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Ireland looks forward to dairy boom once EU quotas go

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Ireland looks forward to dairy boom once EU quotas go


(DUBLIN) - Four weeks from the lifting of European Union milk quotas, Ireland is looking forward to a radical shake-up of its farming sector that would boost dairy output by 50 percent over the next five years.

Exporters are aiming to expand sales of Irish milk and cheese in a boom that would make Ireland the fastest-growing dairy producer in the world.

"Good riddance is what I'll say about the quotas," said Mike Magan, a dairy farmer in County Longford in central Ireland.

"They've held back the natural ability of farmers to grow for three decades, so I'm glad they're going."

The quotas, which end on March 31, were introduced in 1984 to prevent over-production, and Irish agriculture minister Simon Coveney told AFP their abolition was "the most fundamental change to Irish agriculture in a generation".

"For the first time, Ireland will be able to fulfil its potential in terms of producing milk at a volume that makes sense for us," he said.

According to research by Teagasc, a state-backed research body, 60 percent of dairy farmers plan to expand production in the next two years.

Over 80 percent of Irish dairy product is currently exported, and the additional output is likely to be targeted at developing markets outside the EU.

Ireland currently produces 5.4 billion litres of milk, so even if it hits its targets for 2020 it will remain a relatively small global player compared with India, China or the United States.

In Europe, France and Germany also have annual production in the tens of billions of litres.

"In a global sense, we're a small player by volume, but we can be a very significant player in terms of supplying premium high-end markets," Coveney said.

"We will be the fastest-growing dairy producer in the world probably in the next decade in terms of a percentage increase in volume year-on-year," he added.

- Butter, cheese and babies -

Processors in Ireland, which buy the vast majority of milk from farmers, are also gearing up for the post-quota environment.

Glanbia Ingredients Ireland (GIL), which processes some 30 percent of all Irish milk, has invested over 235 million euros ($267 million).

A new plant, largely for dry milk powder, will be opened this week with the company expecting it to support 1,600 jobs, a welcome boost in a country where unemployment remains over 10 percent.

The company exports to 50 countries largely in the form of butter, cheese, whey protein and infant formula.

Jim Bergin, chief executive of GIL, said quotas have hindered the potential for natural organic growth.

"This brings a huge opportunity from a growth perspective. Asia will be a growing market for us but also the Middle East," he told AFP.

- 'Dairy will dominate' -

Ireland's current coalition government, which came to power at the height of the financial crisis in 2011, has placed a strong emphasis on the possibilities of the agriculture sector in reviving the economy.

Prime Minister Enda Kenny in February announced that Ireland would become the first EU country to resume beef exports to China, restricted since the BSE mad cow disease scandal of the late 1990s.

The announcement came weeks after a similar move from the United States to lift its ban on Irish beef.

But state food agency, Bord Bia, is most excited about the end of the quotas in dairy which brought in more than 3.0 billion euros last year in exports.

"Of our total food and drinks exports, dairy will dominate and account for close to 50 percent by the end of this decade," David Owens, dairy sector manager with Bord Bia told AFP.

- Price volatility -

While the whole sector is largely positive about the changes, there are concerns about the impact of milk price volatility at the farm level.

"Milk price volatility is going to be the biggest challenge and farmers are worried about being able to ride out the difficult years," Sean O'Leary, chairman of the Irish Farmers' Association Dairy Committee.

"Farmers have to look at their own situation. Bigger doesn't always mean better, especially with predicted milk prices being lower this year."

Many dairy farmers are also facing EU fines for producing more milk than their quotas allow as they crank-up production ahead of March 31.

O'Leary, a dairy farmer in County Cork, said he aimed to increase his herd by eight percent to 130 cows in the next 12 months.

"There'll be a bit of pain to be taken in year one but hopefully it'll all be worth it," he said.

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