Dairy Industry Ireland, the Ibec group representing the sector, has said it is disappointed at the announcement by Chinese authorities to open a subsidy investigation into EU dairy imports.
The news has stepped up tension with the bloc a day after Brussels released its revised draft decision to impose tariffs on China-made electric vehicles.
The anti-subsidy investigation on dairy announced by China's commerce ministry today will focus on various types of cheeses, milks and creams intended for human consumption.
It was prompted by a complaint submitted by the Dairy Association of China and the China Dairy Industry Association on July 29 on behalf of the domestic dairy industry, the ministry said.
China will examine 20 subsidy schemes from across the bloc, including Ireland.
Other countries include Austria, Belgium, Croatia, Czech Republic, Finland, Italy and Romania.
Of these countries, Ireland is by far the biggest exporter of dairy products to China.
"We are calling on the EU Commission and the Irish government to work quickly to resolve the investigation and ensure that farm families and the industry are not negatively impacted," said Conor Mulvihill, Director of Dairy Industry Ireland.
Mr Mulvihill said the Irish dairy industry produces and exports in full compliance with EU and WTO rules.
"While any threat of trade disruption is unwelcome, and China is an important market for both EU and Irish dairy, Irish dairy is well diversified in its product mix and destination countries," he said.
"At present, the Chinese complaint relates to a subsector of dairy products, such as cheeses, and most of our cheese exports are directed to the UK and EU markets," he added.
The EU was China's second-largest source of dairy products with at least 36% of the total value of imports in 2023, behind only New Zealand, according to Chinese customs data.
The EU exported €1.7 billion in dairy products to China in 2023, down from €2 billion in 2022, according to data from the European Commission's Directorate-General for Agriculture and Rural Development, which cited Eurostat.
Ibec's Dairy Industry Ireland said around €420m of that came from Ireland.
China already launched an anti-dumping probe into imports of EU pork in June, which mainly affects Spain, the Netherlands and Denmark, in a tit-for-tat move against the EV tariffs.
Denis Drennan, president of the Irish Creamery and Milk Suppliers Association (ICMSA), said that "yet again" Irish dairy products might end up as 'collateral damage' in a trade war that was most assuredly not of their own making.
He said that the idea that Irish butter or powders were in any fashion the beneficiaries of state support or funding would be comical if the situation was not serious.
"I think if you suggested to an Irish dairy farmer that he was in receipt of state funding towards the retail price of his product, he or she would laugh in your face," he said.
"If anything, the Irish Government’s policies work as a penalty in our sector and so far from aiding they actually deduct from our ability to sell successfully abroad."
He added that the loss or any kind of negative impact would be a savage blow at a time when primary dairy-farmer producers are "reeling" from low prices, adverse weather and years of high inputs.
Additional reporting by Reuters
