Ireland aims to be fast-growing dairy producer

Companies, farmers and the government have spent hundreds of millions of euros on more processing plants, equipment and cows in a bid to become the world's fastest-growing dairy producer.

In the lobby of Ireland's Agriculture Department in Dublin, a flat-screen TV displays a digital clock counting down the seconds until April 1.

That's when the European Union removes production caps that limited dairy expansion across the continent for three decades.

Call it milk freedom day. Ireland has been gearing up for it since 2010. Companies, farmers and the government have spent hundreds of millions of euros on more processing plants, equipment and cows in a bid to become the world's fastest-growing dairy producer.

Even though a global milk surplus has left dairy prices near a five-year low, farmers on the Emerald Isle are still pushing ahead with expansion plans because they're low-cost producers, exploiting a rainy climate and a grassy countryside ideal for grazing.

Boosting output will allow the country, still recovering from its worst recession on record, to add 10,000 jobs in the next five years, including as many as 4000 on farms, the government estimates.

"This is a big deal for Ireland," Agriculture Minister Simon Coveney said. "A lot of our farmers have the capacity to increase milk production significantly."

For now, an expanding Irish milk industry is unlikely to have much impact on global supplies.

Coveney estimates that the country's annual output will surge 50 per cent in the decade through 2020 to about 7.5 billion litres. That's about what cows in the US, the world's top producer, yield in a month and less than the state of Wisconsin last year.

But that won't take away from the sense of anticipation on Irish farms. While countries including Germany, France and the UK are bigger producers in Europe, Ireland may have the most to gain from lifting quotas. It exports 90 per cent of its supply, and virtually all the extra milk will be sold overseas.

Ireland's dairy cow herd has increased 6.4 per cent in the past two years, the fastest gain in the 28-country bloc, Eurostat data show.

Even with global dairy prices down 34 per cent from a record in February 2014, the average since 2010 is about 60 per cent higher than in the previous decade as rising incomes boosted demand, United Nations data show.

Ireland is expanding with an eye to New Zealand, the world's biggest milk powder exporter. The two island countries have similarly cool, rainy climates conducive to grass. Before EU quotas were imposed, Ireland and New Zealand produced a similar amount of milk, Coveney said.