3-phase plan to support the dairy industry through COVID-19

Dairy Industry Ireland (DII) have recently commissioned Ernst & Young (EY) to conduct an examination of the dairy industry and COVID-19.

The examination resulted in some key findings which were then used to create a plan of action to support the dairy and specialised nutrition sector in Ireland, in both the short and long-term.

The report found that Irish dairy processors export 92% of all products and 75% of Irish dairy is exported to the top 15 countries most affected by COVID-19.

The research also found that short term output from the industry could fall by as much as €2.3 billion in value as a result of falling demand and potential losses in processing capacity.

Impact

DII stated that the dairy industry is one of the biggest wealth creators outside of urban areas and therefore needs to be protected. They believe that concrete strategic actions need to be put in place to protect the industry and allow it to move forward into the future.

Pat Murphy Vice-President of Operations, Kerry Group & Chair of Dairy Industry Ireland, added: “Irish dairy is an engine of the rural and the national economy and it is vital that the necessary steps be taken quickly to enable the industry to contribute to the national economic reboot when it occurs.”

The measures needed to support the dairy and specialised nutrition sectors are as follows:

Phase 1 – support in the next 100 days:

1. Extend EU supports such as Aids to Private Storage:  The belatedly announced scheme was welcome but totally inadequate – needs major extension;
2. Back the Export Credit Insurance: Allowed by the relaxation of EU competition law, this would protect Irish dairy exports and underpin the market;
3. Prioritise COVID-19 testing for ultra-critical technical staff:  This would help ensure that no plant goes down during the dairy supply peak of May and June, which would result in the disposal of milk.

Phase 2 – support by the end of 2020:

1. Extend working capital loans: Government-backed working capital loans should be extended to processors of €550 million to deal with stock carry over;
2. Examine the creation of mutual funds: These funds backed by government, industry and farmers would protect against long-term market shocks. These have been developed in Northern Ireland and the USA;
3. Fast-track licensing for critical dairy infrastructure: Work with regulators such as the EPA to fast track licensing for critical dairy infrastructure; ensuring all milk being produced can be processed.  At present, there are long unnecessary delays in the process.

Phase 3 – support by the end of 2023:

1. Invest further into R & D to drive value-added products: With depleted balance sheets, companies will need assistance to continue research investment;
2. Support companies to aggressively meet climate and sustainability target: The climate change and biodiversity agenda will return as the key commercial challenge for Irish dairy at the end of the crisis;
3. Expand export opportunities: Enable Irish primary and secondary processing to becomes a key native driver of Ireland’s economic reboot.