Arrabawn revenue surge gives €37m boost in farmers cheques

By Joe Dermody

Arrabawn Co-op delivered a €37m increase in milk payments to its suppliers in 2017, with the average milk price 37.45c per litre up 10c versus the previous year.

The Tipperary co-op’s annual report also shows milk supply up 9% to 361m litres during 2017. Turnover for the year rose 25% to €249m, up from €199m in 2016. 

At the Presentation of the Arrabawn Co-0p Quality Milk Award (from left) Conor Ryan, CEO, Winner Thomas Mahon, Kinvara, Co Galway, Patrick Meskell, Chairman, and Sponsors Martin Troy, AIB Nenagh.

Arrabawn has milk suppliers across Munster, Leinster and Connacht.

Shareholder earnings were up from €9.5m to €10m, with the €4.6m operating profit up from €4.5m in 2016. 

Shareholders’ funds also increased from €47.8m to €51.1m, with shareholder value now having grown by 36% over the past five years.

In terms of commodities, butter prices were at unprecedented unseen levels at over €7,000 per tonne.

With intervention available for skim-milk powders, the protein market was also supported, also helping to bolster the strong milk price.

Arrabawn’s strong performance was aided by the co-op’s €40m investment programme over the past five years. This continued in 2017, including at its liquid milk processing plant at Kilconnell.

The completion of the current investment programme at the plant in the first half of 2018 will deliver significant spare capacity, with the Co Galway site capable of processing 150m litres per annum. 

Further investment was also made at the company’s Nenagh operations, particularly through an effluent plant upgrade to bring it in line with environmental best practice.

The company’s agri business also had a very strong year with excellent growth in all categories. 

The performance of the new store in Tyone on the outskirts of Nenagh was very strong, validating the wider investment programme that this year will also see work on another new flagship store start, this time on the outskirts of Athenry. 

Feed sales in 2017 also surpassed all previous records, growing 17% to 150,000 tonnes.

Arrabawn CEO, Conor Ryan, said: “2017 was a very successful year by any standards. Ultimately, we were able to pay out an additional €37m to our suppliers, which averages out at €40,000 per supplier.

This significant increase was off the back of a positive 2016.

“There has been a significant growth in milk supply, coming predominantly from existing suppliers but we are also seeing new entrants to the market. The increase in supply has resulted in further investment requirements commencing last year and this will continue throughout 2018.”

Arrabawn chairman, Sean Monahan, added: “The performance in 2017 validates the investment strategy undertaken by Arrabawn this decade. 

"We were competitive through 2016, but 2017 saw us in a position to pass on significant milk price increases to our suppliers, reflecting market returns. We have also worked closely and supported our existing suppliers and new entrants through this growth phase across a range of initiatives.”

Meanwhile, in April the co-op cut 2c off its March milk price, giving suppliers a base price of 32.05c per litre including VAT. 

It offset the cut with a 2c bonus in light of difficulties facing farmers.

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