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Ireland to be biggest winner post-quota

Analyst predicts the dairy sector here will expand by between 30pc and 40pc

Ireland is going to be the biggest winner from the post-quota period, according to an international dairy analyst.

Rabobank's senior global dairy analyst Kevin Bellamy says Ireland has established itself as the lowest-cost milk producer in the northern hemisphere.

"Traditionally, we would have only classed some southern hemisphere regions such as New Zealand and parts of South America as low-cost producers, but Ireland, by virtue of its low-cost forage system, is well up there at the moment," said Mr Bellamy.

For this reason, Mr Bellamy believes that "at a conservative level" the Irish dairy sector should see expansion of 35-40pc, more than any other area in Europe.

"We're going to see milk production shift out of the southeast of Europe in places like Italy and Greece into the northwest, especially in Ireland, northwest France, Denmark and Holland. The government targets in Denmark are 20pc but we think that the high level of borrowing is going to restrict that to the teens," said Mr Bellamy, who will be speaking at the national food and agribusiness conference in Dublin tomorrow.

"Holland has similar targets but we believe that expansion will be limited to 10-12pc there. Poland should increase by 10pc while northern Germany will increase by 4pc. France won't increase much overall, but there will be a big shift of milk production from the southeast to the northwest,' he said.

The Holland-based expert had more good news for dairy farmers when he predicted that the worst was over in terms of the slump in dairy markets.

"Prices are back by about 25pc over the last 12 months and we saw increasing levels of dairy product being sold into EU intervention storage. But the weaker prices brought some African states back into the market again because product became more affordable. In addition, the weakness of the euro has boosted exports and brought stability back to the market quicker than we expected. Originally, we were predicting a rebound next year but we've brought that forward now to the latter half of 2012. I think we saw markets finding a bottom over the last month," said Mr Bellamy.

Rabobank remain bullish about global growth for dairy products, especially infant formula. "We see demand growth continuing to outstrip supply growth. Even though economies may not be growing as fast in places like China, we see this category as very price inelastic. People stop buying colour TVs before they cut back their spend on their children's nutrition.


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