Ireland represents the biggest single threat to the UK dairy industry with a predicted 50% growth in milk output after 2015.

Milk quota broker Ian Potter believes Irish dairy farmers are well placed to produce extra milk when quotas are abolished, with the latest figures showing a dramatic growth in the number of heifer replacements. Approximately 100,000 more dairy heifer calves were born in 2012 compared to 2008.

“Calvings in the first six weeks of this year are up 33% compared to a year ago. Cows and heifers are now on the farm,” Mr Potter told the South Wales Dairy Conference at Carmarthen on Tuesday (19 February).

“There is a 5-7% milk production increase predicted for this year and if that increase is going to be repeated year on year the Irish will indeed be on course to increase production by 50%. And that will put pressure on dairy farmers here in the UK.”

However, expansion would not be without challenges and this may impact on the overall growth target. The biggest challenge was the level of investment needed. Mr Potter said €2.5bn (£2.2bn) was required overall to increase production by 50%.

“There is a 5-7% milk production increase predicted for this year and if that increase is going to be repeated year on year the Irish will indeed be on course to increase production by 50%. And that will put pressure on dairy farmers here in the UK.”
Ian Potter, milk quota broker

“Farmers need to invest €1.5bn to achieve that predicted level of expansion while processors will have to spend €2bn to increase capacity. A lot of money needs to be found,” he said.

One of the most immediate impacts of that expansion on UK dairy farmers would be in the availability of heifer replacements. “Farmers who import heifers are going to find that they are more difficult to source, exporters will not want to release those animals before 2015,” Mr Potter believed.

But there were still many good reasons for dairy farmers in the UK to be optimistic, he insisted.

Producers would have to be prepared for more volatile pricing but the new trend would be upward. Farmers would also see increased competition among processors for their milk.

Some would offer the option of new milk pricing formulas, such as the one Dairy Crest will introduce on 1 April and these are not unwelcome, said Mr Potter.

“They may be a means of circumventing the new voluntary code but if they are independently verified and transparent I don’t have a problem with them.”

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