Irish dairy farmers responded magnificently to the lifting of dairy quotas 10 years ago. Prior to 1984, the annual production of milk was growing at about 5%, which was in line with New Zealand. Overnight the potential here in Ireland was stymied following barely a decade of EU membership.

For 31 years, the potential of Ireland to supply world markets with competitively-produced dairy products was halted. In the absence of quotas, I’ve no doubt that we could have kept pace with production in New Zealand.

Farmers didn’t lie down though. They responded by reducing production costs per cow, aided by improvements in genetics and grassland management. These developments aided the resurgence in dairy production as soon as the quotas were removed.

They also shifted massively to suckler production in an effort to improve overall farm incomes. But the costs of the quota were severe.

Quotas hampered our ability to optimise our efficiency, especially in respect of stocking rates and grass utilisation. Although we registered progress, we were operating way below our potential.

Following the abolition of quotas, Ireland’s dairy farmers achieved a substantial resurgence in milk production. In 2014, milk intake at processors was over 5.6 million litres. At the end of last year, it had increased to over 8.4 million litres – a growth of almost 50%.

In just 10 years therefore we had made up at least one third of the ground that we had lost to our competitors during the quota years.

Milk fat increased from 3.98% in 2014 to 4.36% in 2024 and over the same period, protein grew from 3.43% to 3.55%. So in terms of milk solids, the percentage growth of milk intake was almost 60%.

This growth was achieved through a combination of increases in cow numbers and milk solids per cow of broadly similar magnitudes.

Competitiveness

This achievement should be celebrated as underlining Ireland’s international competitiveness and the remarkable capacity of Irish farmers to respond to challenges and opportunities.

Unfortunately in some quarters, this performance is decried. I’ve no doubt that the same ability in responding to policy developments will become evident again in respect of climate change and water quality over the next decade.

Commercial farmers always look to how challenges can be best overcome while at the same time ensuring that their livelihoods are secured.

But the future is always uncertain. The growth in milk production has slowed down in recent years. The growth that followed the abolition of quotas was never going to persist. For a number of years prior to the abolition, farmers were preparing for the expansion that was expected. So when quotas were abolished, there was a natural pent-up capacity ready to be unleashed.

Those farms that had the capacity to expand did so very quickly.

Demographics also influenced the response. Where the management of farms was being taken over by younger farmers, there was a greater hunger for growth. Most of the growth occurred on existing dairy farms.

Farmers quickly increased their herd size to accommodate the labour that was available. In contrast to the organic growth that was realised, a much smaller number of farmers converted from tillage or drystock production. It was inevitable that the exceptional level of growth that was achieved in the years immediately following the abolition of the quota would soon level out.

The average herd size now stands at about 100 cows. This is about optimal at present in respect of a one-person operation and it also gets farms beyond the fixed-cost hump. Increasing cow numbers significantly above this level requires the hiring of full-time support staff. Good farm labour is scarce, needs management and is expensive.

For the future, the key factors are the likely trend in the global demand for dairy products and our ability to continue to supply products onto world markets at competitive prices. There will always be unpredictable short-term shocks.

And in recent times we’ve faced plenty of these, such as, the war in Ukraine and now the likelihood of a trade war.

But the fundamental issue for the ongoing health of our sector is its competitiveness in the face of predictable long-run trends in global demand and the pervasive policy emphasis on sustainability.

Global trends

The trends in future global demand are broadly positive, if somewhat subdued, relative to the last decade. Recent studies from the FAO, OECD and the EU suggest that global imports of dairy products will grow by less than the 1.7% achieved in the last decade.

There will undoubtedly be shifts in demand across countries. Human diets will always be affected by fads like plant-based drinks. New technologies such as “precision fermentation” may be challenging, but if we’ve learned anything from history it is that apocalyptic projections rarely turn out to be true.

The key for us in continuing to have a vibrant dairy industry that our smart young people will want to join, is to remain steadfast in our pursuit of competitiveness based on our grassland system.