THE NATIONAL DAIRY COUNCIL | ANNUAL REPORT 2018
Chairman’s Statement
Building a Sustainable Future 2018 was a year of continued momentum and growth for Ireland’s dairy sector and our member co-operatives. Global performance Dairy was the strongest performer within the agrifood sector in terms of export volume growth in 2018, with volumes up 5pc compared to 2017. The value of dairy exports remained stable, exceeding €4 billion for the second year in a row. Butter had an exceptional year in the US and continental Europe and for the first time the value of Irish butter exports exceeded €1 billion for the year, representing a 22pc increase on 2017’s value. More than 50pc of Ireland’s cheese exports – of which 83pc is cheddar – is destined for the UK. However in 2018, 22pc of cheese exports were destined for countries outside of the UK and continental Europe, a significant increase from 17pc in 2010. In 2018 the value of cheese exports to Asia and to North America increased 12pc and 35pc respectively to a total value of €75 million.
2018 Weather conditions Challenging weather conditions during the year saw a slow start to milk output in Ireland in the first quarter of 2018, due to an unseasonably cold spring, followed swiftly by a prolonged summer drought. By the end of the third quarter, milk output was up 1.2%. However, benign climatic conditions enabled milk output to recover strongly to end 4% up on 2017 by year end.
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This recovery helped offset a decline in milk price in 2018. However, net margins declined substantially due to a rise in on-farm costs. The outlook for 2019 will continue to be weather and supply-side driven. Weaker EU milk supply in the first quarter of 2019 and improved export demand will help support commodity prices at the start of the year and, in the absence of any unforeseen market shocks, prices should remain steady to mid-year.
Volatility There is no doubt that today’s political, economic and environmental landscape is demanding, bringing challenges such as market volatility, Brexit, other international trade barriers and unpredictable weather events. As I write this, the challenge of Brexit to the Irish dairy industry is clear and while the future is still uncertain, we must endeavor to prepare ourselves as an industry for every possible scenario. Whatever happens in October, our objective will be to ensure that our UK customers and consumers continue to enjoy the very best of Irish dairy products and that the inevitable negative consequences of Brexit are minimized for all our stakeholders.