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14 July 2015Cork Institute of Technology, Cork

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In Food We Trust

14 July 2015Cork Institute of Technology, Cork

How Future Dairy Expansion Will Benefit Ireland

Cormac Healy Director, Irish Dairy Industries Association, Ibec

Cork Food & Agritech Forum

How Future Dairy Expansion Will Benefit Ireland

CIT, 14 July, 2015

IDIA – who we areThe Irish Dairy Industries Association (IDIA) represents

primary and secondary dairy manufacturers including the Infant Nutrition sector in Ireland

IDIA Membership

ContentHow Future Dairy Expansion will Benefit Ireland

• Our dairy expansion plans

• The benefit to Ireland

• 2020 and beyond

• Importance of export – Importance of Asian markets

• Expanding export sales to Asia – challenges

• Summary

Irish Dairy Industry Expansion

• FH2020 / End of EU Milk quotas

• Target: 50% growth in milk output

• Exports to grow to €5.5 billion

• Significant planning & investment (production, processing & markets)

• €2 billion in on-farm Investment

• €700+ million investment in processing capacity and value-add

Benefits to Ireland

• Investment spend – existing and future

• Increased export earnings – additional €2 billion

• Employment creation – 15,000 additional jobs

• Regional economic impact

• Low import content – strong multiplier effect

Hard Cash – measuring the benefit• An additional 2.75 bn. litres @ 32cpl equates to approx.

€900 million at farm-gate

• Export earnings growth of €2.0 bn. conservatively

• Key to value/contribution will be product mix for new milk

• Important factor in terms of dairy contribution is Irish economic spend

Jobs Dividend

• Teagasc analysis of impact of post-quota dairy expansion to Irish economy points to 15,000 new jobs

• On-farm & inputs/services

• Transport

• Processing

• Marketing

• Research & innovation

Additional benefits• Building a competitive dairy sector for the future

• Infrastructure & expertise

• Driving innovation

• Ireland’s food reputation

• Building multi-nationals’ interest / FDI

Increased meat processing activity (+250,000 head from dairy expansion) – equivalent to five meat plants

2020 and beyond…….

Food Wise 2025 predicts that over the next decade Ireland can;

• increase the value of agri-food exports by 85% to €19 billion,

• increase value added to the sector by 70% to €13 billion,

• increase the value of primary production by 65% to €10 billion.

Dairy sector will be major driver

Export focus• 90% export dependent (moving to 95%)

• Exports to 138 countries in 2014

• Additional volumes will be export focussed

• Increasingly looking to international markets

• China & S.E. Asia particularly important

• USA, Gulf and Africa

Irish Dairy Exports

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 e0

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

4,000,000,000

Source: CSO

*includes dairy enriched powders

Dairy Exports are more internationally oriented…..

Distribution by region 2014 (%)

United Kingdom Other EU Int. Markets0

10

20

30

40 40

31 2932

28

40Food & Drink Dairy

Irish dairy products were exported 138 countries in 2014

Irish Dairy Exports to China growing rapidly

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 e

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

OtherWheyButter & cheeseMilk PowdersIMF

€m

Source: CSO

Source: OECD & FAO Secretariats

Emerging markets driving global demand

Beef Pigmeat Poultry Sheepmeat Butter Cheese WMP SMP Fish0

10

20

30

40

50World Developing OECD

Global demand for livestock & fish products (% Ch 2023 vs. 2011-2013 average)

China33%

SE Asia30%

Europe

4.1%

Global Consumption of Dairy Products to 2023Total consumption to grow by 27%

Total Increase 2013-2023

Source: OECD FAO

Dairy Exports to China & S.E. Asia• Irish dairy exports amounted to €604 million in 2014

• Almost €400 million to China

• Strong growth reflected in sales other S.E. Asia markets

• Malaysia, Vietnam, Thailand…..

Two key Challenges• Reputation

• Food safety & Quality

• Building recognition of Ireland

• Innovation

• Competitiveness – Trade Negotiations

• Grass-based milk production – comparative advantage

• Modern well-invested processing

• Losing ground on trade agreements

Brand Ireland

Trade Negotiations• Two aspects to consider:

a) Direct benefit of reduced tariffs & removal of NTBs

b) Competitors moving ahead – NZ, Australia, TPP

• EU Trade negotiations:

Country Status

China Only an investment agreement

Vietnam Launched 2012. Nearing conclusion.

Malaysia Launched Oct-2010. Last round Apr-2012

Thailand Launched March 2013. 4 rounds.

Singapore Completed

• Dairy expansion making significant economic contribution

• Regional spread and low import content are major factors

• Future product mix will have bearing on scale of increase value

• Export focus

• China & S.E. Asia are major demand growth regions and a strategic focus for Irish dairy sector

• Reputation critical

• Trade negotiations – we can’t fall behind

Summary