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Scale of Chinese market means there is enough scope for everyone to benefit

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Eleena Cheah Soo Sen from Singapore and Jean Yuk Jin Wan from China attempt a "selfie" with the livestock on Stephen Morrison's farm in Kill, Co Kildare. Photo: Michael O'Rourke

Eleena Cheah Soo Sen from Singapore and Jean Yuk Jin Wan from China attempt a "selfie" with the livestock on Stephen Morrison's farm in Kill, Co Kildare. Photo: Michael O'Rourke

Trevor Donnellan

Trevor Donnellan

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Eleena Cheah Soo Sen from Singapore and Jean Yuk Jin Wan from China attempt a "selfie" with the livestock on Stephen Morrison's farm in Kill, Co Kildare. Photo: Michael O'Rourke

Much has been made in Ireland of the removal of milk quotas next Wednesday, and rightly so. Milk production is by a long way the most profitable mainstream enterprise in Irish agriculture.

On average, incomes on dairy farms are two to three times larger than incomes on other types of farms in Ireland. With their low cost base due to Ireland's near ideal grass growing conditions, our 18,000 dairy farmers are among the most competitive in the EU.

While Irish dairy farmers are keen adopters of technology, dairy farming is still a labour intensive business. Increasing Irish milk production by 50pc by 2020 will require milking up to 300,000 additional dairy cows, creating jobs for as many as 5,000 additional workers inside the farm gate.

In terms of extra jobs, that is just the start.

To facilitate this expansion in milk production, it is estimated that dairy farmers will need to invest €1.5bn in their farm businesses over the next five to six years. This will generate spin-off economic activity in the rural economy for a range of trades, including building and construction, farm machinery, as well as veterinary and animal breeding services.

Suppliers of animal feed and fertilisers will also see a boost in their businesses. Dairy farming is an intensive user of fertilisers and more of it will be required to help grow grass and silage to feed the extra cows on farm. Additionally there will be jobs created in the collection and transport of this milk from farms and the processing of this milk into dairy products at production facilities.

This could all amount to a further 5,000 jobs in sectors closely associated with dairy farming.

Temporary construction jobs will also result, due to the need to build new milk processing facilities and upgrade existing milk plants to increase their processing capacity. With this in mind, there is a new greenfield facility in place at Belview on the Kilkenny/Waterford border and cranes can be seen on the skyline in the Co Cork towns of Charleville and Mallow.

But the jobs benefit won't all end there. The incomes generated by the additional 10,000 dairy related jobs in rural areas should percolate though the wider economy via the spending of wages and salaries by those directly benefiting from dairy expansion. This spending will provide an economic boost and additional jobs in retail, leisure and a range of service sectors which one would not normally associate with the agriculture sector.

Overall, some 15,000 jobs across the economy could be supported by the planned expansion in the dairy sector by 2020. In a national context this might sound like a modest total, but the regional concentration of the dairy sector in East Munster and South Leinster, where the greatest expansion is anticipated, will see the economy of these regions benefit in particular.

These expansion plans have not been without their critics, with some questioning whether there will be enough international demand for the additional dairy products produced.

Dairy processors in Ireland and elsewhere in the EU have been targeting the fast growing Chinese dairy market in particular.

Fortunately, the sheer scale of the Chinese market means that there may be enough scope to allow everyone to benefit. Ireland already exports more than 80pc of its milk output and that percentage is set to surpass 90pc as milk production grows.

In spite of all this, the home dairy market will remain important to Irish dairy processors, so the Irish consumer can rest easy that there will still be Irish dairy products on Irish supermarket shelves.

Trevor Donnellan is an economist with Teagasc, the Irish Agriculture and Food Development Authority

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