Northern Ireland Institute of Agricultural Science completes another busy year

The year ended with the organisation hosting its now traditional breakfast seminar on the morning of the Royal Ulster Winter fair.

Paul Vernon, the chief executive of Leprino Foods Europe spoke at the event.

He explained that cost of living pressures, in tandem with weakening consumer sentiment, are the key factors driving world dairy markets at the present time.

Leprino is the largest mozzarella cheese and lactose manufacturer in the world, exporting to over 80 countries.

Its core business interest in Northern Ireland centres on a processing facility close to the village of Magheralin in Co Down, which manufactures 50,000t of mozzarella on an annual basis. Whey and cream are by products of that cheese making operation.

Leprino Foods is a family-owned business with a strong commitment to the attainment of further growth and development.

A case in point is the recent completion of a new US$1 billion dollar cheese processing operation close to Lubbock in Texas. The project was funded completely in-house without the need for any external funding support

Vernon continued: “Within our business we tend to look at consumption trends first and then factor-in production and processing-related factors thereafter.

“And the reality is that consumers are not in a good place at the present time.”

The Leprino representative went on to confirm that, year-on-year, retail visits are up slightly.

However, there has been a significant downturn in the number of opportunities taken by the public to eat out.

And this trend is reflected within all the categories represented within this sector: from fast food through to restaurant visits.

“Food service is at the heart of this,” Vernon further explained.

“If one compares the figures available for 2019, the year prior to Covid hitting, with the current 12 month period, they confirm that out-of-heating is down by 11 per cent.”

Inflation is another issue impacting on consumer buying trends at the present time.

Paul Vernon again: “Where food and drink are concerned the figure is currently running around five per cent.

“Consumer buying patterns are centred almost totally on the issue of price.

“The reality is that consumers are cutting back on what they purchase.

“There is also growing concern regarding the prospects for future economic growth.

“Cost of living is the issue that is number one in driving consumer sentiment at the present time.”

He added: “And all of this uncertainty is impacting on demand across the economy.”

Global milk output

Significantly, United States’ milk output has risen by just over 5.5% over the past 12 months.

This is well above the long term average of just 2%

Milk constituent levels have also risen significantly in the same period.

Paul Vernon added: “Milk production continues to rise in the United States and, in the case of New Zealand, we are looking at an increase of 3.4% and are forecasting that the current production season will come in at 2.6% increase, year-on-year.

“But personally, I think the actual figure will come in higher than this.

“The reality is that even with the recent reductions in farm gate milk prices recently introduced by New Zealand milk buyers, dairy farmers in the country are still receiving above coast-of-production returns.”

According to the Leprino Foods representative, EU milk output has risen by almost 5% over the past 12 months.

He added: “Milk supply in Germany is very strong at the present time.

“Where the UK is concerned, we are looking at a year-on-year increase of some 6% while France is up 3% for the same period.

“Interestingly, milk production in those EU countries previously hit badly by Bluetongue was badly impacted in 2024.

“However, the past 12 months have seen production levels recover tremendously well.

“Calving patterns were pushed back in Germany, France and the Netherlands with the result that milk production in those countries during 20205 has been unseasonably high.”

But it turns out that Northern Ireland has led the way in terms of the relative milk volumes produced over the past 12 months.

Paul Vernon again: “Milk production in Northern Ireland rose by 4% in 2024.

“However, for the year to date, this figure has risen by a further 8.5%.

“So, if the milk output figures in Northern Ireland for the first 9 months of 2023 are compared with the same period in 20205, the actual increase comes in at 207M litres.

“This is a staggering increase, in any sense of the term.

“And the factor driving all of this has been milk price.”

He further explained: “The average milk paid to dairy farmers in Northern Ireland during 2023 was 45 pence per litre.

“By 2024 this figure had risen to 43 pence with the first 9 months of 2025 registering a further average increase up to 43.6 pence.

“And it is theses strong milk prices that have been driving milk output on a global basis since the beginning of 2024.”

When might milk markets improve?

Paul Vernon went on to point out that any real recovery in global dairy markets could be at least six months in the offing.

And it really will be a case of matters getting worse before they improve.

All international markets operate on the basis of the push and pull created by supply and demand.

As a consequence, milk production levels around the world will have to back quite significantly in order to allow farm gate prices recover.

Significantly, the current winter milk bonuses on offer from all the dairies is shielding local farmers from the full brunt of the ferociously negative forces that are impacting on global dairy markets right now.

However, the current strength of the beef market is also helping to maintain all-important cash flow levels on dairy farms.

So, in reality, matters could be a lot worse.

However, the New Year will see this scenario shifting dramatically with farm gate milk prices in Northern Ireland dropping below cost of production levels at some stage during Quarter One of 2026.

Paul Vernon commented: “So with consumer confidence weak and milk production volumes high, markets have not reacted well.

“Over the past 12 weeks butter prices have fallen by around 32%. Where cream is concerned, we are looking at a 50% market fall in the same period.”

He continued: “Cheddar prices are down by 26% over the past 12 weeks.

“And they are still falling.

“In many ways this all adds up to a perfect storm.

“The current outlook is for further downward pressure to impact on markets both within the EU and internationally.

“Milk output around the world will decrease: the cure for high prices is high prices.

“We have seen significant milk price reductions of 13pper litre impact in Great Britain over the past four months.

“And the same trend is starting to impact in Northern Ireland. Milk prices will weaken.

“But there is little doubt that the first half of 20206 will be tough, where farm gate milk prices are concerned.”

Paul Vernon concluded: “The reality is that we need to see a significant reduction in milk supply prior to farm gate returns improving again.”

Dale Farm group chief executive, Nick Whelan, attended both the NIIAS seminar and the Winter Fair, which followed.

He explained that international milk volumes rise significantly over recent months, coming off the back of lower dairy product volumes which has lifted milk price in the past year.

The Dale Farm representative added: “With feed prices across the globe subdued a very favourable milk: feed price ratio has been the impetus to drive production at farm level.

“Locally, the favourable economics and excellent growing conditions have compounded milk volumes.

“Here in Northern Ireland, milk production levels have increased significantly.

“At Dale Farm we are experiencing growth of seven per cent this autumn when compared to the same period in 2024, which is in addition to over eight per cent growth from the year before. Internationally milk volumes are predicted to grow in 2025 by two per cent which is exceeding global demand.

“These are staggering figures.

“The end result is that we now have an international milk market that is grossly over supplied as all the main milk producing nations are in growth mode, hence the significant fall-off in dairy product prices witnessed this autumn.”

“We will be advising our milk producers on this basis.

“The reality is that milk price is headed below cost of production in 2026.”

Meanwhile, investment at Dale Farm continues to progress.

Nick Whelan again: “The new cheese plant at Dunmanbridge is now fully operational.

“And we are currently hosting visits for groups of our producers from across Northern Ireland to view the facility.”

Dale Farm has invested £70M in its new cheddar cheese and whey processing and production facility at Dunmanbridge.

It represents one of the largest ever single investments undertaken by a Northern Ireland agri-food company.

According to Nick Whelan, 200M litres of milk have already been processed by the new plant.

He further explained: “The investment demonstrates our commitment to the next generation of Dale Farm producers as well as our customers.

“The investment is already paying off as we are extending our reachandservicing customers throughout Europe, North Africa and South East Asia.

“Our plan is to build on all of this for the future.”

In tandem with all of this, plans to build on the sustainability levels achieved by Dale Farm across its milk production and processing platforms continue at pace.

“Building economic and environmental sustainability within the business makes sense in every regard and is a fundamental requirement of all our customers going forward.”

Given this backdrop Dale Farm will be pushing ahead with phase three of its ‘Future Strong’ sustainability programme in 2026.

Nick Whelan concluded: “Through our Future Strong on farm programme we are not only reducing our carbon footprint and improving our environmental sustainability, but also ensuring that our farmers have sustainable and profitable businesses that will improve capability to weather market fluctuations, which unfortunately are part and parcel of the dairy industry.”