Co-ops urged to step up efforts to streamline their business

DAIRY co-ops in Ireland were urged by their national umbrella body yesterday to step up efforts to streamline the industry.

Irish Co-operative Organisation Society (ICOS) president Pat McLoughlin said the ending of the EU milk quota system in 2015 will provide an opportunity for the Irish industry, if it prepares in time.

The dramatic fall in dairy markets in 2008 has reduced returns from markets and has very serious consequences for producers and processors.

“Co-ops are currently paying more for milk than they are receiving from the market, and this is not sustainable,” he said.

Mr McLoughlin called on the boards of co-ops to commit to working with ICOS to streamline the dairy processing and marketing sector.

“This is essential if the Irish industry is to meet the challenges of the current turbulent market and be in a position to compete with international competitors.

“These competitors are already focussed on the opportunities in EU and external markets,” he said.

ICOS director John Tyrrell said the current product mix in co-ops is also very exposed to the volatile movement in commodity prices and needs to be reduced.

There is an urgent need to create larger milk pools for processing which will give greater flexibility to produce products that give a higher return and to ensure that investment in processing is optimised.

It will provide the best use of capacity and allow for plant scale and specialisation. This also needs to be supported by developing a product range and market structure to deliver better returns, because EU supports are diminished.

“The dairy industry must recognise there is a new set of challenges we must prepare for. Quotas are going, commodity markets will be more volatile than in the past, margins are squeezed and we have the future costs associated with climate change and energy.

“The industry has a responsibility to overcome these challenges to provide viable incomes and prospects for producers who own our co-ops and who depend on co-ops for their livelihood,” he said.

Agriculture Minister Brendan Smith also told the conference a clear domestic strategy to integrate milk production and processing capacity is needed to avail of future production opportunities and keep ahead of the competition.

Global growth in wealth and population will provide opportunities for quality producers like Ireland.

However, international dairy markets are very volatile at present, with commodity prices falling at a fast rate.

“However, while we are facing short-term uncertainty, all international analysis shows that the long-term outlook is bright,” he said.