ICOS recently met with Commission officials in the dairy unit to look at their projections for the European milk market for the next few years.

While officials acknowledged recent difficulties and probable future price volatility concerns, they still referenced the dairy industry as in their words, the ‘White Gold’ of EU Agri sector over the next decade. This is mostly due to their belief in the continued growth of world demand allied with EU ‘perfect conditions’ for milk production.

While the headline statements are very positive, the report does cite dangers around the concentration of EU production in northern regions (including Ireland), competition from competing global dairy trading blocks, low consumption growth domestically in Europe and also internal environmental constraints.

The report says that milk growth is not expected to surge post quota, and goes onto say that over the next 10 years they expect EU output to increase by only 12 million tonnes from current deliveries of 148 million tonnes , which we find remarkably conservative. The report forecasts growth in Irish milk production over the ten year period of only 1 million tonnes, while our Food Harvest 2020 projections are for almost three times that growth over the next 5 years.

Figures outlining the reduction in Irish dairy heifer numbers in recent times are particularly puzzling for ICOS, as well as growth rates for Irish dairy and other export orientated dairy nations.

We understand that reports of this scale often have different dynamics at play and big variations can occur depending on seasonally, when figures come in, data quality etc., but we would have some questions on the robustness of some of the projections.

Read the full Commission short term outlook here:

http://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/pdf/2015-03_en.pdf