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Dairy: Food for LifeA S T R A T E G Y T O P R O M O T E I R I S H M I L K
& D A I R Y P R O D U C T S 2 0 0 8 - 2 0 1 2
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Dairy: Food or Lie
A Strategy to Promote Irish Milk& Dairy Products 2008 - 2012
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2 A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012
Acknowledgement 4
Chairmans Foreword 5
Chief Executives Foreword 6
Executive Summary 7
Section 1 The National Dairy Council: From Past to Present 19
Section 2 Overview of the Irish Dairy Industry 24
Section 3 The Changing Market Landscape for Irish Dairy Products 34
Section 4 NDCs Vision, Mission, Values and Strategic Objectives 47
Section 5 NDCs Work Programmes 2008 2012 51
5.1 Advocacy & Communications Programme 53
5.2 School Milk & Dairy Programme 565.3 Marketing & Promotion Programme 59
5.4 Issues Management Programme 62
5.5 Nutrition Programme 65
5.6 Accountability & Corporate Governance Programme 68
Section 6 NDC Investment Programme 71
Section 7 What the Strategy Aims to Deliver 73
Glossary 76
Table o Contents
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A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012 3
Executive Summary
Table 1(a): Performance of Irish Dairy Market (2001-2007) 10
Table 1(b): Projected Growth of Irish Dairy Market (2008-2012) 10
Figure 1: National Dairy Councils Core Values 12
Figure 2: Summary of National Dairy Council Work Programmes 14
Table 2: NDC Planned Investment 2008-2012 17Table 3: Key Performance Indicators for National Dairy Council 2008-2012 18
Table 4: Key Performance Indicators for School Milk & Dairy Programme 2008-2012 18
Main Report
Table 1.1: National Dairy Council Promotions Highlights 21
Figure 1.1: Evolution of Role/Remit of International Comparable Models 23
Figure 2.1: Dairy Food Exports (1998-2007) 26
Table 2.1: The Irish Dairy Sector (1960-2006) 26
Figure 2.2: The Utilisation of Milk in Ireland 27
Figure 2.3: The Distribution of Dairy Farms by Size 2006 27
Figure 2.4: World Dairy Prices (2006 & 2007) 30Table 2.2: Projected Population Growth (2007-2050) 31
Figure 2.5: Geographic Distribution of Dairy Farms 32
Table 3.1(a): Performance of Irish Dairy Market (2001-2007) 35
Table 3.1(b): Projected Growth of Irish Dairy Market (2008-2012) 35
Figure 3.1: Per Capita Consumption of Liquid Milk 2006 36
Figure 3.2: Total Liquid Milk Consumption in Ireland 37
Figure 3.3: Per Capita Consumption of Cheese 2006 38
Table 3.2: Segmentation of Yellow Fat Market in Ireland by Value 39
Figure 3.4: Per Capita Consumption of Butter 2006 39
Figure 3.5: Irish Population and Projections to 2021 40
Figure 3.6: Origin and Proportion of Non-Irish Nationals within Population 2006 Census 41
Figure 3.7: Population Growth Forecasts for Each Age Cohort in Ireland 41Table 3.3: Numbers Participating in the Labour Force in Ireland 42
Table 3.4: Mean Dairy Product Intake in Ireland (Grams Per Day) 42
Figure 3.8: Direct Cost of Treating Type II Diabetes & Obesity in Ireland 43
Table 3.5: The Problem of Overweight and Obesity in Irish Children (5-12 Year Olds) 44
Figure 4.1: National Dairy Councils Core Values 50
Figure 5.1: Summary of National Dairy Council Work Programmes 52
Table 5.1: Overview of School Milk Scheme Performance in Ireland 56
Table 5.2: Summary of Work Programmes and Strategic Objectives 70
Table 6.1: NDC Planned Investment 2008-2012 72
Table 7.1: Key Performance Indicators for National Dairy Council 2008-2012 75
Table 7.2: Key Performance Indicators for School Milk & Dairy Programme 2008-2012 75
List o Tables and Figures
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4 A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012
Back Row: Kevin Kiersey, Joe Collum, Conor Ryan, Sean Griffin, Richard Kennedy
Middle Row: Jackie Cahill, Tom Corcoran, Patrick Kelly
Front Row: Eamonn Bray, Mary Purcell, Henry Corbally ( Vice-Chairman), Dominic Cronin (Chairman), Gerald Quain
Not Pictured: Sean McAuliffe (appointed March 2008)
NDC Board
Acknowledgement
The Board and Chief Executive of the National Dairy Council gratefully acknowledge the support and contribution
made by all those involved in the consultation process and in the development of this strategy.
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Currently the Irish dairy industry is well positioned to
take full advantage of opportunities to secure a share of
growing markets both here and abroad.
Today Ireland produces some 5.23 billion litres of milk
a year, which is channelled into four product streams
of butter, cheese, milk powders (including casein) and
liquid milk. This product mix represents a combination of
consumer products and dairy ingredients. The Irish dairy
sector provides employment for approximately 22,000
farmers with a further 9,000 employees in the processing
sector and an additional 4,500 employees in support
and ancillary services. In the region of 85% of Irish dairy
products, valued at 2.36 billion, are exported annually
representing 27% of all food and drink exports.
Investment by Irish dairy farmers reached 834 million
in 2007 and is estimated at 609 million for 2008,
demonstrating the commitment to securing a strong
future for dairy farming in Ireland amidst the evolving
WTO negotiations and CAP Health Check and their
implications at farm level. Equally, 2007 saw 114million in grant assistance awarded by the Department
of Agriculture, Fisheries & Food towards capital projects
aimed at supporting innovation, increased productivity
and new product development to enhance the future
competitiveness of the Irish dairy processing sector.
The business of the NDC is primarily concentrated on the
domestic market, valued at 1 billion, where it focuses on
strengthening the market position and driving consumer
consumption of Irish dairy products, traditionally centred
around milk, cheese and butter. This Strategic Plan lays out
a new direction for the organisation in promoting a vibrant
future for the basket of Irish dairy products produced andsees the NDC evolving to change alongside consumer,
market, industry and farming developments.
Within the Irish context, the consumer market for milk,
in terms of per capita consumption, is showing signs of
decline with significant competition from major brands
in the soft drinks, bottled water and juice categories.
However, there is now a heightened awareness amongst
consumers with regard to obesity and the need for a
balanced diet.
Concerns regarding artificial ingredients and added sugars
are resulting in a switch back to basic, natural products
with milk and dairy products well-placed to benefit from
this trend and to regain their position as natural, pure and
good-for-life. In that context, the NDC echoes the support
outlined in the Agri Vision 2015 action plan for the School
Milk Scheme and it intends to lead this initiative, bringing
new thinking and renewed energy to this important
programme.
Butter has come under significant pressure over the
years from the wide variety of spreads available but has
managed to retain a strong position and take advantage
of consumers desire for natural products. Irish consumers
also lag behind their European counterparts in terms
of their consumption of cheese. While there has been
significant innovation in this category in recent years, there
is further opportunity to promote the versatility of cheese
as part of a balanced diet.
With growing pressure from competing categories and
international brands, the industry requires a concerted
drive to maintain the position of Irish milk and dairy
products as a central part of the Irish diet. Furthermore,
recognising the demographic changes within Ireland
from continued growth in birth-rates to the ageing of thepopulation, to the increase in importance of non-Irish
nationals, the National Dairy Council faces considerable
challenges and opportunities to keep dairy at the forefront
of consumer minds.
It is an exciting but challenging time for the Irish dairy
sector, but we are confident that the NDC, in rolling-out its
current Strategic Plan, will deliver many real and tangible
benefits to its funders and stakeholders.
I would like to acknowledge the support of those Irish
dairy farmers who continue to fund the NDC through
the levy scheme. While achieving the recent increase in
support by industry, not all processors contribute to the
NDC, which is a matter of some disquiet and concern. Now,
more than ever before, there is a real need for the whole
sector to support the NDC in delivering on this robust and
far-reaching plan.
I would like to conclude by thanking the very significant
input made by the Board Members and staff of the NDC
into the whole strategic planning process and the resultant
plan.
Dominic Cronin
Chairman
Chairmans Foreword
A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012 5
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6 A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012
The key priority in taking up the position at the helm
of the National Dairy Council in September 2007 was
to embark on a strategic review process, which would
see the development of a new five-year plan for the
organisation. The first strategic review of its kind for
the NDC, the process was led by a comprehensive
consultation phase with all key stakeholders in order to
obtain as much input into this review as possible.
This has entailed meetings with most dairy co-ops
throughout the country and the representative
associations for the processing sector. Equally, the
National Ploughing Championships and the National
Dairy Show, provided the opportunity to survey farmers
on their views while both the IFA and ICMSA have
provided valuable input into the process.
Consultations also took place with relevant food
agencies/bodies and authorities in addition to
the media and, of critical importance, the study
of international comparable models afforded the
opportunity to compare the existing business model of
the NDC with other similar organisations internationally.
Finally, the review encompassed an analysis of
the home market, the potential for developing
new opportunities and the assessment of current
perceptions of the NDC at consumer level.
In parallel with the strategic review, the internal
capability and resources of the NDC have been
reviewed with a programme of restructuring now in
place. This main purpose of the programme is to ensure
that the organisation is equipped with the appropriate
skills and expertise to implement the new strategy
and will operate to a high level of efficiency andeffectiveness. Equally, as an organisation dependent on
industry funding, the need for accountability forms an
integral element of the strategy and the restructuring
will ensure that the correct controls and procedures are
in place for this purpose.
The outcome of the review process has demonstrated
the clear rationale to continue to invest in the work of
the National Dairy Council. While Ireland continues to
lead in consumption per capita of milk within the EU,
there is no doubt that we are operating in a mature
market and one where complacency will inevitably lead
to decline.
Equally, the opportunities that exist within the dairy
category as a whole in light of the current health and
wellness trend, offer the potential to strengthen the
performance of the dairy sector. With the looming
obesity crisis, particularly amongst the younger
population, the timing of this strategy is very apt to
proactively promote locally produced, wholesome,
nutritious milk and dairy products.
My vision for the NDC is an organisation that has
respect and credibility within the industry, is capable
and dynamic in how it undertakes its business and
continually strives to innovate and lead the way with
a fresh approach. The NDC must be based on a value-
added model and must demonstrate the value created
directly for its stakeholders and particularly, the Irish
dairy farmer, without whom, the organisation would
cease to exist.
I look forward to taking on the challenge of
implementing this ambitious strategy and particularly
working with both farmers and processors in achieving
the objectives set out. I equally look forward to
developing opportunities for co-operation with
related food bodies and particularly with respective
dairy councils overseas which, through working in
partnership, can only be to the benefit of both the NDC
and the Irish dairy sector.
As a final comment, I am confident that the strategy
developed is robust in terms of its thinking, objectives
and targets and I would like to thank the members
of the Board and staff for their commitment, time
and effort in supporting the strategy review and
development process over the last number of months.
Helen Brophy
Chief Executive
Chie Executives Foreword
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A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012 7
Executive Summary
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8 A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012
Background to the NDC
The National Dairy Council (NDC), formerly known as the National Dairy Publicity Council, was established in 1964
with the key objective of maintaining and supporting growth in consumption of milk and dairy products in Ireland.
Originally founded as a semi-state body, the organisation evolved to become an industry-funded organisation
subsequent to Ireland joining the EEC in 1973. Initially financed through a combination of Exchequer and EU fundingand now largely by the farmer levy, the NDC quickly found its place at the forefront of industry, gaining prominence as
the spokesperson on dairy matters and undertaking many high profile advertising campaigns and promotional events.
The Councils role in the generic promotion of milk and dairy products presided through many changes that took place
both at industry and at market level. In 1978, the organisation was one of the first food agencies in Ireland to employ a
nutritionist in recognition of the need to promote the health and nutritional benefits of dairy products amidst increased
consumer interest in healthy eating.
This ongoing need to inform and educate the Irish public on the goodness and nutritional value of dairy products has
continued to act as the key focal point for the organisation and has been manifested through several high profile TV
advertising campaigns in recent years.
Strategic Review ProcessIn September 2007, the Board of the NDC decided to embark on a strategic review of the organisation and its activities
with the aim of developing a clear roadmap for the future, encompassed in a new five year strategic plan (2008-2012).
Notwithstanding the successes of the past, this decision was taken by the Board to ensure that the organisation would
continue to deliver services of real value and relevance to the Irish dairy sector into the future.
Central to the development of this strategy was the review and consultation process undertaken, which involved
significant engagement with key stakeholder groups involved in the dairy sector including:
Farmersover120farmerscompletedaquestionnaireattheNationalPloughingChampionshipsand
MillstreetNationalDairyShow;
Co-operatives/DairyProcessorstheNDCCEOmetwithseniormanagement/Boardsofdairyprocessors
inadditiontoseniormanagementandBoardoftheIrishDairyBoard;
DairyRepresentativeOrganisationsIFADairyCommittee;ICMSA;NationalMilkAgency;NationalDairies
Association;IrishDairyIndustryAssociation;IFAFreshMilkProducersGroup;
GovernmentDepartments/AgenciesDepartmentofAgriculture,Fisheries&Food,FoodSafetyAuthority,
Safefood;
MediaCEOmeetingswithacross-sectionofmediacorrespondentsinvolvedinthefood/dairysector;
Consumersaseriesofconsumerfocusgroupswereundertakeninadditiontoanationallyrepresentative
surveyonconsumerattitudestowardsmilkanddairyproducts.
In addition, as part of the review process, the study of twelve international comparable models provided the
opportunity to compare the existing business model of the NDC with other similar organisations. Equally, the roles of
collective bodies including the International Dairy Federation (IDF), International Milk Promotion Group (IMP) and the
Executive Summary
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A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012 9
newly established Global Dairy Platform (GDP) served in understanding the benefits of international networking and
collective thinking on dairy-related issues.
On concluding this process, it was very clear that the NDC had reached a watershed in its life and needed to re-
position its services to become a key agency in the dairy support infrastructure. However, while there were several
critical messages emerging from the consultation process, there was also a very strong consensus view expressed in
the need for the organisation more than ever in todays changing environment.
The strong core message was that the NDC had performed an important function in the past but that the
challenging market and consumer trends mean that its future role must undergo fundamental change in order for
the organisation to retain its relevance.
The support of existing stakeholders therefore, who continue to fund the organisation, particularly through this
transition period, is recognised in this respect and serves as a strong endorsement of the potential role the NDC can
play in the future to support the sector.
The Dairy Sector in Context
Irelands long tradition in dairying has led to the well-established dairy industry that exists today, internationally
recognised for its innovation, technological, marketing and brand capability. Providing employment for just over22,000 farmers, 9,000 employees in the processing industry and an additional 4,500 positions in support and
ancillary services, the dairy sector forms the largest component of Irelands food and drink industry exporting 2.36
billion annually and representing 27% of all food and drink exports.
Producing an estimated 5,235 million litres per annum, the sector has evolved from a narrow product portfolio
position dominated by butter to a more diversified range reflecting the technology depth in the sector and the
effective value-added business model adopted. In this context, 2007 saw 114 million awarded by the Department
of Agriculture, Fisheries & Food towards supporting developments in innovation, increased productivity and new
product development to further drive the competitiveness of the sector.
Equally, at farming level, the sector has experienced major changes with rationalisation occurring in recent years
and this is expected to continue. The number of dairy farmers has reduced from 68,000 in 1984 to the current figure
of just over 22,000 and this has resulted in larger farm sizes and increases in the average quota to the current level
of 231,000 litres. Amidst this change, there have been major developments at farm level with almost 1.5 billion
invested between 2007 and 2008.
The future potential of the sector is therefore recognised with the prospect for market expansion and growth
envisaged despite the uncertainty of evolving WTO negotiations and the CAP Health Check reforms. The absence
of public stocks within the EU is a particular feature of this positive outlook for dairy product prices with the
International Dairy Federation (IDF) stating that the current surge in demand is not just current and has been
present over a number of years, but a significant amount of new demand has been met from Intervention stocks
which have now disappeared.
Combined with a number of international factors including projected world population growth, energy prices,
increased fuel demand and demand for renewable energy resources, climatic effects, growing demand for dairy
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10 A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012
products in China and India and the prospect of quota abolition, this new price paradigm emanating from the changed
supply and demand profile is in sharp contrast to both the intent and expectation of the reform of the EU dairy market
support system which began in 2005.
Given the positive international outlook together with strong potential within the home market, the relative
competitive position of the Irish dairy sector augers well for future prosperity.
Irelands Changing Market Landscape or Milk and Dairy Products
The Irish market for milk and dairy products remains significant, valued at 1 billion with high levels of market
penetration achieved. However, this enviable market position continues to be challenged in light of competing
categories, dairy-free alternatives and health-related concerns, particularly in relation to cholesterol and recommended
daily fat intake levels.
While the market is significant in size, on closer analysis, sales have reached a mature stage and for some products, are
largely static or showing signs of decline.
As is illustrated, the market grew by 17% to 957 million over the 2001-2006 period and is projected to grow by 11%
from 2008 up to 2012 to 1.115 billion. Milk forms a major component of sales, representing 44% of total sales at just
over 440 million and remains largely static but showing signs of decline, while doorstep delivery continues to decline
representing just over 7% of total sales today.
Opportunities for growth in butter, cheese and yogurt still remain positive and are largely being driven by innovation
in new flavours, product varieties, portion sizes and pack formats to meet changing consumer demands. Increased
focus on health issues will be a critical factor for the future, particularly for butter and cheese as will the continued
competition from international brands.
A key feature of retail sales is the growing dominance of private label, particularly for milk, with retailers holding anestimated 50% of market share for fresh milk and continuing to win share from competing branded products. This
poses a number of key concerns for industry in relation to the commoditisation of product and the consequent
downward pressure on pricing.
At consumer level, the prospects for the sector are positive with Ireland continuing to enjoy economic growth and
despite a global slowdown, prospects remain good with Irelands economic growth level projected to grow at 2% per
annum up to 2015.
There are a number of key changes in the consumer landscape that pose both challenges and opportunities for milk
and dairy products. Domestic demand should grow on the basis of population projections from the Central Statistics
Office, which forecast an increase of 20% in population up to over 5 million by 2021. However, with Ireland becoming a
country of net immigration, this will be challenging as some of the migrant population are entering from geographies
where milk and dairy consumption is not established within the mainstay dietary habits.
2001(m) 2002(m) 2003(m) 2004(m) 2005(m) 2006(m) 2007(m)
Value o Irish
Dairy Market820 851 868 901 925 957 981
2008(m) 2009(m) 2010(m) 2011(m) 2012(m)
Value o Irish Dairy Market 1,008 1,035 1,062 1,088 1,115
Table 1(a): Perormance o Irish Dairy Market (2001-2007) Source: Mintel/CSO
Table 1(b): Projected Growth o Irish Dairy Market (2008-2012) Source: Mintel/CSO
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A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012 11
The continued strong birth rates demonstrate potential for milk and dairy products as does the growing ageing
population and increased life expectancy. Also, the general increased focus on health and wellbeing and the link
with diet is driving consumers to take a greater interest in healthy eating and a desire for natural foods despite the
growing problems of obesity, particularly amongst the younger generation.
Time pressures, long commuting distances, smaller household sizes and less time spent on food preparation are
leading to over reliance on convenience foods and inadequate nutrient intake. Given the nutritional value of
dairy foods, it will be critical to retain strong consumption levels for the future. Milk and dairy products are well
positioned from a health and nutrition perspective but face strong competition from heavily marketed brands with
subsequent intake of dairy foods below the three portions per day recommended by the Department of Health and
Children.
In addition, consumers are becoming more issue driven considering ethical issues and environmental issues when
making food choices. Terms such as food miles and carbon footprints are now commonly used and can determine
purchasing decisions, which also has important implications for the dairy sector.
Given the anticipated demographic changes and the increased consumer desire for products that are both natural
and healthy, the market outlook for milk and dairy is positive and provides the backdrop for the development of thefuture roadmap for the NDC.
However, the evolving complexities and dynamics pose real challenges for the future in driving the positive
position and consumption of dairy foods. This will require a detailed understanding of the market and effective
communications and marketing strategies to be deployed.
VisionIn this regard, the NDCs vision is:
The realisation of this vision will help to position the NDC as an important contributor to the sustainability and
growth of milk and dairy in Ireland.
The Board and management of the NDC are ever mindful of the fact that as an organisation, it is funded by the
dairy farmers of Ireland. As such, their interests and the long-term sustainability of the sector are at the heart of the
organisations raison dtre.
Mission
Thus, the mission of the NDC is:
Delivering on this mission will result in many benefits to the sector, not least the strengthening of the position of
milk and dairy in the minds of consumers, more informed and streamlined lines of communication to various media
and interest groups as well as back into the sector, resulting in an uplift in the consumption of milk and dairy withinthe home market.
to be the authoritative and trusted voice in advancing
the consumer perception and consumption o Irish milk and
dairy products.
to support Irish dairy armers by driving the positive position
and consumption o milk and dairy products through integrated
marketing and communications programmes, based on inormed
scientic evidence.
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12 A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012
Core Values
The values that the NDC wish to convey and embed in the culture and ways-of-working of the organisation are
encapsulated in the diagram below.
Trusted:
The NDC will seek to build trust with key stakeholder groups through the provision of well-informed and balanced
views and information.
Innovative:
The NDC will strive to be innovative, bringing new ideas and a fresh approach to the work undertaken.
Forward-looking:
The NDC will endeavour to be forward-looking, pre-empting issues and matters of interest and importance to the
funders and the milk and dairy sector.
Authoritative:
The NDC will ensure that the views and opinions of the organisation are rooted in robust scientific research so that it
can speak with authority.
Accessible:
The NDC will at all times engage openly with the many stakeholder groups and be accessible and responsive.
Figure 1: National Dairy Councils Core Values
Innova
tive
Forward
-
Look
ing
Acce
ssib
le
Authoritative
Trusted
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A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012 13
Strategic ObjectivesConsistent with, and underpinning, the Vision and Mission for the organisation, the NDC aims to achieve the
following between 2008 and 2012.
1. Enhance the position and image o milk and dairy products through a proactive and well-inormed
advocacy and communications strategy.
2. Increase the consumption o milk by young people by leading the re-vitalisation o the School Milk
Scheme at primary and secondary levels.
3. Strengthen the position and image o milk and dairy in terms o usage and attitudes amongst all target
consumer segments by means o more inormed market research and delivery o eective marketing
campaigns.
4. Inorm, advise and publicly represent the milk and dairy industry through building a systematic approach
to, and competency in, Issues Management.
5. Be recognised as the national centre o knowledge on dairy nutrition and related matters o importance
to consumers.
6. Restructure and develop the NDC as a competent, efcient and eective organisation operating to a
high standard o integrity and accountability, thereby delivering value to unders and key stakeholders.
Success or otherwise in the attainment of these objectives will be the main basis on which the success of the NDC
will be evaluated.
The achievement of these objectives requires the NDC to engage in a wide range of activities which are organised
into discrete work programmes.
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14 A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012
Outline o Work ProgrammesThere are six key work programmes which correlate to a specific strategic objective:
1. Advocacy & Communications Programme
2. School Milk & Dairy Programme
3. Marketing & Promotion Programme
4. Issues Management Programme
5. Nutrition Programme
6. Accountability & Corporate Governance Programme
The overall aims of these work programmes are summarised in Figure 2.
1. Advocacy & Communications ProgrammeFundamental to the success of the Ir ish dairy sector is the necessity to ensure that milk and dairy products are
positioned positively within the minds of consumers. This requires a concerted effort to combat the unsubstantiated,
inaccurate facts and misinformation that are currently being provided to consumers.
The purpose of the Advocacy & Communications Programme therefore, is to establish the NDC as the trusted and
respected advocate for the Irish dairy sector and to take a proactive approach in communicating the health and
nutritional benefits of milk and dairy products to the consumer.
In order to achieve this, the programme will be based on informed scientific evidence, distilled into user-friendly
arguments, which will form the basis of specific communications campaigns for key target groups. In this context,
it is recognised that the key target may not always be the consumer but groups who are important influencers on
consumer purchasing decisions (e.g.. medical profession, media).
Information will also be prepared and relayed specifically for NDC members with the redevelopment of the NDCs web
site acting as a central communications platform in this respect, in facilitating regular updates, newsletters or alerts as
required.
Figure 2: Summary o National Dairy Council Work Programmes
NationalDairyCouncil-KeyWorkProgrammes
Advocacy&
Communications
Act as the trustedadvocate or the
Irish dairy sector &
implement
a proactive
communications
strategy
Lead thedevelopment o a
new consumer -
ocused School
Milk &
Dairy Programme
Strengthen the
position and imageo Irish milk and dairy
products through
eective targeted
marketing campaigns
based on inormed
market insight
Develop andimplement an
Issues Management
Plan or the dairy
sector on consumer
matters
Be recognised
as the national
centre o
knowledge on
dairy nutrition
Develop the NDCas an efcient,
competent
organisation
delivering value to
its members
SchoolMilk&Dairy
Programme
Marketing&Promotion
IssuesManagement
NutritionAccountability&
Governance
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A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012 15
The success o the NDCs role as an advocate will be determined by the level o recognition o the NDC as the rst
point o contact on all matters related to the consumption o dairy products and the subsequent recognition o the
messages communicated by the NDC to the various stakeholder groups.
2. School Milk & Dairy ProgrammeThe School Milk Scheme has operated in Ireland since 1982 with 3.2 million gallons of milk sold at its peak in 1983.
The continued decline in participation in the scheme and the lack of drive to market milk and dairy products more
appealingly to young people is a fundamental concern for the sector with the School Milk Scheme seen as the
vehicle to drive the consumer base for the future.
The main goal of the School Milk & Dairy Programme therefore, is to lead the revitalisation of the School Milk
Scheme and to obtain increased participation by children and teenagers in addition to increasing the number of
schools involved nationally.
The new School Milk & Dairy Programme will seek to address key weaknesses within the existing scheme and willoffer a more attractive and appealing product to children and teenagers, in addition to supporting that offering
with significant marketing support.
The key deliverable or this programme will be to increase consumption o milk and other dairy products through the
new programme in co-operation with NDC member dairies and through delivering a co-ordinated marketing drive
to strengthen the position o milk and dairy products in the 5-18 year age bracket.
3. Marketing & Promotion ProgrammeIn parallel with undertaking specific communications campaigns, the need to maintain the visibility of milk and
dairy products at consumer level and reinforce their relevance to consumer lifestyles is critical to support and drive
consumption.The purpose of the Marketing & Promotion Programme in this respect is to strengthen the image and position of
dairy products in a way that is meaningful and impactful for consumers. Critical to this programme will be to gain
deeper insight into consumer behaviour through establishing a more informed market insight tool to understand
purchasing and usage behaviour in addition to attitudes, drivers and motivations within specific consumer
segments.
This will facilitate the development of targeted marketing and promotion campaigns that will allow the NDC to
inform, educate and strengthen the image and perception of dairy products. Consideration of appropriate tools
and media geared to specific audiences will be necessary in addition to considering the potential for developing a
quality/eco mark for members to allow for product differentiation at the point of purchase.
Through building knowledge and insight o the market, the NDC will deliver eective marketing campaigns to
targeted consumer segments that complement and support NDC members marketing and brand activity.
4. Issues Management ProgrammeWhile the Irish dairy sector has not suffered any significant crisis in consumer confidence to date, the importance
of identifying potential issues and the management of these issues is believed critical to the success of the strategy
and the continued safe passage of the industry.
In this context, the aim of the Issues Management Programme, is to ensure that the interests and concerns of the
consumer are understood and prioritised in order to maintain their trust in the health and nutritional benefits of
milk and dairy products.
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16 A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012
The NDCs programme will be based on partnering and co-operating across several fields of expertise and will centre
on the establishment of a National Issues Management Committee, comprised of industry representatives in addition
to technical, scientific and nutritional experts as required.
By developing a comprehensive Issues Management Plan, the NDC will ensure that the objectives and targets o the
strategy can be achieved while reducing the risk o exposure to unoreseen circumstances or threats that may arise.
5. Nutrition ProgrammeMilk and dairy products contain a wide range of essential nutrients required for growth, development and overall
health and wellbeing throughout ones life cycle. Given such health properties which are scientifically robust and
well-documented, the NDC is concerned at the confusing and sometimes inaccurate beliefs and perceptions held by
consumers.
The aim of the Nutrition Programme therefore, is to provide the basis and foundation for communicating, marketing
and promoting milk and dairy products to key target groups. The NDC will therefore strengthen the existing nutrition
advisory service by widening the existing network and proactively interacting in the areas of clinical nutrition,
community nutrition, business, industry research and education.
This will also require the NDC to adopt a more authoritative approach in working to assist in shaping future policy and
the regulatory framework in which the dairy sector operates.
Forming the oundation or other programmes within the strategy and providing a solid scientic basis or the
development o key messages to combat inaccurate and misinormation is the required deliverable. The key outcome
thereore, is to position the NDC as a key centre o nutrition science and knowledge supporting the role o dairy oods as
an integral part o a balanced diet and lie style.
6. Accountability & Corporate Governance ProgrammeAs an externally funded body, the NDC is accountable to its supporters with the need to ensure that the organisation
operates to a high standard of integrity. Equally critical to the success of the strategy is to ensure that the organisation
is equipped with the appropriate skills and competence in order to drive the implementation of the strategy effectively.
The purpose of the Accountability & Corporate Governance Programme therefore, is to restructure and develop the
NDC as a competent, efficient and effective organisation that has the respect of its stakeholders and funders.
This requires a restructuring programme to be undertaken in order to right-size the organisation, deploy the required
set of competencies to deliver upon the strategy and to review the internal efficiencies of key functions carried out.
In addition, the programme will create the appropriate corporate governance structures, policies and procedures
thereby encompassing the role and responsibilities of the Board, improving the overall integrity of the organisation.
While being dierent rom the development programmes, this programme is viewed as a priority within the strategy inorder to rebuild and maintain condence in the work o the organisation, the success o which will be determined by the
continuation and expansion o the unding required to implement the strategy.
Investment PlanOver the period 20082012, the NDC aims to invest 14 million in strengthening the position and driving the
consumption of milk and dairy products. This is an unprecedented level of investment, which is essentially being made
available by the dairy farmers of Ireland through the levy contribution. It is also important to acknowledge the annual
contribution made by the Irish Dairy Board to the NDC, which is much appreciated.
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A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012 17
However, the investment of 14 million is based on the current levy received from the industry and there is no
doubt that the strategy will be further strengthened by the increased levy contribution of current non-members.
An illustrative breakdown of this investment programme over the key strategic areas of the plan is outlined below.
The School Milk & Dairy Programme together with the Marketing & Promotion Programme represent the two most
significant areas for investment, at just under 68% of the total.
At all times, it is intended to have a reserve of circa 1 million as a contingency fund in the event of an unforeseen
event which requires immediate attention by the NDC.
In making this level of investment, the NDC is mindful of the need to deliver real value to its funders andstakeholders, and in executing the proposed work programmes, delivering value-for-money will be a key priority.
What the Strategy Aims to DeliverAs the NDC is not directly engaged in sales, it is believed particularly important to demonstrate the impact and
value of the work programmes to both funders and stakeholders. CSO/Mintel projections for dairy are positive in
forecasting an 11% increase over the 2008-2012 period to a total market value of 1.15 billion. In this capacity, the
role of the NDC is to ensure that the programmes implemented within the context of the strategy, have a direct
impact on helping to achieve this growth.
Based on the overall need to strengthen the position and image of milk and dairy products, omnibus research
was commissioned by the NDC for the purpose of establishing baseline indicators on current consumer attitudesamongst the adult population (15+ years) in Ireland. The fieldwork was undertaken in April 2008 by TNS/MRBI and
involved a nationally representative sample of 1,017 adults. The results proved very interesting in establishing a
number of key issues at consumer level:
Whileencourageingly,4in5adultsclaimtoconsumemilkeveryday,over25%disagreethattheywill
consumemoreinthefuture.Thisisdespitethefactthat94%believemilkprovideskeynutritional
benefitsfortheirhealthandwellbeing.
Thislikelihoodofconsumptionalsoappearstodeclinewithage(e.g.86%of15-24yearoldsvs.65%of
55+claimstheywillconsumemoremilkinthefuture)underliningtheneedtogenerateincreased
frequencyofconsumption.
Furthermore,4in5adultsareoftheopinionthatteenagersarenotconsumingenoughmilk
demonstratingtheawarenessofthiskeyissuehighlightedintherecentTeenSurvey(IUNA2008).
2008 m
2009 m
2010 m
2011 m
2012 m
Total m
% o total
Advocacy & Communications
Programme0.3 0.5 0.5 0.6 0.6 2.5 18%
School Milk & Dairy Programme 0.45 0.7 0.8 0.8 0.8 3.55 25%
Marketing & Promotion Programme 1 1.2 1.2 1.3 1.3 6 43%
Issues Management Programme 0.2 0.2 0.1 0.1 0.1 0.7 5%
Nutrition Programme 0.25 0.25 0.25 0.25 0.25 1.25 9%
Total Investment 2.2 2.85 2.85 3.05 3.05 14 100%
Table 2: NDC Planned Investment 2008-2012
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18 A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012
31%ofthepopulationdisagreethatmilkisanatural,unprocessedfoodindicatingtheneedtopromote
thenaturalimageofmilkwiththelinkagebacktothefarm/producerrequiredforreassurancein
thisrespect.
Inaddition,with17%ofthepopulationbelievingthatmilkisharmfultotheirhealth,thefocusonthe
nutritionalbenefitsandhealthpropertiesofmilkiscriticalforthefuture. Interestinglyaswell,abouthalfofalladultsbelievesoyamilkisequallyasgoodascowsmilk,highlighting
thegrowthandsuccessofalternativestodairyandpresentingaclearchallengeforthedairysector.
While90%ofadultsbelievecheeseisanessentialsourceofcalcium,thereareclearhealthconcerns
regardingcholesterolandfatbeingdetrimentaltohealth.
Equally,thesameconcernsareexpressedforbutterparticularlyintheolderagegroupswith25%ofthose
55+claimingtoneverusebutterwhile38%ofalladultsclaimtobetryingtocutdownonusingbutter.
Finally,atamoregenerallevel,over25%ofadultsbelievetheydonotconsumetherecommended
threeservingsofdairyperdayfortheirhealthandwellbeing,whichdemonstratesbothachallengeand
opportunitytoincreaseconsumptionfrequency.
The results of the research have been analysed to create a set of performance indicators based on achieving consumer
attitudinal shifts in key areas over the 2008-2012 period. These are illustrated below in Table 3 and show a projected5-10% change over the five-year period, which will be tracked and monitored on an annual basis.
Aside from these indicators, specific targets have also been set for the School Milk & Dairy Programme, which are
shown in Table 4 below.
In the partnership with NDC member dairies, it is targeted to increase the current pupil/student numbers participating
in the School Milk Scheme by 35-50% up to a projected level of 127,500. In achieving this increase in participation, it is
projected that milk consumption can increase from the current 3.7 million litres up to a potential 5.5 million litres.
Central to the implementation of the strategy will be the continued evaluation of investment against these targets in
measuring the overall effectiveness of the work programmes in achieving the strategic objectives set out.
ConsumerAttitudestoMilk&DairyProducts2008
Agree
2012
Agree%Change
Milk plays a vital role as part o a healthy
balanced diet53% 58-63% +5-10%
Milk is a natural unprocessed ood 69% 74-79% +5-10%
Milk is something I will consume more o in the
uture 71% 76-81% +5-10%
Butter can be consumed as part o a healthybalanced diet
44% 49-54% +5-10%
Cheese is benefcial to my health and is notattening/detrimental i consumed in moderation
55% 60-65% +5-10%
It is important or ones health to consume threeportions o dairy per day
71% 76-81% +5-10%
SchoolMilk&DairyProgramme 2008 2012 %Change
Number o pupils/students participating 85,000* 114,750-127,500 +35-50%
Litres o milk consumed (million) 3.7* 4.9-5.5 +35-50%
Table 3: Key Perormance Indicators or National Dairy Council 2008-2012
Table 4: Key Perormance Indicators or School Milk & Dairy Programme 2008-2012
* Most recent figures by Department of Agriculture, Fisheries & Food (2004)
Source: TNS Phonebus Survey 2008
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A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012 19
Section 1
The National Dairy Council: From Past to Present
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1.1 Overview o the NDC to Date
Formerly known as the National Dairy Publicity Council, the National Dairy Council (NDC) was established by
the Minister of Agriculture in 1964, as a semi-state body. The aims of the Council were defined as maintaining and
supporting the growth in the consumption of milk and dairy products.
The Council changed from a semi-state body to an industry-financed organisation in 1973 subsequent to Ireland
joining the EEC. In 1978, the European Commission commenced a financial support programme to assist the
undertaking of national promotional campaigns in an effort to increase dairy consumption and thereby reduce the
problem of disposing of surplus milk production within the EEC.
With the assistance of EU funding, the popularity of milk, butter and cheese has been maintained and developed in
Ireland by a range of successful marketing and promotional programmes over the years. The NDC has been behind
many well-known campaigns from Butter is the Cream to Dem Bones, Dem Bones Need Calcium and has played an
important role in communicating the benefits of dairy produce to the Irish consumer.
The accompanying music to this campaign Pride of the Herd was composed by Shaun Davy, the well-known piper
and subsequently entered the Irish record charts with great effect. It remains today a haunting anthem to the origins
and traditions of an industry emerging from the worlds greenest dairy land.
The Councils role in the generic promotion of milk and dairy products has over time presided through the many
changes that have taken place in the industry in terms of its structure, amalgamation and rationalisation.
Originally funded through both Exchequer and EU funding, the National Dairy Council quickly grew and found its place
at the forefront of activities representing the industry in many different situations. It quickly gained prominence as
the spokesperson on dairy matters, while undertaking various high profile promotions, event sponsorship and media
campaigns
In the early 1960s, it had a very popular 15-minute weekly radio slot on RTE 1 hosted by Gay Byrne which grew steadily
in listenership. The organisation also opened the Cookery Kitchen Information Service at that time.
In 1978, it was one of the first food organisations in Ireland to employ a nutritionist on its staff in support of the growing
attitudes towards healthy eating, which was in its infancy at that stage.
Some of the high profile events included:
TheMilkFunRunstagednationallyinconjunctionwiththedairiesandacharitytoraisefunds
and awareness for the selected cause.
TheMilkSuperstars,whichfeaturedhighproleathletesandwell-knownpersonalitiesfrom
TV/Radiocompetingonaweeklytelevisionprogrammefortheultimatesportingtitle.
TheMilkRswassponsoredfor22yearsinassociationwithFBDInsuranceandtravelledthecountrywhile
commandinghighnetworkproleinadditiontopressandradiocoverage.
TheMilkMusicAwards,anannualawardsceremonytransmittedliveontelevisionfollowinga
polling system used in the weeks leading up to the event.
Other examples of successful promotions are detailed in Table 1.1 opposite.
S E C T I O N 1
The National Dairy Council:
From Past to Present
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1.2 Strategic Review Process and Stakeholder Feedback
In September 2007, the Board decided to embark on a strategic review of the NDC with a view to developing a new
five-year plan for the organisation. Notwithstanding the successes of the past, the review was deemed necessary in
terms of ensuring the future continuation of the organisation in playing an effective and critical role within the dairy
sector.
As part of the research and consultation process undertaken to inform the NDCs new strategy, significant
consultation was undertaken with regard to the key stakeholder groups involved in the milk and dairy sector
including:
Farmersover120farmerscompletedaquestionnaireattheNationalPloughingChampionshipsand
MillstreetNationalDairyShow;
Co-operatives/DairyProcessorstheNDCCEOmetwithseniormanagement/Boardsofdairyprocessors
inadditiontoseniormanagementandBoardoftheIrishDairyBoard;
DairyRepresentativeOrganisationsIFADairyCommittee;ICMSA;NationalMilkAgency;NationalDairies
Association;IrishDairyIndustryAssociation;IFAFreshMilkProducersGroup;
GovernmentDepartments/AgenciesDepartmentofAgriculture,Fisheries&Food,FoodSafetyAuthority,
Safefood;
MediaCEOmeetingswithacross-sectionofmediacorrespondentsinvolvedinthefood/dairysector;
Whats Cooking. An eight-week TV programme transmitted on RTE 1.
Cheese SuperMum. A road show event which had its fnal staged and judged on The Late Late Show
with Gay Byrne.
Radio 2 Food File with Gerry Ryan. A weekly slot to promote dairy-based ood recipes with a high volume
o postal requests.
Pennywise Kitchen with Jimmy Greely on 2FM eatured avourite ood preerences o pop superstars in the
music industry.
The National Cheese Board Awards was endorsed by Bord Filte and promoted nationally the wide
availability and versatility o armhouse and industry cheeses.
The Young Home Economist Competition, Panel o Ches in Ireland, Schools Computer Programmes andMedical Seminars are examples o other areas that the Council targeted in its quest or publicity and sales.
Table 1.1: National Dairy Council Promotions Highlights
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22 A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012
Consumersaseriesofconsumerfocusgroupswereundertakeninadditiontoanationallyrepresentative
surveyonconsumerattitudestowardsmilkanddairyproducts.
A number of critical messages emerged from the whole consultation process, not least the fact that there was
confusion on the role of the NDC and a low level of awareness of its services including its nutrition and health
programmes. However, there were some very clear and coherent views expressed about the role that the NDC could
have and the issues that it should be in a position to address on behalf of the industry. Such views were typically
expressed in comments like
the industry has no clear, uniied voice when it comes to addressing nutritional issues in the media,
there is a need to deend the position o milk and dairy in light o national and international scares,
the nutritional value and naturalness o milk needs to be promoted,
the School Milk Scheme is important because these are the years when young people are weaned o milk by izzy
drinks.
On concluding the research and consultation process, it was clear that the NDC had reached a watershed in its life and
that it needed to re-position itself to become a key agency in the dairy support infrastructure, delivering appreciated
and value-adding services of real relevance to the sector.
The strong core message was that the NDC had performed an important function in the past but the challenging
market and consumer trends mean that its future role must undergo fundamental change in order for the organisation
to retain its relevance.
In this capacity, the support of the stakeholders who continue to fund the NDC, particularly through this transition
period, is recognised and serves as a strong endorsement of the potential role the organisation can play in the future to
support the sector.
1.3 International Models o Milk and Dairy Promotional
Organisations
As part of the research programme informing this Strategic Plan, the roles and activities of those other international
dairy organisations involved in supporting the milk and dairy sectors in their respective countries were reviewed. Many
were represented at the World Dairy Summit in Dublin in September 2007 where initial contact was made and followed
up. It is interesting to see how these organisations have evolved over time in keeping with the needs of and challenges
facing the sector.
By and large, the more progressive of these organisations seek to influence and shape policy and consumerperceptions by being an informed advocate for the sector on nutritional-related issues. In addition, they are more
strategic in how they market and promote milk and dairy, with a healthy reliance on insightful consumer market
research.
Figure 1.1 captures the essence of this evolution to being a more value-enhancing organisation. Typically these
organisations, like the NDC, are small but have deep competencies around: communications and advocacy; policy
influence; input to regulatory matters; promotion and marketing.
Most are funded by way of a levy, collected from either processors or producers or a combination of both. The
composition of their Boards has also evolved to include members with broader and complementary skill sets drawn
from the worlds of academia, research, healthcare and business.
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A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012 23
Another noticeable feature is the extent to which such organisations are networked nationally and internationally,
with links into organisations such as the International Dairy Federation (IDF) and the International Milk Promotion
Group (IMP).
In terms of joined-up-thinking, the newly established, Global Dairy Platform (GDP), set up in 2007, aims to act as an
umbrella body for the dairy industry worldwide. The rationale for the organisation is based on the recognition that
acting collectively in a co-ordinated manner, the dairy industry can accomplish more.
The main aim of GDP is to provide insight, guidance and networking to enable the global dairy industry promote
and advocate milk and dairy products. Still in the infant stages of development, it is worth noting the premise on
which GDP was established the recognised need for co-operation for the collective benefit of the dairy industry
worldwide not too dissimilar from the NDCs role at national level.
1.4 Conclusion
A huge wealth of knowledge, insight and advice was gleaned from undertaking the research and consultation
programme, which has helped to shape the strategic agenda for the NDC. The experiences and initiatives of other
comparable dairy councils internationally have proven to be fertile ground for thought, while the development of
such relationships will be even more important going forward.
While this Strategic Plan has been designed to respond to a number of key issues and challenges facing the milk
and dairy sector, the NDC is committed to staying in-tune with the needs of its funders and stakeholders, and being
agile, so that it continues to be truly relevant and value-enhancing long into the future.
Figure 1.1: Evolution o the Role/Remit o International Comparable Models
Value-AddedModels
Advocacy
Inuencingpolicy& regulatory environment
Sophisticatedcommunicationsprogrammes
Recognisedindustry spokesperson
Targetedmarketingbasedonconsumer/market insight
Crisis/Issuesmanagement
Nutritionalexpertise&knowledge
BasicModels
Genericmass-marketadvertising
Reactivemediacommunications
Development/Disseminationofinormation material
SchoolMilkProgrammes
Promotionalevents Com
petenc
ycom
plexity
/soph
istica
tion
Cons
umer
-Mu
lti-sta
keholde
rengage
ment
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Section 2
Overview o the Irish Dairy Industry
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2.1 Historical Overview
Ireland has a long tradition in dairying and established a reputation for quality butter as far back as the 18th century.
The Cork Butter Exchange played a pivotal role, from 1770 onwards until the First World War, in the trade of Irish
butter throughout the British Empire. The economic war with Britain in the 1930s saw a decline in the butter trade
to the UK, with the consequence that the industry went through a contraction in the two decades which followed,with the number of creameries falling from 274 in 1929 to 193 in 1951.
The 1950s saw a revival in fortunes with trade to Britain resuming. The Irish dairy sector entered a renaissance
period in the 1960s and 1970s. These years were significant firstly for, the establishment of Bord Bainne in 1961 and
secondly, the entry into the EEC in 1973.
The launch of the Kerrygold brand was a watershed for the industry, successfully diversifying Irish butter into
international markets across the UK, Europe, the Middle East and America. EU entry enabled the dairy sector to
expand rapidly and adopt new technologies such as spray drying. These new technologies provided processing
solutions for skim milk, which previously had been returned to farms as a by-product fed to pigs, for close to zero
economic value.
The period saw a phase of rationalisation with the demise of the dairy disposal company-run creameries and the
emergence of co-operatives. Other developments in the 1970s saw the diversification from butter into cheesemanufacture with cheese output rising from 5,000 tons in 1960 to 45,000 tons in 1973. The sector also benefited
from the expansion of milk powder production, with the major infant formula companies locating operations in
Ireland.
The expansion in milk output was quite remarkable, growing from 2,182 million litres in 1960 to 3,364 million litres in
1973 up to 5,800 million litres in 1984. This expansion was underpinned by significant technological advancement
at both farm and processing level. The introduction of automatic milking machines and bulk tank cooling at farm
level facilitated the transition from daily delivery to the creamery, to bulk collection off the farm. At the same time
processors invested in plant capacity with a huge focus on improving milk quality. Major advances were also made
in cheese technology during these years.
Intense competition between the main co-operatives drove the technology advances with some notable
developments such as achieving a shelf-stable cream liqueur and the emergence of dairy spreads, which for the first
time offered the consumer a spreadable dairy product from the fridge.
In addition to the strong technological competency, the sector quickly acquired an expertise in consumer
marketing and brand building. The consumer marketing base was further enhanced with product introductions
such as yogurt, fromage frais and cream cheeses, which were underpinned by fermentation technologies.
1984 saw the introduction of milk quotas, which halted the expansion of milk production in Europe. The
introduction of quotas proved yet another milestone and prompted some Irish co-operatives to diversify
internationally into multinational companies. This required an innovative approach, with the adoption of new
business models. In addition, there followed a new wave of rationalisation with a number of mergers, driven
by a strategy to achieve scale and efficiency in a business environment where increasingly buying power was
concentrated amongst a few.
S E C T I O N 2
Overview o the Irish Dairy Industry
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2.2 The Economic Signicance o the Irish Dairy Sector
Today Ireland boasts a substantial dairy industry which provides employment for approximately 22,000 farmers with afurther 9,000 employees in the processing industry and an additional 4,500 employees in support and ancillary services.
Approximately 85% of Irish dairy products, valued at 2.36 billion, are exported annually representing 27% of all food
and drink exports.
It is notable that the value of dairy exports has risen despite the volume constraint imposed by the milk quota regime.
This continual value growth reflects the innovative capacity within the dairy sector and the progression towards
increasingly adopting value-added processing and products.
2.3 Dairy Sector Composition and Output
Over the years, the Irish dairy sector has evolved from a narrow product portfolio position dominated by butter to a
more diversified range which reflects the technology depth within the sector. The dairy sectors business model has
evolved from that of a cost plus food processing operator to encompass the value-added margin driven by effective
brand management strategies as is demonstrated in Table 2.1.
Million
Year
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Figure 2.1: Dairy Food Exports (1998-2007) Source: CSO
1960 1973 1997 2000 2005 2006
Milk Production
(Litres - million)2,182 3,364 5,073 5,160 5,060 5,235
Cheese (Tons) 5,000 45,000 86,000 96,000 118,000 135,000
No. o
Dairy Farms33,300 26,300 22,386 22,042
Table 2.1: The Irish Dairy Sector (19602006) Source: CSO
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A Strategy to Promote Irish Milk & Dairy Products 2008 - 2012 27
Ireland produces approx. 5,235 million litres per annum and in summary allocates the milk fat and protein into four
product streams of butter, cheese, milk powders (including casein) or liquid milk consumption. This product mix
represents a combination of consumer products and dairy ingredients as shown in Figure 2.2.
2.4 Overview o Dairy Farming
At farm level, there has been a structural shift with significant numbers choosing to exit the industry resulting in
a degree of consolidation. The number of dairy farmers has declined from 68,000 in 1984 to the current figure of
22,042. This decline in numbers has been accompanied by a shift towards larger farm sizes with the average quota
rising from 76,000 litres (16,717 gallons) in 1984 to the current average of 231,000 litres (50,800 gallons).
Figure 2.2: The Utilisation o Milk in Ireland Source: IDF/NMA
LiquidMilk539millionlitres
0%exported
Cheese135,000tons
1,472millionlitres
milkequivalents
81.5%exported
WholeMilkPowder
43,650tons338millionlitres
milkequivalents
100%exported
Butter
143,000tons
2,886millionlitres
milkequivalents
91.6%exported
SkimMilk
2,597millionlitres
Casein48,000tons
1,571millionlitresSkimmilkequivalents
85%exported
SkimMilkPowder
68,000tons
716millionlitres
Skimmilkequivalents
70%exported
MilkProduction5,235millionlitres
Figure 2.3: The Distribution o Dairy Farms by Size 2006 Source: Department o Agriculture, Fisheries & Food
%
Farm size in Litres of milk
30
2520
15
10
5
0
50K50K
-100K
100K-200K
200K-250K
250K-300K
300K-350K
350K-400K
400K-450K
450K
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Introduction
From the establishment of the National Dairy Council in
1964, dairy farming has presided over many changes but
still is recognised and valued as a way of life in modern
Ireland. This case study provides an example of what it
was like to be a dairy farmer in the 1960s and how that
compares today through the eyes of a father and son on
their particular farm.
The Murphys
Profile of a four-generation dairy farm family.
The Farm
53-acre dairy, 40 cow herd, all year milk supply, two calving
seasons
Time Line
1959Dans parents offered farm by Land Commission
1961 Dan and Hannah move on to farm with Dans parents
1964 Dan and Hannah take over the farm
1993 Dan takes early retirement scheme, passes farm
to son, John and family
Background
The Murphy family commenced farming on this farm in the
early 1960s. Beneficiaries of a Land Commission scheme
that broke up a larger estate into family-farming units,
they took 53 acres of what were, Dan Murphy remembers,
unpromising land for dairying - largely scrubland.
My father had his name in with the Land Commission for a
long time, Dan recalls. In 1959, they approached him to seeif he was still interested and he told them he was. In 1961,
we moved in.
Early Days
Dan was already married to Hannah so it was essentially
two couples who were moving into the farm together.
The poor condition of the land was matched by the low
productivity of the times. The farm could only support nine
cows where there are, today, 40 and Dan recalls the milk
went to the now defunct dairy where the contract was
to supply one gallon per day. For this, the Murphys were
paid eight old pence and got additional money for any
surplus they supplied. The milk would be dropped down for
collection at the local village where it was collected by lorry.
Conditions throughout were primitive, Hannah remembers.
For the first two years there was no running water (except,
strangely, at night). It took two years for the situation to
be rectified. However, the 60s were a time of change for
the family, farming and for Ireland. In 1964, the Murphys
took over the farm from Dans parents and, with a young
family of their own, the new technology and advances in
productivity were more than welcome. Tractors eased a lot
of the drudgery of farm work while better housing for the
cows meant the herd could grow. Hannah took an active
part in farm life over the years, driving the tractor, setting
potatoes and doing the farm chores.
Dan believes the most obvious sign of improved conditions
could be seen in the milk itself. It became a much cleaner
and more controlled product. The milk produced is of a
much better quality now, Dan says. The cow is washed
down and the milk goes straight into the bulk tank where
it is cooled immediately. In the old days it was cooled by
water. It wasnt as reliable.
Distribution
Joining the EEC was the landmark event of the early 1970s
and Dan believes it was a good move for dairy farmers,
even if they didnt benefit to the extent that other farming
sectors did. Dan believes that consumers often take milk for
granted and do not necessarily appreciate the value, paying
higher prices for bottled water, for example.
Of course, the distribution of milk also changed radically
over this time. In the 1960s, it was delivered door-to-door
and very little went to supermarkets. Dan remembers that
the first major shift in the 1970s came, in fact, with the
emergence of Baileys Irish Cream Liqueur as an important
new client. Today, the supermarkets dominate milk
distribution in Ireland and Dan believes that they dontwork particularly hard to market or sell the value of milk to
consumers.
Though not sentimental about the old days (Dan regrets, for
example, that a lack of resources delayed the expansion of
the herd size) he notes that modern dairy cows are not as
hardy as the breeds that came before them. Cows now take
a lot more care, he says.
Case Study: The Story o Irish Dairy Farming 1961-2008
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New Generation
Like the rest of the family, Dans son John was closely
involved in the farm from his youngest days. From
the age of 15, he would take over the running of the
business while his parents took a weeks holidays in
Kerry. He helped us to get away and so now were
happy to help them when they need a break, Hanna
says of her son.
Availing of the early retirement scheme, Dan retired
in 1993, passing ownership of the farm to his son,
then aged 34. John had spent some years working
as a carpenter so was sure that farming was what hewanted to do. When I got married, I felt that I was
travelling too much, he says. And I liked farming as a
way of life. You feel you are your own boss. When you
get up in the morning youre at work, not stuck in traffic
for an hour.
New generations bring new ideas and John now
manages the dairy farm with a grassland management
system far more sophisticated than his father would
have operated. Electric fencing keeps the herd grazing
in confined paddocks. Less moving around means
less damage to the land while a rota system means
the cows are always grazing on fresh grass, increasing
productivity and the overall quality of the milk. (Like hisfather, John points to the improved quality of milk as
one of the major gains of decades of advance.)
The herd winters inside for about 100 days of the year,
when there is no grass growth and are fed on a silage-
based diet. To keep milk supply going all year round,
calving takes place in two seasons from September
to October and from late February to April. The cows
are dried off between 40 and 60 days before calving,
moved to different sheds and fed on a suitable diet.
John typically works a twelve-hour day up at 7am in
the morning and finishing late in the evening, when
the second milking of the day is done. Its a full timejob but a lifestyle he likes, one closely governed by the
seasons and one where local community matters a
great deal.
Running a Business
John believes joining the EEC was positive even if, in
real terms, the farmers take home from the retail price
of milk has declined from 50% in the 1970s to about
30% now. The price increases of 2007 were, he says,
long overdue.
The quota system of the 1980s may have had its
imperfections but it also helped to keep smaller
farmers in business as it protected their output.
We would probably have been swamped by larger
producers without it, John reflects. Looking to the
possible abolition of the quotas in 2015, he says: weve
all progressed but anyone that stays in dairying will
have to be careful. Costs have escalated and have to be
managed very carefully.
Both John and Dan agree that farming has become
more and more like other businesses there is a heavy
bureaucracy that has to be managed and many cost
factors outside the farmers control. Over all, however,John is positive about this regulatory regime. Farmers
are a lot more confident about the food they produce
and are far more environmentally aware too.
Community
Looking to the future, it is hard to know if small farmers
can survive, John says. His wife Caroline agrees. Dairy
farmers are an endangered species, she jokes. Farming
has given them a great quality of life and their children
are independent and self-motivated with a great
work ethic. Their two boys Sean (20) and Kenny (16)
combine study, farm work and off-farm employment.Theres never time to be idle on a farm, she says. The
community is one of real people doing real work. The
traditions of time gone by are still very much alive in
this farming community. Farmers help each other out
when there is work to be done hay or silage to be
saved for example and the only reward expected
is the communal dinner in the host familys kitchen.
Caroline recalls what happened when Johns uncle
died a few years ago. Spontaneously, all the neighbours
came together and saved the hay for them.
Of course, times are changing. People have off-farm
jobs now and less time on their hands but John recalls
an incident only a few weeks ago when he had tocheck on a cow having a difficult calving late one night.
No sooner was he up and about, but two neighbours
called down to the sheds to see if they could help.
In spite of the pressures of change, old k inships and
loyalties are important. As Caroline puts it People have
a special bond growing up here, and special memories.
Everyone works together.
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2.5 Outlook or Dairy Sector
A key driver in this structural shift and consolidation at farm level, is the threat of falling or unstable milk prices
anticipated from EU CAP Reform and market support adjustments. The market dynamics, emerging from policy reform,
provides a range of scenarios for decision-making with consideration around the trade-off on the impact of unit price/
value and volume movements.
The buoyant world markets in 2007 took all commentators by surprise with dairy commodity prices doubling within
twelve months on the back of a decline in global stocks and strong demand in developing markets.
Key Factors Aecting World Dairy Prices
The developments led to a reassessment of the global outlook for dairy product prices and supply based on the
following factors:
globalpopulationgrowthindevelopingeconomies
thesustainedsurgeinworldenergyprices
theincreaseddemandforfuelintheever-expandingChineseandIndianeconomies anoverallconcernthatsuppliesoffossilfuelsaredissipatingatafasterratethanpreviously
believed because of the surge in demand
sustainedclimaticeffectsworldwideofglobalwarminglinkedtooveruseofcarbon-basedfuels
significantincreaseinGovernmentfundingsupportsforthedevelopmentofrenewableenergyresources
theabsence/rundownofgrainanddairystocks
theincreaseddemandforgrainasbiofuel
theemergenceoffoodmilesasanissueforconsumers
theimpactofhighergrainpricesonanimalproductioncosts
thesurgeindemandinChineseandIndianeconomiesfordairyproducts
EUproposalstoincreasequotasin2008andbeyond
theresponseatproducerlevelsacrosstheEUtotheprospectofquotaabolition
thedangerofvolati lepricing
US$perton
Butter Chedder SMP
5,800
5,300
4,800
4,300
3,800
3,300
2,800
2,300
1,800
2006 2006 2006 2006 2006 2006 2007 2007 2007 2007 2007 2007
Figure 2.4: World Dairy Prices (2006 & 2007) Source: ZMP
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In addition to the new production cost related issues affecting dairy product prices, the absence of public stocks
particularly in the EU, is also a key feature. According to the International Dairy Federation (IDF), the current surgein demand is not just current and has been present over a number of years, but a significant amount of new
demand had been met from intervention stocks which have now disappeared.
The new price paradigm deriving from the changed supply and demand profile set out above is in sharp contrast
to both the intent and expectation of the reform of the EU dairy market support system which began in 2005.
While supply from Australia is reduced due to problems with drought, supplies from Europe continue to decline in
response to EU policy reform. However, despite the supply contractions in specific geographic regions, overall there
has been a global expansion in milk production. Global supply has risen from 470 billion litres in 1997 to 553 billion
litres in 2007, a growth of 18%. In the short to medium term, it is expected that supply will lag demand as the global
population grows and consumption of milk and dairy increases in developing countries.
In most developing markets, current consumption levels are well below the WHO per capita consumption target
of 185 litres per annum. The trend in the developing world is for a shift in diet from starch-based to protein-based
products. This scenario provides a positive outlook in the long term for both milk production and consumption of
dairy products globally.
Ireland with its temperate climate and extended grass growing season has a natural advantage for milk production.
In addition, Irelands reliance on grass as the primary animal feed source is expected to further accentuate the
competitive position with respect to milk production over those regions, where grain is the principle feed. Grain
based livestock production enterprises will have to deal with inflationary costs sparked by expansion in biofuel
production. The impact of biofuels will enhance the competitiveness of Irish milk production and thus provides for
an encourageing future.
As already mentioned, in recent years there has been an exodus from dairy farming with the small units
disappearing and being absorbed into larger farm units. The exit from milk has been facilitated by the permitted
trading of milk quota through a quota exchange whereby sellers and buyers determine the market price within
a co-op region. The quota exchange auctions have seen two trends: firstly high prices have been set at these
exchanges in the southern half of Ireland where the number of buyers exceeds the sellers. However in the northern
and western regions the reverse seems to be the case with sellers exceeding buyers resulting in a low price offered.
In summary, there has been a greater demand for milk quota in the southern regions than in the northern and
western areas.
Region 2007 2050 %Change
World 6,671 9,191 +38%
High Income 1,223 1,245 +2%
Low Income 5,448 7,946 +46%
Arica 965 1,998 +107%
Asia 4,030 5,266 +31%
Latin America 572 769 +34%
North America 339 445 +31%
Europe 731 664 -9%
Table 2.2: Projected Population Growth (2007-2050) Source: University o Illinois
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The concentration of dairy farming is in the southern half of the country with more than 15,000 dairy farms. In the
border, western and midlands there are less than 5,700 dairy farms. This trend in concentration in the southern part of
the country is emphasised even more when milk production levels are compared.
There has also been a consolidation at processing level and currently the six largest processors control 70% of the
national milk volume. In the liquid milk sector there are just fifteen processors.
Figure 2.5: Geographic Distribution o Dairy Farms Source: CSO
SOUTH-WEST
7,400 Farms
SOUTH-EAST
3,700 Farms
DUBLIN &
MID-EAST
1,080 Farms
MID-WEST
3,600 Farms
WEST
1,800 Farms
BORDER
2,900 Farms
MIDLANDS
1,500 Farms
28% o
all dairy arms
72% o
all dairy arms
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2.6 Conclusion
As a commitment towards increasing the efficiency within the processing sector the Department of Agricultureawarded 114 million in grant assistance towards capital projects in 2007. This grant assistance is aimed at
supporting the innovation, increased productivity and new product development to enhance the competitiveness
of the Irish dairy sector so as to enable the sector to compete into the future.
This grant assistance is in line with the strategic objective of Agri Vision 2015 to ensure the sustainable
competitiveness of the dairy sector. The grant package recognises the need for the State to engage with the
processing sector in order to achieve the most favourable conditions such as increasing scale and efficiency for long
term success.
The State is also committed to building a knowledge base in the food sector and has committed 8 billion in
the National Development Plan 2007-2013, towards food research and a major input of this fund will generate
nutritional knowledge centred in the dairy science/biotechnology interface.
Given the positive international demand trends and outlook, a growing and more prosperous home market, therelative competitive position of the Irish dairy sector augers well for future prosperity. The key challenge for the
sector is how to take advantage of these positive trends and particularly, in the case of the NDC, the potential
opportunities that exist to grow and develop the domestic market.
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Section 3
The Changing Market Landscape
or Irish Dairy Products
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3.1 Domestic Market Overview or Milk and Dairy Products
The Irish dairy market remains one of the most significant markets in Ireland with the majority of homes having
some form of dairy products in the fridge. However, this high level of market penetration has been challenged
in recent years particularly from dairy alternatives and substitute products. In addition, population growth, while
being a key driver of demand, has not impacted on the dairy sector to the extent that would have been imaginedgiven the high proportion of non-nationals accounting for this growth and the lack of tradition in some cases of
consuming milk and dairy products.
Table 3.1(a) below highlights the performance of the Irish dairy market over the 2001-2006 period and Table 3.1(b)
the projected growth up to 2012. As is illustrated, the market grew by 17% to 957 million over the 2001-2006
period and is projected to grow by 11% up to 1.115 billion from 2008 to 2012.
In examining the published statistics on the Irish dairy market, a number of discrepancies are apparent in the
breakdown of the market value within the category. The figures contained in this report are based on the following
sources: CSO, Mintel, TNS and NMA. However, despite this, the overall growth forecasts and trends are not too
dissimilar with Datamonitor for example, projecting an increase in value up to 1.03 billion or 10% according t