Irish milk production surges, but can it continue?

Ireland’s milk production is rising again, but the outlook is far from straightforward. While farmers enjoy strong prices and lower feed costs, looming regulatory changes could reshape the entire sector. The numbers show opportunity in the short term but also signal risks that could cut deep into output and exports.Ireland’s dairies collected 1.04 million tons of raw milk in July, a 3.6% increase compared to the previous year. Growth has been slowing since April, when output was 12.6% higher year-on-year.Ireland’s production has rebounded notably from a low baseline in the first half of 2024. Cumulative output through July reached 5.82 million tons, up 6.2%, returning to levels observed in 2022.Growth has been supported by favorable grass growth in the first half of 2025, despite drier conditions in recent weeks. In addition, the average price of compound feed fell by 4% compared to the previous year, ensuring good feed availability for dairy production.Farmgate prices have remained strong throughout the year. In July, the average stood at €51.76 per 100 kilo, 9% higher than a year earlier. However, this marks a sharp contraction from the 35.1% annual increase recorded in January. Overall, farmgate prices have shown a gradual decline that has accelerated, reflecting the higher baseline of 2024.Lakeland Dairies announced a 2.1% cut in its farmgate price in August, bringing the average to €47.25 per 100 liter. According to the cooperative, the move results from higher global milk availability, weaker consumer demand, and ongoing trade tensions. Nonetheless, high milk prices combined with favorable feed costs have continued to support investment in production and higher milk volumes.Production has increased despite a decline in the size of the dairy herd, down 2% year-over-year to 1.48 million heads in December 2024, highlighting a higher productivity per cow. However, the decline of 32,500 in dairy cow calf registrations represents a potential threat to the sustained production of milk in the country. The threat of the nitrate derogation endDespite Ireland’s booming milk production, stricter environmental regulations pose an important threat. The nitrogen derogation allowed a higher nitrogen utilization in Ireland, with close to 50% of dairy farms above the 170 kilo per hectare threshold (65% of the country’s milk output). The end of the derogation is set for December 2025, which could result in notable implications for the Irish dairy sector.According to Teagasc, complying with the regulation would imply an average reduction of 27 cows per herd, resulting in a decline of 39% in family farm income (€43,555 per farm). At a national level, this would translate to a loss of 1.2 billion liters, a 22% contraction in the size of the dairy herd, and severe effects in Ireland’s dairy exports. Other scenarios consider the rent of additional land, the export of slurry and manure, and the combination of contracting the rearing of replacement heifers with the removal of non-replacement animals. These scenarios have an impact of 15%, 19%, and 14% on farm income, respectively. Nonetheless, none of these alternatives was as costly as cutting cow numbers.