The Irish dairy industry is running a risk because it is making too much butter and not enough cheese, the head of the Irish Dairy Board, Noel Coakley, told the Teagasc National Dairy Conference in Limerick yesterday.
Mr Coakley, who took over the running of Bord Bainne earlier this year, told the 700 farmers who attended the conference that the product mix of the Irish dairy industry was out of kilter with the rest of Europe.
"We are running a risk which one needs to alleviate, perhaps by reducing the output of butter while increasing cheese and whole-milk powder," he said.
He said that 63 per cent of butterfat (fat content in milk) in Ireland went into butter and in Europe this figure was 31 per cent butter and 34 per cent cheese. In Ireland, only 17 per cent of butterfat was turned into cheese.
He said it would probably require an investment of about €70 million to make the changes necessary and target the continental market, which is growing year on year.
He said most Irish cheese was currently going into the British market and there were big risks involved in going into the continental cheese market. One did not know what the response of competitors to Ireland moving into this market would be.
He said Irish dairy farmers were competitive and had an advantage over other farmers because of the grass-based system of production here, but markets were difficult and prices were down, although there had been a rise in skim-milk powder prices in the past few months.
Matt Ryan, the Teagasc dairy programme manager, said it was likely that in five to 10 years' time that most dairy farmers in Ireland would be milking 80 to 150 cows and, by necessity, this would be a one-person operation, with family and casual labour.
Dr Pat Dillon, head of dairy production research at Teagasc's Moorepark centre in Co Cork, argued that the early abolition of the EU milk quota scheme, which limits the amount of milk Irish farmers are allowed to produce, may be beneficial to the Irish dairy industry.
He said it would allow dairy farmers who are eager to expand to do so and possibly facilitate the growth in Irish milk production. He said policies facilitating the long-term leasing of land and greater access for young people would be important in allowing the dairy industry to compete successfully internationally.
There was an upbeat message to the farmers from Dr John Penno, the chief executive of Synlait Ltd, a major New Zealand dairy company. He said there was a bright future in dairy farming in Ireland for those who wanted it.
Ireland, located on the doorstep of the European market, would benefit from the deregulation of the European milk quota policy and this would offer a huge opportunity for Irish dairy farmers.
Warning of a changing environment, he said, "farmers need to think less about what is happening outside the farm gate and exercise more control over our farming businesses. Production of milk will not decrease, it will simply be produced by fewer, larger, highly successful businesses."