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The capacity to expand milk production in Ireland following the removal of milk quotas
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2012-12
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Doris Läpple and Thia Hennessy. The capacity to expand milk production in Ireland following the removal of milk quotas. Irish Journal of Agricultural and Food Research, 51: 1–11, 2012.
Abstract
Given the imminent removal of milk quota in 2015, EU dairy farmers will be able to
expand production without purchasing milk quota rights for the first time in 30 years.
This paper uses Irish National Farm Survey data to simulate the expansion capacity of
Irish dairy farms. Specifically, the likelihood of achieving the 50% increase in production
target published in the Irish Government’s Food Harvest 2020 Report is explored.
Potential milk output is estimated accounting for structural change and the economic
viability of production under three price scenarios for 2020. In addition, the number of
new entrants that would be required to meet the 50% target is calculated. The results
indicate that the 50% output volume growth target set in the Food Harvest report will
be difficult to achieve and that future potential milk output depends importantly on
the rate of structural change and productivity growth as well as on real milk prices
in 2020. A regional analysis reveals that relative to other regions, the south has the
greatest expansion capacity. This suggests that quota removal could cause significant
regional restructuring of milk production, which is likely to present some challenges to
the dairy processing sector.