Mapping a future for more expansion
This week Irish Dairy Board chief executive Kevin Lane talked to Declan O'Brien and outlined his vision for the dairy sector in a post-quota era
Q The Irish Dairy Board (IDB) has played a central role in the development of the Irish dairy sector by marketing Irish dairy products around the world. What do you see as the future role of the IDB?
AWe have a focused vision of what we need to develop to serve our members -- that is to build and create routes to market and value for our members. The uplift in milk output forecasted under Food Harvest 2020 presents an opportunity for the Irish dairy sector to expand output for the first time since the introduction of milk quota. On the marketing side, this will require experience and knowledge in developing new markets and products, and building on our existing international marketing footprint.
The IDB's mandate is to market products on behalf of its members. Our efforts will be focused on developing a greater presence for Irish dairy products on the international stage.
QThe growth plan for the dairy sector has been set out in Food Harvest 2020. Is the target of a 50pc expansion in milk supplies over the next eight years realistic and/or achievable?
AThe target of a 50pc increase in milk volume by 2020 is regarded by many commentators to be optimistic. The growth will obviously be milk price and cost dependent and will be very regionally diverse.
Q You have put the total cost of a 50pc expansion at €850m, with €400m needed for additional processing capacity. This is far higher than some other industry commentators. Do you stand over those estimates and can you explain your rationale?
AYes, we stand over our figures based on the analysis we undertook. We calculated the €850m on the following basis. We took the €400m figure as published in the Food Harvest Report for processing. We looked at forecasted milk output and calculated that the working capital required to fund this was in the region of €250-300m on an annual basis. In terms of developing market infrastructure and investment, we put an additional €200m figure on this. Of course, these financial projections carry a health warning in that milk price will determine the quantity of milk produced. Our numbers do not include the costs involved at farm level, which are also considerable.
Q Given the limited potential for growing butter sales, a 50pc increase in milk output will necessitate the production of an additional 300,000t of cheese and 100,000t of whole milk powder (WMP). Is there an outlet for this extra product? Where are those markets?