Written by Ian McCluggage
A Northern Ireland perspective
Similar to all farmers throughout Europe, Northern Ireland dairy farmers find themselves in a new era in agriculture. This has been fashioned by EU policy seeking both environmental and rural sustainability. Future farm profitability will be dictated by the market place.
Free market economics always seek to maximise returns against the most limiting resource. Therefore milk producers must make decisions on the system and scale of enterprise mix, taking into account what is limiting efficient production on their own farm.
There are two routes to remain competitive, either produce milk cheaper than others or target quality milk for high value markets. For Northern Ireland the first road is not an option due to lack of industry scale. Therefore quality milk must be delivered competitively to the processor who meets customer expectations with profits shared equitably along the supply chain.
By ensuring they are adhering to ethical production systems, farmers allow consumers to enjoy milk or dairy products and the clean and diverse countryside in which it was produced. This policy is essential and can secure an improved and sustainable return from the market place - but there must be trust and true integration within the supply chain.
Following the introduction of milk quotas in 1984 a limit was placed on potential expansion on the majority of dairy farms. However due to a combination of accessibility, profitability and farmer ability the milk quota held on Northern farms has increased by almost 40 per cent over the past 12 years. This, combined to the additional allocation of 1.5 % of milk quota to the UK as part of the Mid Term Review, has ensured a plentiful supply of quota. Current low purchase and lease prices mean that quotas are unlikely to restrict future expansion.