Irish dairy exports saw a modest decline on 2022’s record-breaking performance when dairy exports rose to €6.8bn (+33%) in value terms on the back of high farmgate milk prices and strong milk production. But with global trade experiencing a decline throughout 2023, Irish dairy exports also slipped – by around 8% to €6.3bn in value terms, as revealed in the Irish Food Board’s (Board Bia) annual export performance report. A combined increase of 6% in the value of cheese, specialized nutritional powders and yogurt helped to partially offset the overall declined, said Bord Bia but noted that 2023’s result was still 22% ahead of 2021’s export performance.
David Kennedy, Bord Bia head of dairy, explained this year’s dip in dairy exports with the oversupply situation that materialized in 2023 and the bearish global commodity markets. “If you think back to the second half of 2022, we saw high farmgate prices across the world on milk, which led to increased supply,” he said. “That increased supply meant that we started this year globally with high stocks and expensive stocks of dairy commodity products. These products struggled to work their way through the supply chain, as the cost of living crisis meant that affordability was a real challenge for the global consumers.”
Butter (€1.3bn), cheese (€1.2bn) and whey ($250m) made up 45% of the total dairy export volume, with Kennedy stating all three commodities suffered price declines in 2023. “2022 was an unbelievable year for butter, with EU prices of around €7,000 per ton available throughout the second half of the year. Coming into 2023, those prices are back to €4,000-€5,000 per ton, so a significant fall-back there. Equivalent prices on cheese, 25% back on 2022 prices and then SMP, 40% back on 2022 prices.
Irish butter exports to the US continued to increase, growing more than 10% in the first 9 months of 2023. Exports to Southeast Asia were mixed, with Kennedy noting that cheese volumes in Japan had been maintained, highlighting this as a positive for what he described as a ‘really important’ market for Irish cheese outside of Europe.
Bord Bia’s head of dairy said there was a likelihood that demand from China could finally begin to return in 2024. “It is predicted that markets like China should arrest its decline in terms of demand and start to come back.”
Looking ahead into 2024, Kennedy expects last year’s challenges to be lessened this year. “I believe that global stocks are lower than they were in 2023 and the stocks are more affordable than they were coming into 2023,” he said. “We expect to see increased consumption of butter, cheese in those key retailer and foodservice markets.”
Demand for environmentally-sound dairy products is also likely to remain a sustainable trend, Kennedy predicts. “We are increasingly seeing demand from international customers for low-carbon footprint, highly sustainable dairy ingredients.”
“Dairy wasn’t the only food export segment that recorded a decline in 2023 – Ireland’s overall food, drink and horticulture exports were down 4% on 2022.”
Chief executive Jim O’Toole said Bord Bia remains optimistic about the future as the body looks to launch a new four-year strategy later this year. He reported that confidence in European and Americas markets is the strongest, with almost 70% of exporters believing some level of expansion can be achieved in these territories.
Some challenges remain however, with global economic growth still projected to decline in 2024 and the combination of inflation and interest rates likely to affect consumer sentiment and spending power.
“Later this year, Bord Bia will be launching a new four-year strategy,” he said. In devising that strategy, we look to the future with optimism.”
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