Dairygold job cuts a wake up call
The bosses at Dairygold are aware of this.
They know that the choices facing them are a slow death on the one hand, or innovating and moving up the value chain on the other hand.
As hundreds of their colleagues pack their bags, the remaining workers and the farmers who own the company and produce the raw material must face up to Dairygold’s pressing need to move onwards, from what Mike Feeney, of Enterprise Ireland’s Food and Marketing division calls the “false calm” in which the Irish agricultural industry has operated.
He says the industry was in an unreal market environment of protectionism, commodity purchasing and EU subsidies.
But all that has changed and he says food companies will go out of business now, unless they can command a higher price for what they produce.
The subsidies are being stripped away, market barriers are breaking down, and prices for agricultural produce are harmonising across the world.
Instead of national markets dominated by local players, the leaders now are companies with the scale and the competitive edge to operate across Europe.
The Irish food industry also has to move to counter the dominance of the supermarkets, and get fully up to date with the food safety, animal welfare and environmental concerns of consumers, and with their changing lifestyles.
The new, much more challenging business environment will expose industry un-competitiveness. Neither farmers nor processors can afford to stay locked in the past, clinging to outmoded ways of doing business, while the prices for their commodity products harmonise across world markets.
Moving from these commodity products to new, valuable and unique products that the consumer wants and will pay for is the route to much higher profits.
Irish companies large and small have already taken that journey.
Dairygold must now set out on the same road, by innovating and moving up the value chain, and being market led and customer focussed.
The sacrifice of those who lose their jobs will not be wasted if it jolts the food industry into a change of mind set from ‘product led’ to ‘market led’.
With that culture change must come a willingness to invest in innovation, in product development, in people skills, and in marketing.
That will not be an easy change of direction in our co-operative dairy industry, where we have heard much more over the years about paying farmers maximum milk prices than investing in the research and development which is a first step towards success.
