Global Dairy: Ireland - Darker skies despite price wave

GLOBAL DAIRY IRELAND

Words by: Chris McCullough

Irish dairy farmers on both sides of the border are riding the crest of a decent price wave for once but it’s not all rosy down on the farm.

Feed and other input costs have risen too, which takes the shine off the milk price, but there are bigger issues involving the climate ahead that have got Irish dairy farmers worried.

For the first five months of this year milk prices in Northern Ireland have averaged £0.30p (NZ$0.60) per litre, which is 5p per litre higher than the average for the same period in 2020.

Across the border in the Republic of Ireland the latest prices released by the main processors are hovering around 36 euro cents (NZ$0.61) per litre for the standard 3.3% protein and 3.6% butterfat, inclusive of bonuses and VAT.

Feed prices have been relatively high this year, especially in Northern Ireland, which has put pressure on milk margins.

While post-Brexit trade issues are easing as time goes on there are some logistical challenges remaining for Northern Ireland farmers who buy inputs on the United Kingdom mainland.

This is down to the controversial Northern Ireland Protocol, a system devised by the European Union and ‘Through the potential for carbon leakage, the world will be heavy if we cannot begin to differentiate between emissions from cars and emissions from cows.’

UK to prevent checks along the land border between Northern Ireland in the UK and the Republic of Ireland in the EU, post-Brexit.

However, milk trading in the UK has recovered more towards levels witnessed pre-Covid-19 which is good news for Northern Ireland dairy farmers too.

Domestic demand balance between retail and foodservice is expected to gradually shift in the direction of pre-pandemic levels, but retail demand will remain elevated this year.

Dairy outlooks suggest global markets might face some downward pressure, due to growing supplies from key exporters and a potential softening of China’s strong demand.

UK trade has been improving since the initial shock of exiting the EU, but continues to be challenged by rules of origin and logistical issues.

Irish farmers might say the clouds that hang over them for most of the year are dark enough being laden with rain, but darker days lie ahead if current climate regulations get official seals of approval.

In Northern Ireland the government is trying to push through its own versions of how to save the planet, but the devil in the detail will have a huge detrimental effect on agriculture.

In short, there are two Climate Bills trying to get approval in the NI Parliament; a Private Member’s Bill and a less-severe one introduced by NI Agriculture Minister Edwin Poots. Both call for the country to have net zero emissions but the Private Member’s one insists targets are met as early as 2045.

This has got farmers tetchy to say the least, and in response the Ulster Farmers Union, together with other industry stakeholders, commissioned a report into what net zero by 2045 actually meant.

It will not only be the ruination of the agriculture industry, says the report, but will result in loss of 13,000 jobs on farms and cause a reduction of £11 billion in economic output with no guarantees the bill will actually reduce emissions.

The report also predicted an 86% reduction in cattle and sheep numbers is needed to hit the 2045 target which would hit the dairy industry hard and wipe out traditional grass-based family farming systems.

Dairy Council for Northern Ireland chief executive Dr Mike Johnston said: “It would reduce our highly successful dairy sector to a cottage industry creating widespread job losses across farms, processing and ancillary industries, taking us back to levels of milk production last seen in 1946.

“Unless consumers’ eating patterns change, dairy and meat produced to lower standards will be imported from other countries to replace high-quality local produce. It would cause carbon leakage with no benefit to greenhouse gas emissions or global warming, and increase levels of food poverty.”

It’s a similar situation across the border in the Republic although the government there has already passed its Climate Action Bill into law calling for a 50% reduction in carbon emissions by 2030.

Zoe Kavanagh, chief executive of the National Dairy Council in the Republic, said: “We understand that every sector has its role to play, and our industry has already pledged to cut its emissions and to continue to work to reduce its impacts.

“Ireland’s dairy industry is inextricably linked with Ireland’s economy and its society and the cost to our country; and, through the potential for carbon leakage, the world will be heavy if we cannot begin to differentiate between emissions from cars and emissions from cows.”