Ireland has a high-quality, vibrant, well-invested growing dairy industry. It has a number of globally renowned reputable players, in particular Kerry, Glanbia and Ornua, who compare with the best in class on the world stage. Brands like Kerrygold in the chilled dairy sector and Baileys from Diageo have achieved worldwide recognition. Kerrygold gained the accolade of being Ireland’s first €1bn food brand in 2019, while Baileys presence in the cream liqueur market reached 7.4m nine-litre cases in 2019, a 20% increase on the 6.2m cases sold in 2015.

The Irish dairy industry has received huge Government focus and support on its growth journey, particularly since the removal of quotas in 2015.

Kerrygold is Ireland's first €1bn food brand

Help was provided both through Enterprise Ireland with capital resource funding and Bord Bia through consumer insights and international market support. Bord Bia’s capability and capacity was expanded, with Government support increasing from €28m in 2010 to €44m in 2018. And Enterprise Ireland invested almost €150m in the expansion and upgrade of Irish dairy processing capability over the past decade. This means that Irish dairy is a joined-up industry, which enables it to achieve its potential in global markets with its value doubling from €2.2bn in 2010 to €4.4bn in 2019.

Profitable

Dairying consistently achieves the highest level of farm profitability in the Teagasc National Farm Survey, increasing from just over €44,000 in 2010 to €66,500 in 2019. However, the profitability of dairying for farmers, on a three- or five-year rolling average, is still not profitable enough to provide long-term sustainability for their businesses.

Our product quality, coupled with our outdoor grass-based system, makes us a global leader. My involvement with the industry over the past decade taught me that we grew more in volume than in value. We must address this in the decade ahead and nowhere is this more apparent than in the infant formula sector. Here, most of the margin is taken by non-Irish branded players and it is not making its way back to the farmer or primary processor.

Grow value not volume

The dairy sector needs to focus the next decade on growth in value rather than volume and not repeat the mistake of the last decade. Looking to the future, I believe there are three key areas that will define our prospects.

1 Sustainability

The major issue is sustainability and sustaining or enhancing our environment. Our farmers are the custodians of the environment and they need to be incentivised to farm in a more environmentally friendly way. They need new simple metrics to help them measure their environmental impact, both good and bad.

2 Health and nutrition

There is additional scope to become a bigger and more important part of the Irish economy through health and nutrition. The “free-from” labelling term is now global and it is affecting dairy. This has the potential to damage dairy volumes and it must respond. But rather than competing head to head, we should focus on what dairy does well and how it forms part of a healthy, nutritional, and balanced diet. It needs to do this as well as becoming more sustainable.

3 Agri-technology

We still farm in very traditional ways and have not yet embraced all the technology being used in other areas of the world. Efficiency must be driven, with farmers becoming adaptors and Government becoming sponsors. This requires significant annual spend on carbon and methane reduction, smarter ways to farm, better ways to grow crops and produce milk, better ways to increase our yields and improve animal welfare.

Technology and artificial intelligence will increasingly become a feature of the industry as labour becomes more expensive and less available. We will have to embrace new technologies in our farming and new ways of creating efficiency along the food chain.

*Kevin Lane was CEO of Ornua, previously the Irish Dairy Board, between 2010 and 2018 during which time revenues more than doubled and Kerrygold became Ireland’s first €1bn food brand. Since stepping down from Ornua, he has taken on the role of non-executive director with the Wheatsheaf Group, a UK agricultural investment firm.

Webinar

The Irish Farmers Journal is hosting a webinar titled: Sustainability and Agri-food – the next decade on Tuesday 3 November at 3pm. Featuring Tom Arnold, chair of the Irish 2030 Agri-Food Strategy Committee along with Tara McCarthy of Bord Bia, Dr Mark Lyons of Alltech and Juan Aguiriano of Kerry Group.

Submit your questions to our panel by emailing webinar@farmersjournal.ie or send to 086-836 6465.

You can view the webinar FREE at www.ifj.ie/2020vision

2020 Vision is supported by Bord Bia, Alltech and Kerry.