Energy costs ‘key for dairy industry’

THE cost of energy is one of the most pressing issues facing processors, a dairy industry leader has warned.

Lakeland Dairies chief executive Michael Hanley said it cuts the margin processors can achieve and ultimately it impacts on milk prices.

He told his group’s milk quality awards presentations in Cootehill, Co Cavan, that energy costs in Ireland are way higher than they should be. One of the main reasons for that is a lack of competition among energy providers.

“The establishment of a wholesale market for electricity, the removal of inefficient generating stations and the encouragement of new entrants to the electricity market would go a long way to improve the situation for all energy users, including dairy processors,” he said.

Mr Hanley said dairy market conditions have been very volatile in recent years but he was pleased to see some level of balance returning this year.

“Returns have improved and, while it remains to be seen how long-term that will be, it appears that 2007 is going to be a better year for dairy farmers. That is very much to be welcomed,” he said.

Lakeland Dairies chairman Mike Magan said the Government’s €300 million capital investment package for the dairy processing sector including €100m grant assistance for specific proposals where processors provide matching funding is a far sighted initiative.

He said there is ample capacity in the Lakeland region for new ventures designed to consolidate the milk pool, create efficiencies of scale and target new market opportunities.

“The investment fund provides the opportunity for real steps to be taken in this regard, it remains to be seen how it will be allocated,” he said.