Dairy Sector Profile | Bord Bia

Vision for the Irish Dairy Sector

To be the world's most trusted exporter of sustainably driven and technically advanced high-quality dairy products to customers worldwide.

Sector Summary

Ireland’s dairy industry is built on the tradition of cattle grazing outdoors on grassland pasture for up to nine months of the year on family-owned farms, often passed down from generation to generation. Indeed, it has been found that Irish dairy herds enjoy on average 240 days per year out on pasture, with 95% of their diet consisting of grass. This outdoor grazing system enables Irish dairy to be one of the most environmentally efficient in the world with a carbon footprint of 0.97kg CO2e per kg FPCM*.

These 17,000 farms have an average herd size of 91 cows and an average size of 55 hectares. Ireland has the longest grass-growing season in the northern hemisphere. This advantage is bestowed on the country by virtue of its island location on the western edge of Europe, with a temperate climate, plentiful rainfall and rich deep soils. Ireland has a population of just over five million people, yet it produces enough dairy to feed multiples of it. Our dairy production is focused on cheese, butter, powders and dairy ingredients.

Sustainable Growth

Irish dairy exports were valued at an estimated €6.3 billion in 2023, representing a value decline of almost 8%.

Milk collections in Ireland declined by near to 2% on 2022 levels to approximately 8.7 billion litres. This is the first year Irish milk supply has declined since production quotas were lifted in 2015. Challenging weather in the early summer months limited grass growth and was followed by heavy rainfall throughout the autumn which led to difficult grazing conditions.

Global milk supply grew by 1% in 2023 with Europe, New Zealand and the US all increasing output, with Argentina the only major exporter showing lower production. The world's largest dairy importer, China, continues to grow its milk pool, registering growth of around 2% albeit slowing versus the higher growth rates of over 8% in both 2021 and 2022.

Trends in the Industry

Irish butter exports decreased by an estimated €175 million in 2023 to reach €1.3 billion, down 12% on 2022 levels. The EU Milk Market Observatory reported a range of €4,380 - €5,740 per tonne for 2023, significantly behind 2022 prices.

German retail butter volumes declined by 5%, while the lower-cost margarine category grew by 4%, indicating some trading down by shoppers. Estimates indicate that UK per capita butter consumption has dropped by 6% in 2023 to below three kg per capita for the first time since 2019.

Cheese exports increased by around €55 million in 2023 to approximately €1.3 billion, a rise of 4% on 2022’s figures. Market values were relatively robust with average weekly European prices of approximately €3,900 per tonne during the year, only 8% behind 2022 prices and well ahead of the five-year average of €3,330 per tonne.

GIRA estimates that UK cheese consumption grew by approximately 2% in 2023 (GIRA, 2023c). Overall, Irish export volumes to the UK grew by over 15% in 2023. North American import demand was challenged with domestic production of cheese in the US estimated to have grown by less than 2% (StoneX, 2023). Volumes to the Middle East and North African markets returned to growth in 2023 with double-digit increases into the key regional markets of Egypt, Libya and Saudi Arabia.

Exports of specialised nutritional powders increased by around €45 million in 2023 to stand at €800 million, a rise of 6% on 2022’s figures.

The increase in exports to North America recorded in 2022 was retained and China’s sourcing from Ireland looks to have returned to 2021 levels after supply chain challenges in 2022.

Casein contributed most to the overall dairy category decline in 2023 with exports valued at an estimated €500 million, a €185 million drop on 2022 levels.

The key driver was a significant devaluation in unit prices compared with prices available in 2022, in part attributable to a focus on moving high price inventory through businesses as quickly as possible.

Whole Milk Powder (WMP) exports grew by 4% in 2023 to reach a value of €220 million. Latin America contributed to some of this increase where better affordability and lower availability from Argentina were key influencing factors.

The EU whey price dropped to €640 per tonne in August 2023. This is close to half the levels seen in 2022 and when coupled with lower volumes (down 12%) meant the value of Irish exports from this category fell by €90 million to an estimated €250 million.

Prospects for 2024

From an Irish dairy output perspective, favourable weather and/or improved milk prices could help boost milk volumes for 2024 compared to 2023.

However, challenges regarding the impact of nitrates changes on stocking rates, accompanied by expensive land rental costs create some uncertainty from a milk production perspective as we head into 2024.

Globally, it is likely that there will be a modest increase in output from the main exporting regions. On the demand side most commentators are predicting modest import growth of 2% reflecting uncertainty around economic growth and affordability. Domestic production in China is predicted to rise again by around 2% in 2024. However, even with increased availability of locally produced dairy products, the market would still need to import almost 17 million tonnes of dairy products according to StoneX.

Demand for imported butter is predicted to increase by up to 5% in the UK. Per capita consumption of butter and cheese in the US is trending positively, with a forecast growth of 6% and 1% respectively.

Affordability impacted consumption negatively in the first half of 2023 as retailers, manufacturers and foodservice operators were all seeking to recoup their higher input costs via consumer price rises. With most of these price increases believed to be worked through the supply chain, lower on-shelf prices should attract consumers back to the dairy category during 2024.

Outside of trading, 2024 looks to be a pivotal year in terms of the sector’s requirements as part of the National Climate Action Plan commitments and the Fifth Nitrates Action Programme.