Partnerships with overseas co-ops likely to figure in IDB five-year plan

PARTNERSHIPS with giant overseas co-ops and the sale of under-performing subsidiaries are likely to figure in a new five-year strategy document which the Irish Dairy Board (IDB) is expected to publish in March.

The IDB has had discussions with Fonterra in New Zealand and with Dutch co-ops Arla and FrieslandCampina about possible product and storage exchanges that would be mutually beneficial during each other’s off-peak production periods, chief executive Kevin Lane told attendees at the Irish Farmers’ Association’s (IFA) Dairy 2020 conference yesterday in City West Hotel, Dublin.

The IDB recently disposed of its French subsidiary Loyez-Wossen via a management buyout. Mr Lane also said the IDB would consider other disposals. The Irish milk marketing body is considering other efficiencies as part of its plans to capitalise on Rabobank projections of 2.5% growth in global demand for milk, and the Government’s target to increase milk production by 50% up to 8.25bn litres of milk per annum by 2020. These targets will also necessitate targeting new emerging markets including Russia and China.

In response to queries from IFA members, the IDB chief also said that the dairy board will not take on any milk processing role in helping expand the dairy sector, along the lines suggested in the Government’s Food Harvest 2020. Instead, it will keep its focus on marketing Irish dairy products, developing new products and new routes to overseas markets.

The IDB last year rolled out its new Kerrygold Extra brand in Germany. That has grown to €20m per annum in sales. IDB’s overall market valuation is more than €2bn.

Mr Lane added: “We have disposed of our French subsidiary, while retaining our route to market there, and reinvesting those funds into our core business.

“By early March, we will be announcing other financial agreements as part of our plan to move forward over the next three to five years.”

Connacht Gold Co-op is also seeking to develop new overseas markets. Connacht chief executive Aaron Forde said: “We are considering acquisitions in new and emerging markets. These will further develop our options in overseas markets.”

Yesterday’s IFA Dairy 2020 conference was also addressed by Department of Agriculture secretary general Tom Moran, incoming ICOS chief executive Tom O’Callaghan and Dr Sean Brady, principal author of the Food Harvest 2020 report and chairman of the Dairy Expansion Activation Group which has recently published the new Dairy Sector Road Map.

IFA president John Bryan said the publication of the Dairy Sector Road Map shows there is real momentum behind the implementation of the targets set down in the Food Harvest 2020 Report.

The conference was subtitled Making Profitable Expansion Happen. This ensured that much of yesterday’s focus was on likely price volatility, particularly when the current quota era ends in 2015.

Cork dairy farmer Tim O’Leary said: “There is going to be a massive expansion in milk production in the Cork area, but there is no point in farmers producing milk if it isn’t going to be profitable. How are are we going to manage our incomes after the end of the milk quota?”

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