Farm Ireland

Wednesday 13 December 2017

Non-Irish product being used to secure post-quota markets

Darragh McCullough

Darragh McCullough

The Irish Dairy Board (IDB) will source 30,000t of non-Irish dairy product this year to supply expanding markets and secure market share for increased Irish volumes when quotas cease in 2015.

While the IDB has always handled some foreign product, volumes have been ramped up in recent years as the organisation prepares for an expected 40pc increase in domestic output over the next seven years.

The post-quota period will bring the total volume of milk being marketed by the IDB to at least 3bn litres.

Since 2010, the IDB has placed more than 32 sales people in new and emerging markets around the world.

"We're well ready for post quota and hugely confident that we'll find profitable homes for whatever milk is thrown at us," said IDB chairman Aaron Forde.

Trading director, Bernard Condon, went one step further.

"At this stage we'd have a much bigger problem if quotas weren't being removed because we barely have enough product to keep up with demand," he said.

Despite retailing for up to twice the price of local competition, Irish butter under the Kerrygold banner is continuing to gain market share.

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Much of this growth is being driven by the successful launch of spreadable versions of Kerrygold in recent years.

German consumers are prepared to pay up to a 100pc premium for what is known as 'meadow milk' produced from cows that spend most of their time grazing outdoors.

However, international food giants such as Unilever are pushing hard to get more milk from traditional European dairy farms also qualifying for the meadow-milk label.

"Dutch producers claim their product is meadow milk if the cows spend at least six hours a day for 120 days a year out on pasture. This is a fraction of what the typical Irish cow spends at grass," said IDB CEO Kevin Lane. IDB executives also expect a boost from an extended milk production season when the limitations of the quota system are lifted.

They are hoping to 'steal' two to three weeks at both ends of the milk production season simply because farmers won't be trying to dry off cows early in the autumn to stay under quota. At the other end, farmers will also be calving cows a few weeks earlier when they know they don't have the restraints of the end of the quota year on March 31 looming over their freshly calved cows.

This will have the potential to reduce the working capital costs of both co-ops and the IDB by hundreds of thousands of euro, according to the group's financial officer, Donal Buggy.

Irish Independent