INSIGHT
UPFRONT MARKET VIEW
Irish margin biggest in Europe The Irish milk pool grew by approximately 30% between 2014 and 2017 and the margin on Irish dairy farms in that period averaged 8 Euro cents per kilo of milk, a margin twice that of other European Union (EU) countries. Sjoerd Hostee from Langs de Melkweg reports on a comparative analysis from the Munster Technological University and Teagasc.
I
reland is the land of grass-based dairy farming where farmers often work with a low milk price and low-cost price. This image exists of the country and it appears to be correct, as is also evident from the analysis “Irish Dairy post quota” presented by researchers from the Munster Technological University (MTU) in Cork and Teagasc in November 2020. They compared the results of Irish dairy farmers and Irish dairies with those of fellow farmers and dairy-processors in Denmark, the Netherlands, Germany, the United Kingdom and France. The comparison was made for the period 2014 to 2017, with reliable figures from Farm Accountancy Data Network (FADN). Other 14
data sources have also been used where possible; this confirms that from 2014 to 2019, Ireland saw its milk pool grow by more than 40 percent. The average of the other countries was only 7 percent. In the period up to and including 2017, the Irish milk pool had already grown 30 percent. With such an enormous drive for expansion, it is to be expected that costs will rise and the margin will come under pressure. However, that hardly happened. Even in the years after 2015, when the European milk quota was dropped, the Irish scored a clearly higher margin per litre of milk than their colleagues in other countries. On average, this margin was 8 cents per kilo of
milk in the period 2014-2017 with a cost of production of 24 cents (excluding own labour). Dutch farmers recorded the highest cost of production (35 cents) after Denmark (38 cents).
LOTS OF CONVERTERS
The Irish realised their lower costs by constraining costs for, among other things, the purchase of feed, contract work, depreciation and interest. However, farmers do spend more on fertilisers per kilo of milk on the island. The fact that the cost of production among the Irish, despite their enormously rapid increase in total milk production, did
Dairy Exporter | www.nzfarmlife.co.nz | June 2021
