THE strength of the pound against other European currencies is creating problems for the Irish dairy industry and if it continues next year it will adversely affect exports, according to Dr Noel Cawley.
Dr Cawley, who is managing director of the Irish Dairy Board, said the movement of the pound relative to a number of major currencies is of significant importance to Irish dairy exporters.
Speaking at the annual review of world markets, Dr Cawley said that in particular, the strength of the Irish currency relative to sterling, the dollar and the deutschmark has a major affect on returns to Irish milk producers.
He said at the start of 1996, the pound was trading at 1.035 pence against sterling, compared to 0.988p at the start of 1995.
This represented a 4.75 per cent decline in the return which could be achieved from the British market.
The pound has since fallen back to parity against sterling but has risen strongly against continental EU currencies such as the deutschmark.
The German market accounted for almost 31,000 tonnes of butter along with a considerable quantity of milk powder and cheese.
The US is also a significant market for Irish dairy exports where 26,000 tonnes of case in were exported in 1995, he pointed out.
Returns from that market were 5.6 per cent less in November 1996 than they were at the start of the year, with the pound also rising strongly against the dollar.
Dr Cawley called for a repositioning of the pound within the ERM to protect Irish export values which were being eroded because of the strength of the currency.
He said higher milk output in Ireland during the year caused almost all product categories to grow in volume.
Butter production grew by 0.4 per cent to 143,000 tonnes despite weak market promotions.
He said, in consequence, total Irish sales to intervention amounted to 28,387 tonnes compared to none the previous year. Skim milk production grew by 4 per cent to 128,000 tonnes.
Dr Cawley said although case in returns were lower, particularly in the US, output reached a further high of 43,000 tonnes, up 1.4 per cent on the 1995 record level.
Cheese production, he said, reached a record level of 91,000 tonnes, an increase of almost 18 per cent.
The bulk of this is cheddar, he said, and was sold into the British market where demand is influenced by a number of factors, not the least of them, currency rates.
"Although many of these were unfavorable to Irish exporters in 1996, cheese still proved relatively attractive to Irish exporters, particularly in summer and early autumn," he concluded.
