Milk quota end: Meeting the 2020 targets

Ireland’s dairy sector needs to expand by 31% between 2014 and 2020 in order to meet the 50% expansion target set in the high profile Food Harvest 2020 report.

The dairy target has attracted national and international headlines since it was set in the Food Harvest 2020 strategy report launched in July 2010 by then minister for agriculture Brendan Smith. The target has put Ireland to the forefront of discussions about the impact of milk quota abolition.

Misconception

One misconception in Ireland and abroad is that Ireland is planning to increase production by 50% over the next five years. That is not the case. In fact, the report used average production in the 2007 to 2009 period – 4.934 billion litres – as the baseline for the 50% growth target. At a record 5.6 billion litres, 2014 milk output was 14% ahead of the base period. We are well on the road to meeting the 50% expansion target.

To meet the stated target of 50% growth by 2020, Irish farmers and the dairy industry now need to achieve 31% growth over the next six seasons (2015-2020).

This requires a compound growth rate of 4.6% per year, although most industry sources expect a strong once-off uplift in 2015, when milk quota restraints are removed. For example, it is expected that lactation length and average per-cow yields will increase.

Milk intake

Ireland’s milk intake was static at around 5 billion litres until the relaxation of production limits during Common Agricultural Policy (CAP) reform. As part of a “soft landing” agreed in the CAP “health check”, there was 2% annual increase in production allowed.

Regardless of the targets set in Food Harvest 2020, dairy expansion is not compulsory for any farmer. Milk price and weather will be the main factors driving expansion – these two factors will ultimately determine whether the target is achieved.