Dairygold’s modular expansion plan is ideally constructed to allow the co-op to react to any shortfall in anticipated global demand for milk, said IFA’s Kevin Kiersey.
The IFA dairy chairman said Dairygold shareholders owe it to themselves to attend next Thursday’s AGM, to ensure the co-op’s milk supply agreement (MSA) is approved. He is urging Dairygold farmers to attend and speak their minds, and not leave it to others to speak on their behalf on the day.
With global demand for milk growing at 2% per annum in recent years, he is confident Irish dairy farmers will enjoy an era of unprecedented growth post-2015. He also notes that, in any case, the MSA is constructed to respond to any number of global market scenarios.
“The fact that the plan is modular means investment will take place over several years,” said Mr Kiersey. “If the forecasted volumes don’t materialise, then the full course of the investment plan may not take place.
“For instance, that might mean that you would have the drier in Mitchelstown first, but the one in Mallow would wait for the milk volume. I do believe that farmers want to produce more, and be in a position to supply the growing demand that will exist for their milk.”
The IFA dairy spokesman said he knows Dairygold has growing demand for its products from both existing and emerging markets. He also cites significant growth in demand by the Irish Dairy Board, which is busily developing routes to new markets.
Mr Kiersey said there is no basis to any talk of the EU reversing its position on the ending of milk quota restrictions in 2015. The EU is committed to dairy expansion, anxious to reverse the head start which the EU’s quota era has given to US and NZ dairy producers.
He also said the sector will certainly be lucrative. In the immediate term, the IFA is targeting 34cpl +Vat from Irish co-ops for all March milk. Kerry this week set its March price at 35cpl +Vat. This is a fair indication of the better times that lie ahead for Irish dairy producers.
Mr Kiersey said he wished to “set farmers’ minds at rest” as to Dairygold’s MSA, which he described as robust and constructed in the best interests of both suppliers and shareholders.
“We have looked at this milk supply agreement in great depth,” said Mr Kiersey. “We have sought legal advice, and we are happy that it is robust, that it is within the society’s own rules and that is to the benefit of all Dairygold members and shareholders.
“In the last 18 months, Dairygold have developed and communicated detailed plans to fund the necessary additional capacity required to process and market the extra milk its suppliers intend to produce after 2015. These well thought-out plans were rigorously examined by every committee within the democratic structure of Dairygold co-op, and were extensively communicated to farmers, including in one-to-one sessions,” Mr Kiersey said. “A milk supply agreement rooted in the co-op rules forms an intrinsic part of those plans. IFA itself examined the agreement, sought legal advice on several issues, and obtained clarifications and adjustments to the satisfaction of our elected representatives in the region, which were adopted by Dairygold.”
Mr Kiersey urged farmers to speak their minds at next Thursday’s gathering at the Dairygold Powder Store in Mallow, Co Cork. He said the IFA will continue to encourage co-ops across the country to work and plan investment in close co-operation to ensure that best use is made of scarce farmer resources in planning for the post-2015 era.
“It is our business as dairy farmers and co-op shareholders to take an active interest in the detailed workings of our co-op, especially when it comes to plans which will underpin our livelihoods for years to come. We should not leave it to others to attend on our behalves or to speak for us,” he said.
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