“Previously, non EU dairy markets would have been less lucrative than the higher priced markets closer to home and was a limiting factor in growing the value of Irish dairy exports,” said Trevor Donnellan economist for the country’s agriculture and the food body, Teagasc.
However, international demand is now pushing up dairy commodity prices and today, Asian demand is a key driver of the buoyant conditions in global dairy markets, he told DairyReporter.com.
Leap in trade surplus
The analystsaidthe benefits of the price rise to Irish dairy exporters were clear from the recent improvement in the Irish dairy export statistics.
This week, the Irish statistical agency the Central Statistics Office (CSO) recorded a leap in the country’s Trade Surplus, which it put down to increased dairy and medical exports.
In 2011, for the year to date, the value of Irish dairy exports is running at its highest level ever, surpassing the previous record achieved in 2008, said the analyst.
Over thefirst five monthsof 2011, dairy grew by 47 per cent to €676m from €459m last year, according to the CSO.
Demand for bulk dairy commodities butter, cheese and milk powders are a key element in Irish dairy exports.
These commodities have been strong over the last 18 months following the global economic recovery, said Donnellan.
As well as maintaining the traditional bulk dairy commodity business, there is also an increasing focus in Ireland on more specialised higher-value added dairy products such as infant milk formula which are also having a beneficial impact on Irish dairy export figures, the analyst added.
In response to the CSO statistics, Michael Barry Irish Dairy Industries Association (IDIA) director said he welcomed the increasing global demand for Irish dairy.
However, he said it illustrated the increasing volatility within the dairy industry in terms of price and supply response.
“This reinforces the need for an adequately financed CAP including the continuation of appropriately resource market management mechanisms,” he said.
Good medium term prospects
Short term prospects to the end of 2011 remain quite positive and the value of Irish dairy exports for the full year will be not far short of €2bn, said Donnellan.
“This would represent a doubling in export value in less than a decade, which is quite an achievement when one considers that the sector has to get by on processing a fixed volume of raw materials due to the restrictions of the EU milk quota.”
The analyst said the prospect of a faltering global recovery was a concern for the sector, but that medium term prospects were quite good.
The milk quota will cease to exist in 2015 and significant plans are in place at farm level and in the dairy processing industry in Ireland to boost dairy product production by as much as 50 per cent in volume terms by 2020.
“If these plans are achieved, then in excess of 90 per cent of the dairy products produced in Ireland will be destined for export markets by 2020,” saidDonnellan.