Abstract
Purpose This paper aims to examine the competitiveness trends and rankings of the Irish dairy sector at the farm and trade levels, relative to selected European Union (EU) Member States, in the context of the removal of the EU milk quota in 2015. Design/methodology/approach Competitiveness indicators including partial productivity measures and accountancy-based indicators were used for farm competitiveness, and net export market share and normalised revealed comparative advantage (NRCA) were used for export competitiveness. Findings Amongst the countries examined, Ireland had the highest growth in partial productivity indicators and was ranked first with the lowest total costs and cash costs per kg of milk solids post-quota. However, the total economic cost sub-components showed that Irish dairy farmers had high opportunity costs for owned land and labour. While Irish dairy products such as butter and powders have demonstrated growth potential in competitiveness post-quota with Irish butter and whey ranked in top three relative to other countries, other products, i.e. cheese and liquid milk have declined in competitiveness according to key export competitiveness indicators used. Practical implications The challenge for Irish dairy farmers is how to mitigate relatively high land and labour costs, which can limit farm competitiveness in the long run. The key players in the Irish dairy industry can now better position themselves in the global dairy market, recognizing the competitiveness dynamics of the different dairy products and their competitors. Policy implications and further areas of research have been identified to help improve the overall competitiveness position. It is surprising that Irish butter is a leader in the EU, yet not much research has been done to understand the market dynamics of this sector. Originality/value To the best of the authors’ knowledge, this study is the first of its kind to use both farm and export competitiveness measures to analyse the Irish dairy industry relative to other countries in the context of quota abolition. Unlike previous studies on dairy export competitiveness, this study has disaggregated the processed dairy products, which allowed for the ranking of countries and comparability across countries using NRCA.
Highlights
The dairy industry in the European Union (EU) has undergone significant structural adjustments over the years due to changes in factors such as prices, weather, environment and policies (Giles, 2015; Läpple and Sirr, 2019)
Of particular importance to this study is the removal of the EU milk quota regime in 2015
While the policy was beneficial in the beginning, it later became a constraint in the development of the industry because the demand for dairy exports was growing much faster than supply (Donnellan et al, 2011; Donnellan et al, 2015), especially for Ireland
Summary
The dairy industry in the European Union (EU) has undergone significant structural adjustments over the years due to changes in factors such as prices, weather, environment and policies (Giles, 2015; Läpple and Sirr, 2019). The milk quota system was introduced in 1984 to contain the growth of milk production and to ensure that the EU would be able to continue to fund the growing cost of the price support framework (Donnellan et al, 2011; Groeneveld et al, 2016). This ensured that the EU dairy market would have little or no surplus in the EU public storage for products such as butter and skimmed milk powder.
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