The loss of the derogation would blow a €45bn hole in the Irish economy between 2026 and 2035, according a new impact assessment by EY commissioned by Dairy Industry Ireland (DII).

DII, which represents the interests of the country’s processors, said the loss of the derogation would have “catastrophic consequences” for the farming sector and wider economy.

The impact assessment reveals that should the derogation not be renewed by the European Commission then there would be a €555m annual cut to milk cheques.

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There would also be a 12% reduction in the number of dairy farming families and a 14.5% decline in the national dairy herd, the report found.

Ireland would see a 15% drop in dairy exports, including 24% in butter and 21% in milk powders, should the derogation be lost, it stated.

Idle processing

Furthermore, it found that 29% of the country’s dairy processors would be idle during the peak months of the year.

Conor Mulvihill, director of Dairy Industry Ireland, said that the loss of the nitrates derogation would devastate rural Ireland, hollow out communities, destroy jobs and push up food prices for ordinary consumers.

“Irish farmers and industry have done everything asked of them, meeting every environmental challenge, investing over €2bn in processing infrastructure and in farm climate initiatives,” he said.

“They have embraced catchment-based water quality strategies, real-time nitrate monitoring, and sustainability-linked payments – a world-first for a national industry.

“Yet despite this, farmers now face shifting goalposts and new rules that threaten their future. Ireland is already starting from an exceptional environmental base, with some of the lowest nitrate levels in EU waters – so why jeopardise a model that is working?” he added.

Ireland Inc

Mulvihill said that there is a clear and present danger to the economics of Ireland Inc, at a time where Government Minister after Minister, as well as EU leadership have said we should be backing and doubling down on support for successful native industries at a time of geopolitical flux.

“Irish dairy is exactly such an industry, and we have one of the lowest environmental dairy footprints on the planet for producing some of the world’s most nutritious food.”