Brendan Smith (Cavan-Monaghan, Fianna Fail)
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72. To ask the Minister for Agriculture, Food and the Marine if he is satisfied that there is adequate processing capacity in the dairy sector; and if he will make a statement on the matter. [26975/21]

Charlie McConalogue (Donegal, Fianna Fail)
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Since the removal of milk quotas in 2015, the volume of milk produced by Irish dairy farmers has increased from approximately 5.5 billion litres to almost 8.3 billion litres in 2020. However, it should be noted that whilst milk production in Ireland has increased significantly in this period, the rate of increase has eased. This increase in milk production has been accompanied by parallel investment in processing capacity.

A study ‘Analysis of the Irish Dairy Sector Post Quota’ published by Teagasc and Cork Institute of Technology in October 2020 found that there are limitations to the Irish production model which are largely related to its seasonal nature, which mirrors grass production. For example, in the peak production month (May), more than six times the volume of milk is processed than in January.

As a result, processing plant utilisation in Ireland over the full year (approximately 62%) is far lower than in EU counterparts (at over 90%). However, this seasonal production cycle does provide the Irish dairy sector with a unique comparative advantage in terms of lower production costs and carbon-efficient, grass-fed dairy products.

The impact of peak milk production, which has been managed to date through co-operation in the dairy industry, is an issue on which I would encourage all processors to engage with their suppliers. It is vital that this engagement takes place at an early a stage as possible to allow suppliers to plan their milk production accordingly. It is important that processors and their suppliers work together to ensure that the Irish dairy sector can effectively manage the next stage in the development of a sustainable Irish dairy sector.