Chairman’s Statement

2022 was a record year for dairy prices globally, driven by weaker flows from the major milk producing regions for much of the year. Global dairy prices began climbing in mid-2020, and despite inflationary pressures felt right throughout the supply chain, prices maintained this trajectory to reach record highs in early 2022.

Global Success

The value of Irish food and drink exports in 2022 was more than a quarter ahead of prepandemic levels. Irish dairy exports reached a record value of €6.8 billion in 2022 representing 33% growth versus 2021 with over 1.7 million tonnes of product shipped to over 130 markets worldwide.

The foundation for this growth was a solid year in milk collections on Irish farms, estimated to be close to 2021 levels at approximately 8.7 billion litres for the year. This was despite evidence of lower fertiliser usage and relatively slow grass growth in the spring and early summer.

Despite the strength of this overall performance, 2022 presented a particularly challenging year in the form of increasing inflationary pressures. Muted buyer activity in some key import regions and continued uncertainty exacerbated by the war in Ukraine are factors which will impact on prospects into 2023.

According to Eurostat, average prices for EU (European Union) butter were up 74% for January to September versus the same period in 2021. The equivalent figure for cheese and Skim Milk Powder (SMP) was 29% and 45% respectively (European Commission, 2022). These three categories accounted for just under 40% of Irish dairy volume exports in 2022.

Environmental Sustainability

Ireland’s dairy sector is on a pathway towards a low-emissions, sustainable production system. To continue producing highly nutritious products, our dairy food producers will adopt a range of new practices which will reduce the carbon footprint and ultimately yield better outcomes for society and the environment.

Despite ongoing commentary regarding the ‘industrialization’ of dairy farms, the supplier base in Ireland has largely retained its family farm profile. The average dairy farm is now milking ninety cows at a stocking rate of 2.1 livestock units per ha (Teagasc National Farm Survey, 2021), with a spring-calving, pasturefed model predominating. This average ninety cows per herd is worth comparing to a range of 140 to 230 average in Northern Ireland and Great Britain and just under five hundred in New Zealand.

However, the Climate agenda continues to redefine and reshape all aspects of industry. The regulatory picture in Ireland has become clearer for the agriculture sector following the legally binding agreement on a 25% reduction in emissions by the end of the decade. This represents a significant challenge for the sector and will require significant collective effort from all parties to achieve. Co-operation is a deep-rooted value within our industry and only through continued collaboration, vision, and investment can we build on the positive progress made to-date and be successful in delivering on our long-term ambitions as a sector.

As a sector we need to be stronger and more defiant in our messaging, to combat the increasingly negative commentary around Irish dairy production, while still winning hearts and minds by reminding people of our heritage and how much there is to be proud of – in terms of both dairy’s nutritional credentials and Irish production practices. We need to position Irish dairy farmers and the sector as committed to solving climate challenges arising from production of dairy- we are not on opposing sides- farmers together with us see and share the problem and are working to resolve it.

Irish dairy exports reached a record value of €6.8 billion in 2022 representing 33% growth versus 2021 with over 1.7 million tonnes of product shipped to over 130 markets worldwide.

The European Commission is predicting that EU milk collections will continue to decline marginally in 2023, although fat and protein levels should improve to counter this deficit.

Strengthening Our Membership

NDC is pleased to have secured Dairygold as a full member, effective from July 2022 for an initial period of 3 years. Increased membership provides additional scope for NDC to work on behalf of Irish Dairy Farmers with stronger impact.

2023 Prospectus

Looking forward to 2023 it is expected that Irish dairy supply will be modestly ahead of 2022. Increased availability of fertiliser early in the year and favourable weather conditions would provide support to volumes. Volatility in energy costs and availability of labour will be other factors that may influence production decisions.

Environmental considerations, and indeed regulations, are playing a more prominent role in the direction of dairy production globally. Dutch farmers took to the streets in 2022 to protest at their government’s plans to cut nitrogen use by 50% by 2030 (Financial Times, 2022). New Zealand has announced plans to apply a levy on methane emissions from livestock as part of their national climate efforts. Although not signed into law yet this is likely to feed into farmer sentiment and could provide some of the context as to why the USDA is predicting a further modest reduction in New Zealand supply.

The European Commission is predicting that EU milk collections will continue to decline marginally in 2023, although fat and protein levels should improve to counter this deficit. Overall, 2023 looks to be a year of both challenge and opportunity for the Irish dairy industry. The prospect of a modest increase in milk supply against a potentially lower global supply is positive. These prospects are balanced however, by an uncertain global economic forecast and its effect on consumer spending and the ongoing cost and input availability pressures facing farmers and processors. It remains to be seen how commodity prices respond to these challenges in 2023. On a positive note, the diverse nature of the Irish dairy industry in terms of product output and markets served, not to mention its agility and sustainability credentials, positions it well to navigate these factors over the coming year.

The National Dairy Council remains fully committed to delivering value and playing an important part in helping the Irish dairy sector to unlock its full potential.

On behalf of the Board, I would like to thank our CEO, Zoë Kavanagh and her Executive Team for their dedication and commitment to the work of the NDC in 2022.

Eamonn Carroll Chairman