By: Will Babler and Luke Strub, Atten Babler Commodities LLC
Ireland Milk Production Update
Milk production within Ireland grew at a staggering pace during Nov ’15, finishing 48.1% above the previous year. Ireland milk production growth has outpaced growth within other Member States since the expiration of the EU-28 milk production quota system at the end of Mar ’15, resulting in a continued increase in Ireland’s market share of total EU-28 milk production. Ireland has accounted for 5.4% of total EU-28 milk production throughout the first seven months of the ’15-’16 production season, up from 4.8% of total EU-28 milk production during the previous year.
Ireland has gained market share of total EU-28 milk production as slaughter rates have trended lower. ’15-’16 YTD bovine slaughter within Ireland is down 6.8% YOY throughout the first seven months of the production season while total EU-28 bovine slaughter remains up 0.8%, led by increases within Spain, Poland and Italy.
Although milk production within Ireland pales in comparison to production within leading U.S. states on an absolute basis, only California and Wisconsin have larger dairy herds. Milk per cow yields throughout Ireland have been artificially reduced throughout years leading up to the expiration of the EU-28 milk production quotas, restricting production despite the relatively large Ireland dairy cow herd. Average milk per cow yields within the top five milk producing U.S. states were nearly double the Ireland per cow yields throughout 2014.
YOY declines in slaughter and likely increases in milk per cow yields have contributed to Ireland milk production increasing by 15.9% throughout the first seven months of the ’15-’16 production season. Ireland has led all Member States in production gains throughout the ’15-’16 production season on both a percentage and absolute basis, pushing overall EU-28 milk production higher. Ireland’s contribution to the overall EU-28 growth rate will slow within the next couple months of reported figures, however, as seasonal declines in Ireland production exceed seasonal declines of other top EU-28 milk producing Member States. Total EU-28 milk production typically reaches seasonal lows throughout the month of November, however Ireland production reaches later and more sizable seasonal lows during the months of December and January due to the predominate use of a pasture-based system.
Seasonality in Ireland milk production dwarfs that of other EU-28 Member States, as the monthly percentage of annual production has ranged from 13.5% of production in May to 2.4% of production in January on average over the past five years. The seasonality component of Ireland milk production is larger than the combined seasonal components of the four next largest EU-28 Member States (Lithuania, Romania, Latvia and Bulgaria), historically.
Increased seasonality due to the predominate use of a pasture-based system has also translated to low relative milk per cow yields throughout Ireland when compared to other top-producing EU-28 Member States. Of the top ten milk producing Member States, Ireland had the second lowest milk per cow yield throughout 2014, trailing only Romania, which also has a high degree of relative seasonality. The recent gains in Ireland milk production are even more remarkable considering the lower than average historical milk per cow yields historically exhibited. The seasonally lower than average Nov ’15 production base contributed to the significant YOY increase in Ireland milk production as incremental changes in production can lead to disproportionate increases in total production, however recent gains in Ireland milk production remain impressive.