Ireland dairy and beef supplies forge into EU markets

Ireland's food exports reached a record level of €7.5bn last year, with dairy exports up eight per cent and beef by six per cent. Dairy products and ingredients account for 26.5 per cent of exports, the largest segment. Beef exports accounted for 18.3 per cent of the total and beverages 13.5 per cent. Exports of cereals and cerealpreparations, which account for 3.1 per cent of total exports, increased by about 15 per cent in 2005, with potato,fruit and vegetables increasing by 11.6 per cent during the year.

Dairy prices are expected to remain stable, after Ireland exporters experienced a six per cent decline in the value of the milk sector to €1,332.4m. Deliveries are estimated to be down about four per cent compared to 2004, Ireland's department of agriculture and food stated in its annual outlook report.

World prices for dairy products are expected to remain relatively stable though somewhat lower than in 2005, the department said, citing forecasts. On internal EU markets, producer prices are expected to fall as the new intervention prices take effect.

" Oil prices and the value of the US dollar to euro exchange rates will be important factors in determining the effectiveness of Irish and EU traders in competing on the global market,"​ the department stated.

Ireland exported €2bn in dairy products exported during the year. Market conditions for dairy products continued to improve in 2005 even though there was a 2.4 per cent increase in world cow's milk production as estimated by the Food and Agriculture Organisation.

A medium-term outlook for EU agricultural markets made by the European Commission in February 2006 showing reasonably favourable trends for the period to 2012, the department reported.

A decline in the production of butter and skimmed milk products x is expected over the medium-term as more milk is used for the production of cheese and other high value-added dairy products. This combined with increased consumption will help in offsetting EU price pressures due to the effects of increased world output on the market and decreases in support prices, the department said.

The Department of Agriculture and Food estimates that butter production increased by 2.9 per cent and cheese by 8.5 per cent in 2005. The production of skimmed milk powder fell by 16.5 per cent during the year.

Beef exports are expected to remain competitive on the high-end of the EU market with decreasing production throughout the continent offering further opportunities for expansion, the department stated.

The forecast beef consumption in the EU is expected to be largely unchanged in 2006, with demand again exceeding supply. The increase in manufacturing beef available from the UK is expected to offset some of the demand for third country imports, but there is still likely to be an overall 350,000 tonne deficit in the EU's 25-member countries.

Beef production is forecast at 7.326m tonnes and consumption at 7.672m tonnes in 2006, Ireland's department of agriculture and food stated in its annual outlook report.

In 2005, the agri-food sector accounted for 8.6 per cent of Ireland's gross domestic product (GDP) and 8.5 per cent of its employment and exports.

Beef exports reached 487,000 tonnes during the year. During 2005 Ireland's industry consolidated is position in the higher-value end of the EU market.

The UK remains its largest single destination,receiving exports of 260,000 tonnes or almost 50 per cent of Irishbeef production. France, Italy and the Netherlands are the country's biggest customers, with continental EU accounting for about 40 per cent of the country's beef exports.

The Commission also forecasts that in the EU beef market, consumption will remain higher than domestic production over the period to 2012, with increasing imports from non-EU countries expected to fill the demand.

"The medium-term scenario exhibits a declining trend in beef values, in line with the assumed continuation of the ongoing restructuring,"​ the department stated.

With increasing supplies of UK beef coming on to the market this year, Irish producers and processors may have to adjust their target markets, the department noted.

Exports of live animals to third countries are expected to cease in 2006 due to the abolition of export refunds on live animals other than for breeding. This will primarily affect the Lebanon, which received 10,000 head of cattle from Ireland during 2005. The end of the subsidy means such markets will become uneconomic.

The live trade will be centralised in closer EU markets, which due to its declining livestock production has a demand for such animals.

The ending of the over thirty months scheme in the UK on 22 January 2006 sends an overall positive signal and restores the EU beef market to a normality not seen since 1996. British beef was banned from the rest of the EU 10 years ago. The ban was lifted in principle in early March 2006, 10 years to the month after the initial link between BSE and vCJD was first established.

The EU Commission proposes lifts the embargo on UK exports of live cattle, beef and beef products from animals born after 1 August 1996 and meat produced after 15 June 2005. The decision reflects the fact that the level of BSE cases in the UK have declined to less than 200 per million head and BSE controls are being fully and properly applied.

In 2005, Ireland introduced a single payment scheme for its farming sector as part of the EU's policy to reduce subsidies to the sector under its Common Agricultural Policy (CAP). In Ireland about €1.2bnn was paid to about 125,000 farmers under the new decoupled support scheme. This allows farmers the freedom to produce based on consumer demands rather than on the amount of subsidies they hope to receive.

Ireland's agriculture sector is a major beneficiary of EU farm subsidies. At one point Ireland had about 30 per cent of all butter in EU intervention storage, although it accounted for only five per cent of EU production.</>