'Dairy sector needs a new vision'
The focus needs to switch from price volatility to what average milk prices will be over the next decade, argues Mike Brady
Published 15/06/2016 | 02:30
Irish dairy farmers have hit the ground running since the abolition of milk quotas in April 2015. Milk production for the 2015 calendar year was up 13.4pc on and a further increase this year means we are well on target to meet the Food Harvest 2020 target of 50pc extra milk volumes by the year 2020.
Yes, we are experiencing a big speed bump en route as the annual price of manufacturing milk has fallen by 38pc since the high of 2013.
Increased milk production from dairy farmers in America, New Zealand and some of our European neighbours combined with reduced Chinese demand and a Russian ban on dairy imports from the EU have caused a surplus of dairy product on world markets.
Milk prices internationally have been falling since the autumn of 2014 but Irish dairy farmers have been cushioned by milk purchasers supporting the milk price in 2015.
However the current milk price fall is unlikely to slow down the march of Irish dairy farmers to milk more cows and produce more milk after the frustration of over 30 years of stagnation due to EU milk quotas.
However, after the initial surge in milk production the question must be asked, where is Irish dairy farming heading and where will it be by the middle of this century.
The key question for Irish dairy farmers to ask about the future is what will the average milk price be for the next 10 years?
Base milk prices in the region of 24c/l for a sustained period of time will break most confinement dairy farmers in America and mainland Europe as they are actually losing money every day at present prices.