Irish dairy farmers target Middle East after removal of EU milk production quotas

The removal of the quotas is expected to trigger a huge increase in Irish dairy production – much of it destined for the Middle East.

Irish dairy products on display at the Choithrams supermarket on Al Wasl Road in Dubai. Pawan Singh / The National

Irish dairy farmers are looking to the supermarkets of the Arabian Gulf to help make up for 30 years of lost time.

The removal last week of production quotas first introduced by the European Union in 1984 is expected to trigger a huge increase in Irish dairy production – much of it destined for the Middle East.

Irish dairy exports to the Arabian Gulf could jump by 50 per cent over the next five years, predicts Michael Hussey, the Dubai-based regional manager of Bord Bia, the Irish food board.

Milk quotas were introduced in 1984 to reduce the so-called milk lakes and butter mountains that started to emerge in the 1970s, when European milk production outstripped demand.

Agricultural exporters such as Ireland and the Netherlands stand to be the biggest beneficiaries from the removal of quotas across the European Union last week.

“There will definitely be a big impact here,” said Mr Hussey. “The Middle East will be the target for much of the increased production.”

Total exports of dairy products from Ireland into GCC countries jumped 28 per cent last year to €247 million (Dh988.3m), according to Bord Bia estimates.

Irish dairy products such as Kerrygold butter and Irish Farmhouse cheese are increasingly visible on the region’s supermarket shelves.

The rise in Irish food exports to the Gulf will bring exporters from the country into closer competition with New Zealand, which dominates the regional market.

When milk quotas were introduced in 1984, Irish milk production was roughly the same as it is today – about 5.4 billion litres per year.

Over the same period, annual production in New Zealand surged to 19 billion litres from 7.6 billion litres.

The Irish agriculture minister Simon Coveney described the removal of the quotas as “the most fundamental change to Irish agriculture in a generation”.

GCC markets such as the UAE and Saudi Arabia are drawing increased attention from global food producers as growing populations, rising incomes and improved land and sea freight connections stoke demand for imports.

A regional hotel building boom that has Dubai at its centre is also driving demand for food products.

The rapid growth in air travel to hubs such as Dubai, Doha and Abu Dhabi is making it easier for exporters to bring fresh produce from Europe, North America and Australasia to the dinner tables of the region at affordable prices.

Bord Bia last week hosted a group of buyers of food ingredients from Saudi Arabia and Kuwait, and plans to take another group of UAE companies to Ireland this year.

Follow The National's Business section on Twitter