Dairy farmers have welcomed a decision by Ornua, the agri-food co-operative, to pay an additional €15m bonus to its member suppliers.
It follows the recent disposal by Ornua of its majority stake in DPI, a US speciality foods distribution business, to Arbor Investments.
The €15m will be funded from Ornua’s gain on that disposal and will be paid to member suppliers in April/May in addition to the normal annual cash bonus.
Ornua,, owner of the iconic Kerrygold brand, is responsible for about 60% of Ireland’s dairy exports to over 110 countries, on behalf of its members — Ireland’s dairy processors and farmers.
In addition to returning additional funds to its member suppliers, Ornua said the sale of DPI will allow it to continue to develop its core business of building routes to market for Irish dairy products.
Over the last 18 months, Ornua has invested in acquisitions and key capital expenditure in Africa, Germany, Ireland, Saudi Arabia, Spain, Britain and the US.
Already in 2016 it has acquired Shanghai-based dairy manufacturer Ambrosia Dairy.
Ambrosia supplies dairy products such as sour cream, yoghurt and speciality cheeses to the high end retail and food service markets in the Shanghai region.
The acquisition provides Ornua with its first manufacturing base in China, one of the most important global dairy growth markets.
Ornua CEO, Kevin Lane, said the latest acquisition is another milestone in its growth as a global supplier of quality dairy products.
“We are buying an excellent dairy enterprise which allows us to significantly grow our Chinese business in one step.
“It provides us with a manufacturing base in China and brings on board a team with local knowledge and expertise, complementing our own existing in-market operation,” he said.
ICMSA dairy committee chairman, Gerald Quain, said Ornua’s additional payment to member supplers was most welcome.
It was against a background of serious pressure on dairy markets and a current milk price that is below the cost of production.
He calculated that the additional bonus would translate to about 0.5 cents per litre of the milk supplied to Ornua.
Co-ops must pay this back directly to milk suppliers, given that it was their investment in Ornua that put this business in place, and in recognition of the serious income pressures being felt farmers at this time.
Mr Quain said that the decision by Lakeland Dairies to hold the milk price to its suppliers for December milk at 26.25 cents per litre was most encouraging.
Mr Quain said that this was the kind of practical support and solidarity that should be an example to other processors — some of whom have much greater reserves than Lakeland.
Calling for further Government and European Union action, he said that a meaningful Intervention price of at least 28 cents per litre and long-term support is still awaited.
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