Asian markets accelerate Irish dairy growth

By Neil Merrett

- Last updated on GMT

Related tags: Bord bia, Milk, Irish dairy board

The dairy sector dominated another record year for Irish food
exports in 2007, as producers and farmers exploited strong demand
from Asian markets to increase their sales by 13 per cent to
€2.36bn, the country's food board has said.

The performance helped drive €414m worth of export growth for the country's entire food industry, which made €8.62bn in total profit, up five per cent over the previous year, according to Bord Bia's latest annual export report. Dairy products alone accounted for 65 per cent, or €270 million, of the total annual growth, with the dairy sector well positioned to continue the trend over the coming year, the report added. Bord Bia's Aidan Cotter said that the increased export value for products like dairy goods was partly driven by a shortfall in supply after key milk producing nations like Australia and Argentina suffered from extreme weather conditions. "Nevertheless, it is clear that increasing Asian demand, the use of land for bio fuels and climate change are poised to play a growing role in food markets,"​ he stated. "In particular, the changing market environment is set to further enhance the competitive advantage ofIreland's grass-based dairy and meat sectors."​ However, to fully reap the benefits of these changes, the food board said that dairy farmers would need to consolidate the higher prices for their products as commodity costs in the sector began to ease. Bord Bia added that commodity markets remain "increasingly fragile"​, with the supply and demand balance potentially creating significant volatility for manufacturers. The board offered some hope for processors and farmers alike in terms of volume output for 2008 though, with a proposed increase in the EU milk production quota expected during the year. The Irish Dairy Board (IDB) remained more optimistic for the industry in 2008, stating last month that it expects the price hikes for milk to remain an exceptional occurrence rather than a long-term problem. It added that further growth in demands from Asian markets was a key feature of their outlook. "Demand for dairy products, particularly cheese, is expected to increase,"​ stated the IDB in its latest world dairy review. "The strongGDPgrowth inAsia, together with the income-per-capita growth being experienced in oil producing regions, population growth,westernisation of diet and, in several cases, government milk consumption programmes, are all leading to increased demand." ​ There remained some concerns ahead for the board in the new year, with uncertainty over whether global milk production is at a sufficient level to meet current demand, the IDB said.

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