For Irish farmers it's like white oil, or white gold as they often call it. Milk has for years been the most profitable crop Irish farmers big and small could produce.

That's down to our geography and climate which make us the best country in the world for growing grass and therefore for keeping cows for milk. The fact is we can produce high quality milk more efficiently than anyone else.

That has allowed us over the last five or six decades to develop a national dairy industry that is now famous around the world for products like Kerrygold. But it's not just butter. In recent decades we have added cheeses, infant milk formula, whey protein powder for athletes and other dairy products that are in high demand around the world to our list of dairy exports.

The market for Irish dairy produce is now stronger than ever because of the new awareness by international consumers of the value of milk and dairy products from grass-fed cows and because of our image as an environmentally pure, green island.

Given the advantages we have, you might think that we would be producing as much dairy produce as possible. Over the past 30 years, however, that has not been the case.

We are a long way off producing the maximum we could as a country because the Irish dairy industry has been held back to a significant degree by the EU quota regime introduced in 1984 which imposed limits for milk production on every country.

Those of you who are old enough will remember how this came about. Ireland joined what was then the EEC (the European Economic Community) in the early 1970s, and the big attraction for us was the Common Agriculture Policy which gave farmers a huge market and guaranteed prices for milk and some other products. The intervention system meant that if the market price dropped below a set level the EEC intervened and bought up the surplus.

The result was an explosion in milk production across Europe -- and especially in Ireland -- and the intervention system led to the notorious "butter mountains" in cold storage. And it wasn't just dairy produce. You may remember there were also "wine lakes" and "beef mountains" at the time.

Much of this was eventually dumped on world markets which was not good for farmers in developing countries. But the big problem in Europe was that the intervention system was costing European taxpayers so much it became unsustainable.

To stop the CAP collapsing altogether EU farm policy switched to a quota system to limit production, eventually coupled with a system of direct income payments to farmers.

The quotas have been in place now for just over 30 years and, as we said above, that has seriously retarded the development of our dairy industry here. Individual farmers were able to buy quota from other farmers, but the overall national quota was set at regular intervals and there were severe price penalties (called a super-levy) for individual farmers or countries that did not keep within quota.

In the last decade, however, the world has changed, particularly with the emergence of China and other parts of Asia, and demand for high quality farm produce -- and especially for dairy produce -- has grown rapidly. These days there is a global demand for dairy produce from Europe, and the result is that the quota system has been scrapped. From the beginning of this month farmers across Europe are once again free to produce as much milk as they like.

Most people here believe this presents a massive opportunity for Ireland. There are some dissenting voices -- and we will come back to those -- but the majority opinion is strongly positive, predicting great things for our farmers and the Irish dairy industry as a whole.

Minister for Agriculture Simon Coveney has predicted that milk production here will increase by 50 percent in the next five years (15 percent next year alone) and that this expansion will create over 10,000 new jobs on and off farm and translate into well over €1 billion in additional export revenue every year.

Coveney believes that this is the most significant EU farm policy change in several decades and that Ireland needs to grasp the opportunity it presents for us with both hands. All the farm organizations here and the dairy industry as a whole agree.

To increase milk production here by 50 percent will mean adding 300,000 dairy cows to the 1.1 million national herd. That will require significant investment by farmers in livestock, buildings and equipment, and a lot of farmers here have already begun that expansion even though it means borrowing large amounts of money.

Some of the farm leaders have already been urging farmers to be cautious and have emphasized the need for maximizing efficiency at farm level to get the most out of existing herds before borrowing to increase herd size. A small number of doubters have been predicting disaster ahead and have pointed out that the end of the quota system came into effect on April Fool's Day!

Certainly, the need for caution is real. World markets for farm commodities are notoriously volatile and unpredictable, despite the growing demand from China, India and other places for dairy produce.

There is no guarantee that milk prices will be maintained. In fact with unlimited production across the EU, there is every chance of a decline in the price of milk as we head into the future.

That is why efficiency is going to be so important in this new era. When Ireland joined the EEC back in the 1970s there were 250,000 farms in Ireland, most of them very small. Over the following years that number fell rapidly and consolidation took place.

By 1984 when the quota period began there were 80,000 dairy farms in the country and today as quotas end there are 18,000 - the average herd size has trebled in that period and output per cow and per acre have increased by 50 percent.

So paradoxically, although we now have a great opportunity to increase national milk production, the number of dairy farms is likely to fall even more as we head into the future. Ireland's smaller farms will have to grow to stay competitive.

The average dairy farmer in Ireland milks around 65 cows compared to around 400 on the average dairy farm in New Zealand. And New Zealand is our biggest competitor and currently the dominant player in the Chinese market for dairy produce.

It's not just in Ireland that milk production is set to grow. Dairy farmers across Europe are getting ready for the new dawn, and there are genuine fears among some farmers that the lifting of EU milk quotas will flood the world market with cheap surplus milk.

The fact is that farmers have known since 2003 that this change was coming and quota levels have been raised steadily over the last seven years to get farmers used to producing more milk. That has led to a steady fall in the wholesale price of milk in Europe over the last few years, and smaller dairy farms are now struggling to survive. Which is why some European farmers were protesting in front of the EU Parliament building when the quota system came to an end at the start of the month.

So the opportunities for the Irish dairy industry in this new era are huge -- but so are the challenges. One example of the opportunity we have is the success of baby milk powder from Ireland in the Chinese market. Nearly all of the imported infant formula milk in China comes from Ireland, mostly from the three infant formula giants Wyeth, Danone and Abbott which all have plants here.

That success is built on trust, a very important factor in China after the scandal they had there some years ago with contaminated home produced baby milk. There is no reason why we cannot build on that trust to expand into other dairy sectors like butter and cheese.

The same is true of the rapidly expanding international market among sports people for protein powders, mostly made from whey (a fat free, protein-laden by-product of cheese making). This has now developed into an important part of the Irish dairy industry, and whey protein powder from Ireland is seen as a safe, quality product.

In fact most of the opportunities that we will have in the future for our dairy produce will be based on offering a premium range of dairy products which emphasize the grass-fed, natural milk production we have here, rather than the intensive grain-fed, indoor systems they have elsewhere. That image of premium produce from a natural environment will be important not just in mature markets in Europe and the U.S. but in developing markets as well where consumers are also becoming more concerned about what they eat and about the use of hormones and antibiotics in farming in many parts of the world.

Among the challenges we face will be that expansion on the proposed scale. With 300,000 extra cows emitting methane, there will be a substantial increase in our national greenhouse gas emissions. That may be a problem given the carbon targets we have to meet in the coming years.

This contentious matter was dealt with head on by Coveney, who pointed out that Irish agricultural production is independently recognized as one of the most climate-friendly and resource-efficient systems in the world. The European Commission's Joint Research Center has assessed Ireland's dairy production as that with the joint-lowest carbon-intensity in the EU, he said.

In the context of meeting the global climate change challenge, and against a background of increasing dairy demand, it cannot make sense to migrate dairy production from countries with highly carbon-efficient production systems (like Ireland), to those with carbon intensive systems, Coveney added.

All of which is true, if you look at it on an individual cow basis. But it does not get around the fact that, in proportion to other countries, Ireland has an awful lot of cows.

Nevertheless, if the world is going to produce and consume more dairy produce, then Ireland is one of the best places to do so. Irish milk and dairy products are set to make en even bigger mark across the globe in the future.

Irish cows graze in the fields of Aras an Uachtarain, the presidential residence.Photocall