The European Union’s milk quota program is set to expire in April 2015, and Ireland is getting ready to increase production by 50%. This leaves neighboring United Kingdom farmers and dairy processors nervous about imports from Ireland, a low-cost producer. The Irish island is virtually ideal for pasture, with a warm and wet climate paired with land not suitable for arable farming.
Ireland is already preparing to take more market share when the quota system dissolves, consistently producing 101% of its quota level since 2011. In 2011-2012, this resulted in a EU16 million fine, or nearly $22 million U.S. That equates to over $1,000 for each of the country's 18,500 dairy farms.
Not Ireland’s first increase
Dairy Crest, a publicly traded U.K. processor, recently announced a 31% jump in profits, but highlighted the challenges that Ireland will bring with a quota repeal. Dairy Crest said that while fluid milk imports into the U.K. were unlikely, other products could weigh on the country’s milk prices.
It wouldn’t be the first time Ireland grew its industry. According to the website Ask About Ireland, between 1975 and 1984 Irish milk production grew at a furious pace of 6% per year. 1984 was the year the E.U. quota was implemented. Today, the country has 1% of the world’s dairy cows but is responsible for over 15% of the world’s infant milk formula production.