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14 July 2015Cork Institute of Technology, Cork
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14 July 2015Cork Institute of Technology, Cork
How Future Dairy Expansion Will Benefit Ireland
Cormac Healy Director, Irish Dairy Industries Association, Ibec
Cork Food & Agritech Forum
How Future Dairy Expansion Will Benefit Ireland
CIT, 14 July, 2015
IDIA – who we areThe Irish Dairy Industries Association (IDIA) represents
primary and secondary dairy manufacturers including the Infant Nutrition sector in Ireland
IDIA Membership
ContentHow Future Dairy Expansion will Benefit Ireland
• Our dairy expansion plans
• The benefit to Ireland
• 2020 and beyond
• Importance of export – Importance of Asian markets
• Expanding export sales to Asia – challenges
• Summary
Irish Dairy Industry Expansion
• FH2020 / End of EU Milk quotas
• Target: 50% growth in milk output
• Exports to grow to €5.5 billion
• Significant planning & investment (production, processing & markets)
• €2 billion in on-farm Investment
• €700+ million investment in processing capacity and value-add
Benefits to Ireland
• Investment spend – existing and future
• Increased export earnings – additional €2 billion
• Employment creation – 15,000 additional jobs
• Regional economic impact
• Low import content – strong multiplier effect
Hard Cash – measuring the benefit• An additional 2.75 bn. litres @ 32cpl equates to approx.
€900 million at farm-gate
• Export earnings growth of €2.0 bn. conservatively
• Key to value/contribution will be product mix for new milk
• Important factor in terms of dairy contribution is Irish economic spend
Jobs Dividend
• Teagasc analysis of impact of post-quota dairy expansion to Irish economy points to 15,000 new jobs
• On-farm & inputs/services
• Transport
• Processing
• Marketing
• Research & innovation
Additional benefits• Building a competitive dairy sector for the future
• Infrastructure & expertise
• Driving innovation
• Ireland’s food reputation
• Building multi-nationals’ interest / FDI
Increased meat processing activity (+250,000 head from dairy expansion) – equivalent to five meat plants
2020 and beyond…….
Food Wise 2025 predicts that over the next decade Ireland can;
• increase the value of agri-food exports by 85% to €19 billion,
• increase value added to the sector by 70% to €13 billion,
• increase the value of primary production by 65% to €10 billion.
Dairy sector will be major driver
Export focus• 90% export dependent (moving to 95%)
• Exports to 138 countries in 2014
• Additional volumes will be export focussed
• Increasingly looking to international markets
• China & S.E. Asia particularly important
• USA, Gulf and Africa
Irish Dairy Exports
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 e0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
3,500,000,000
4,000,000,000
Source: CSO
*includes dairy enriched powders
Dairy Exports are more internationally oriented…..
Distribution by region 2014 (%)
United Kingdom Other EU Int. Markets0
10
20
30
40 40
31 2932
28
40Food & Drink Dairy
Irish dairy products were exported 138 countries in 2014
Irish Dairy Exports to China growing rapidly
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 e
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000
OtherWheyButter & cheeseMilk PowdersIMF
€m
Source: CSO
Source: OECD & FAO Secretariats
Emerging markets driving global demand
Beef Pigmeat Poultry Sheepmeat Butter Cheese WMP SMP Fish0
10
20
30
40
50World Developing OECD
Global demand for livestock & fish products (% Ch 2023 vs. 2011-2013 average)
China33%
SE Asia30%
Europe
4.1%
Global Consumption of Dairy Products to 2023Total consumption to grow by 27%
Total Increase 2013-2023
Source: OECD FAO
Dairy Exports to China & S.E. Asia• Irish dairy exports amounted to €604 million in 2014
• Almost €400 million to China
• Strong growth reflected in sales other S.E. Asia markets
• Malaysia, Vietnam, Thailand…..
Two key Challenges• Reputation
• Food safety & Quality
• Building recognition of Ireland
• Innovation
• Competitiveness – Trade Negotiations
• Grass-based milk production – comparative advantage
• Modern well-invested processing
• Losing ground on trade agreements
Brand Ireland
Trade Negotiations• Two aspects to consider:
a) Direct benefit of reduced tariffs & removal of NTBs
b) Competitors moving ahead – NZ, Australia, TPP
• EU Trade negotiations:
Country Status
China Only an investment agreement
Vietnam Launched 2012. Nearing conclusion.
Malaysia Launched Oct-2010. Last round Apr-2012
Thailand Launched March 2013. 4 rounds.
Singapore Completed
• Dairy expansion making significant economic contribution
• Regional spread and low import content are major factors
• Future product mix will have bearing on scale of increase value
• Export focus
• China & S.E. Asia are major demand growth regions and a strategic focus for Irish dairy sector
• Reputation critical
• Trade negotiations – we can’t fall behind
Summary