Irish dairy ambitions hit by export decline

Milk powders have been hit by production lines

Ireland’s reputation as a global dairy export powerhouse took a hit this week as new data revealed its dairy exports had fallen in 2012 for the first time in three years.

Casting doubt over its ability to deliver on ambitious growth plans, the data showed Irish exports of dairy products and ingredients had slipped 3.5% to €2.6bn in 2012, wiping €95m of value off the sector [Bord Bia]. And they continued to fall in the first quarter of this year - by about 4.6% year-on-year, while volume fell 3.6% to 680,239 tonnes.

The new figures are a blow to Ireland’s dairy ambitions. Dairy is its largest agrifood export, accounting for 29% of annual exports, and it plans to grow them by 50% between 2015 and 2020 following the EU’s abolition of milk quotas.

Bord Bia, the Irish food board, denied the decline was caused by any fundamental problems with Ireland’s dairy export policy. “We were very concerned, but we could see it was due to a combination of lower output because of adverse weather and higher feed costs,” said Michael Hussey, manager of dairy and ingredients.

These factors meant Ireland had less dairy produce to export, with production of WMP and SMP particularly badly affected, he said.

Value sales of dairy had also been hit by lower dairy prices on global markets. The EU commodity price of butter for example, fell 19% to €3,070/tonne last year.

Prices were likely to remain volatile, but Bord Bia was working on adding more value to Irish dairy exports to better protect them from weather and price fluctuations, Hussey said.

It plans to launch an Irish quality assurance scheme for dairy later this year - similar to those already established for other sectors - to give a point of difference and provide added reassurance in targeting growth markets such as China.