in the short- to medium-term, and “without it we are effectively going to kill the goose that lay the golden egg”.
He noted that there are challenges facing the sector to maintain the derogation at both a national and European level.
Commenting on the outlook for milk into the future, Buckley said that from a supply perspective, milk is going to be much more challenged in the medium- to long-term.
He said that the gap between the amount of milk being produced globally, versus the demand, is growing.
Buckley outlined a forecast for milk supplies up to 2030, with the gap between supply and demand increasing by 62%.
Demand is expected to remain similar, but the supply of milk is expected to drop.
“The future of Irish dairy sector is very positive, if we continue with our grass-based milk production system,” he added.
“If we don’t protect what we have, particularly our derogation and we switch to a different system, we would be looking at a completely different outlook,” he said.