Growing importance of North America for Irish dairy exports

The US market has become a crucial hub for the Irish dairy industry, with exports reaching €681m in 2023 – a doubling of value from 2019 figures. This growth has contributed significantly to Ireland’s overall expansion in dairy exports.

During the four years between 2019 and 2023, the US accounted for nearly 26% of total Irish dairy export growth. In 2023, 24% of all Irish butter exports found their way to American households, alongside 6.5% of cheese exports.

The US market also accounts for approximately 20% of Ireland’s exports of casein, the highly valued dairy ingredient used for a variety of applications including medicine and dietary supplements.

US dairy consumption

The US is one of the world’s largest consumers of dairy, with the average US citizen consuming approximately 295kg of dairy per annum, according to the United States Department of Agriculture (USDA).

This position looks set to be cemented, as 2023 consumption figures released by the USDA saw an increase across several categories, with particular interest in the consumption growth of both butter and cheese, two important categories for Irish dairy products in the US.

Indeed, the US plays a significant role in the global supply of milk. Of the six main milk-producing regions, the US accounted for 34% of total milk production in 2023.

Fluctuation in US dairy production, export volumes and trade policies can have an impact on the global dairy market.

Choice is king

Choice remains a priority for US consumers, reflected in the abundance of dairy products available on American grocery store shelves.

US retailers often stock twice as many products compared with their Irish or European counterparts, which is especially evident in the expanding dairy section.

While the differences between US and Irish grocery markets are numerous, another notable distinction lies in the number of retailers.

In Ireland, a handful of retailers dominate the market, whereas the US boasts a far more fragmented landscape, with over 200 banners, many operating regionally or within single states.

With its expansive geography and ethnographic contrasts, the US can’t be treated as a single uniform market when we consider the consumer.

Projections from IGD indicate that the US grocery market is poised to grow to $2.1tn by 2028, adding an extra $353bn in sales between 2023 and 2028.

Proving Irish grass fed

While Irish dairy has long been synonymous with grass-fed practices, the demand from trade buyers and consumers for tangible proof is clear.

In response, Bord Bia developed the grass fed dairy standard to provide verifiable proof to the market of Irish dairy farmers’ ability to yield milk from predominantly grass-based diets.

Sustainable sourcing

Part of Bord Bia’s remit in the US is to regularly meet with influential trade customers to build preference for Ireland as a preferred dairy supplier. These customers are placing increased significance on environmental sustainability in their procurement strategies.

On a recent Government-led trade mission to the US, meetings were held with several important retail and food service customers. Notably, these buyers commended the Irish dairy sector for its commitment to a more sustainable supply chain, from on-farm through to processor level.

Tracking sustainability

Bord Bia has been carbon footprinting Irish dairy farms since 2014. We now have 10 years of audit data, which shows a steady improvement in carbon efficiency and an increase in output per cow.

The carbon footprint has fallen by over 12% since 2014. Results from audits conducted in 2023 indicate a dairy carbon footprint of 0.90, down from 1.03 in 2014.

After years of rising average milk solids, 2023 was the first year without an increase.

Average milk solids per cow remain at 443kg, having risen from 429kg in 2021. The current poor weather conditions are likely to affect cow output and will be reflected in next year’s data.

The average dairy herd size again increased last year, from 94 to 100 cows.

Source of emissions

The greatest source of emissions on Irish dairy farms is from the animals themselves. An increase in the average herd size corresponds to an increase in the average total farm emissions.

However, dairy farmers continue to make positive strides by reducing total chemical N spread, increasing the use of protected urea and using low emissions slurry spreading (LESS) technology. These are all-important actions, as recommended by the Teagasc MACC, that farmers are taking to reduce their GHG emissions.

Average chemical N per hectare fell to 142kg from 144kg, while 25% of N spread was protected urea, the highest since Bord Bia began tracking its usage in 2021. LESS technology is now used by 84% of SDAS members, up from 70% of dairy farmers in 2022.

Another measure being undertaken by dairy farmers that improves farm productivity and efficiency is milk recording.

Almost 70% of dairy farmers undertake milk recording of their herd.

Milk recording can be a useful process to detect herd health issues and identify the most efficient cows. It can also be used to assist in breeding decisions to ensure that the genetic merit of the most carbon-efficient cows are retained in the future herd.

For over six decades, Ornua, which is a co-operative of Irish dairy co-operatives, has served the Irish dairy sector by building profitable routes to market for Irish dairy products on behalf of its members and Irish dairy farming families.

A central driver behind the delivery of Ornua’s mission to create value for the dairy sector has been the Kerrygold brand, Ireland’s most successful food export and the only Irish-made and -owned food brand to reach over €1bn in sales globally.

This success has been greatly supported by Kerrygold’s impact in the US, home to the world’s largest consumer market, in which Kerrygold holds the number two position for branded butter and number one for imported butter.

Having first launched in the US in 1990 with Kerrygold cheese, the very first pallet of Kerrygold butter arrived to US shores nine years later.

Since then, Kerrygold has grown from strength to strength, underpinned by Ornua’s strategic investment in the brand and focus on building strong connections with US consumers who not only appreciate, but favour the distinct credentials of Kerrygold’s Irish grass-fed dairy products.

Ireland’s grass-based farming system is the platform that gives Kerrygold the attributes that make it a unique proposition for consumers and one that distinguishes Kerrygold from other dairy products available in the market.

Kerrygold lovers value the premium quality and great taste owing to the grassfed difference, along with the strong sustainability credentials that are associated with Ireland’s grass-based farming system.

Communicating this ‘green advantage’ and Ireland’s reputation as a sustainable producer of dairy is important for Ornua and the Kerrygold proposition, supported by an active programme of engagement with key buyers and influencers from global markets, including the US.

By bringing key customer partners and opinion formers to Ireland to experience and learn about the Irish grass-based dairy farming model up close, Ornua is focused on both protecting and strengthening confidence in its flagship brand.

This involves bringing buyers to visit farms and meet the families that work tirelessly to produce the world-class milk that makes Kerrygold a world-famous butter.

Farm visits also provide an unrivalled opportunity to showcase the deep-rooted commitment of Ireland’s dairy farmers to consistently enhance sustainable practices, supported through programmes like the SDAS.

Following three decades of sustained in-market presence, investment and customer engagement, Kerrygold has built a large consumer following in the US, yet there is significant scope for further growth.

Future growth

Building towards future growth will be supported through the recent doubling in production capacity of Ornua’s flagship butter production facility, Kerrygold Park in Mitchelstown, Co Cork. This major investment underpins Kerrygold’s plans to become Ireland’s first €2bn food brand.

The development of the facility, which can now produce up to one million retail packs of Kerrygold butter each day, responds to the continued growth in demand for Kerrygold in major international markets such as the US.

The brand is well placed to meet that demand and reach more dinner tables across the US, supported by the continued confidence retailers and consumers have in the quality of the product and the high standards of sustainability through which it is produced.