Downey said farmers need to consider planning and efficiency at farm level as they expand.

“Based on the expansion in other parts of the world, Irish producers need to be particularly careful on the level of borrowing and additional business cost they take on as they expand," he said.

“IFA is acutely conscious of the many issues outside the farm gate that must be addressed to help the sector meet its potential. Key among them is an increase in farm profitability, which must be central to the 2025 Agri-Strategy."

He added that environmental measures must not inhibit the growth of dairy farms.

Chairman of IFA's Dairy Committee Sean O'Leary said dairy farmers are poised to capitalise on the end of the milk quota regime due to low debt levels on Irish farms.

“According to research carried out by Ipsos MRBI for AIB Bank, and presented at our current series of dairy seminars, the average level of indebtedness of Irish dairy farms is €62,000. This compares with over €800,000 on the average Dutch farm, and €1.4m on the average Danish farm,” he said.

“The same study suggests that 63% of Irish dairy farmers are planning to grow their milk output by 2020, but of these only 8% will increase production by more than a third. Expanding farmers intend to increase yields per cow (44%), improve grass management (14%) with no more than 45% planning to increase cow numbers," added O'Leary.

"Most farmers who plan to expand will proceed with moderate, cautious and sustainable growth."

Read more news and analysis on the end of milk quotas here