Dairy sector ‘needs more restructuring’

CO-OP leaders were told yesterday that the need for further restructuring in the dairy processing sector is now all the more urgent.

Delegates to the annual conference of ICOS, the co-ops umbrella body, heard the society’s director general, John Tyrrell, outline the reasons for further restructuring.

He said it is due to the continuing changes in the policy framework with market liberalisation and greater competitive pressures at processing and retail level.

Mr Tyrrell said was essential that the sector continues to pursue a process towards achieving the optimum structure for the most efficient assembly, processing and marketing of the Irish milk supply.

“This may take two or three steps to achieve or may take the form of regional combinations of processors or joint ventures between willing parties. We need a solution that best suits Irish conditions,” he said.

Mr Tyrrell said substantial rationalisation and consolidation has taken place in the dairy sector over the past six years, since the publication the ICOS Dairy 2000 Strategy.

Mr Tyrrell said while progress has been made, the challenges and recommendations outlined in the ICOS 2000 Strategy and in the 2003 Prospectus Report are still valid and must be pursued. These include increase the scale of processing and marketing of dairy products and enhancing the value added content.

He said a significant number of dairy co-operatives and companies will be submitting proposals for funding under the Dairy Investment Fund, announced last July by Agriculture Minister Mary Coughlan.

It provides for €300m capital investment, of which €100m will be grant-aid. The establishment of the fund was a key plank of the ICOS agenda in the recent partnership talks.

Mr Tyrrell said ICOS is now working with processsors in finalising proposals before the November 23 deadline and he is confident that a significant number of proposals will be submitted.

He said that while there are some limitations on the type of projects covered under the fund, it offers a real opportunity to underpin improved efficiency and value added in the dairy sector.

The fund provides for up to 40% funding of investment in the south and east and up to 50% in the BMW region.

Mr Tyrrell said this level of grant aid will not be available in the future due to new EU state aid rules that will become effective from the beginning of next year.