Ireland: Dairy Farmers Struggle with Rising Production Costs

Dairy farmers in Ireland have announced that they can no longer absorb the significant spike in production costs for milk products, resulting in higher consumer prices. The production costs have soared by nearly 20% in the past year, making it unsustainable for farmers to maintain the current pricing structure for milk, cheese, and butter.

Statistics reveal that the price of two litres of full-fat milk has increased by 26 cents, reaching €2.44, while a kilo of Irish cheddar cheese is now 50 cents more expensive, priced at €11.14. Additionally, a pound of butter has risen by 70 cents to €4.43.

Denis Drennan, President of the Irish Creamery and Milk Suppliers’ Association, highlighted that food prices haven't historically matched inflation rates, leaving consumers unaccustomed to recent hikes.

Drennan pointed out that apart from cost pressures, environmental regulations and the lack of young people entering the dairy sector further complicate the industry dynamics. The dairy sector is also under pressure from global supply challenges, with over 90% of Irish dairy products being exported.

Co-operatives are feeling the strain as costs mount, with Conor Ryan of Arrabawn-Tipperary Co-operative attributing rising expenditures to energy and labor. Efforts to mitigate these costs include implementing solar energy solutions.

Global market competition adds to the challenge, affecting small retailers like Killruddery farm shop, which struggles to maintain butter stocks due to thin profit margins.

University College Dublin’s Professor Michael Wallace emphasized that the globalized market environment drives local pricing, as regulations continue to suppress supply.