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 advantae (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.
The paper aims to evaluate regional farm efficiency rankings for Ireland which seeks to be a leader in the global dairy industry. It conducts a within-country analysis based on technical and scale efficiency of dairy farms to explore how regional constraints imposed by the milk quota may have affected Ireland's regional farm efficiency levels.The stochastic meta-frontier approach is adopted because of its usefulness in comparing regional technical efficiencies. The findings suggest that policies aiming to promote labor and soil quality improvement in the East region, and that relate to discussion groups in the South region, in addition to management of herd size, would be useful for improving efficiency postquota. Moreover, some farms expanded beyond their optimal scale leading to a reduction in efficiency levels and this points to the need to tailor farm advice and promote caution and prudence in farm expansion decisions, especially in a region like South West.
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