Some farmers out of tune
The loss of 45 jobs, of which 40 are seasonal for seven months, provoked a bigger reaction even than the announcement of 150 jobs going at the ADM plant in Ringaskiddy in Cork.
In each case Irish plants couldn’t live with the red hot competition in the food industry.
ADM makes citric acid, a common food additive, being marketed at lower and lower prices by Chinese manufacturers, who have taken about 30 to 40% of the world market.
At Kilmeaden, Glanbia makes cheddar cheese. Like citric acid, global sales of cheese are growing, but every dairy company in the world is looking for a share, and only the fittest, cheapest producers can survive.
Glanbia hope to survive by shifting manufacture to their Ballyragget, Co Kilkenny HQ. It would even work out cheaper than Kilmeaden to have it manufactured under contract by Dairygold Co-op in Co Cork.
It looks like a good deal for farmers, who had challenged Glanbia and the other co-ops during the summer to stop cutting milk prices, and to start cutting their processing costs instead. IFA President John Dillon warned that price cuts would drive thousands of dairy farmers out of business.
He called on farmer board members of co-ops to get stuck into the really hard decisions, by getting rid of co-ops’ inefficiencies and duplication.
IFA dairy chairman Michael Murphy (who farms in Co Waterford) spent the summer telling co-ops to look at every avenue to make savings, instead of the “easy option” of milk price cuts.
He said dairy farmers need a strong, industry-wide strategy to take out inefficiencies, and co-operate on collection, processing, R&D and marketing.
He said Irish dairy industry mergers had not always been accompanied by the appropriate cost elimination.
But not all dairy farmers are singing from the same hymn sheet, with some in Co Waterford saying the closure of Kilmeaden Cheese Factory is a ridiculous decision, and pledging to fight to keep it open.
In fact Glanbia has said it will retain the Kilmeaden facility, and will continue to explore alternative specialist cheese production options. They will continue to collect milk from suppliers in Waterford at no extra cost or inconvenience.
Most of the milk produced by Co Waterford’s 900 dairy farmers between March and October went to Kilmeaden, averaging 180,000 gallons of milk a day.
Cheese has been manufactured at Kilmeaden for 20 years, but its closure has been on the cards since the merger of Waterford Foods and Avonmore.
With Snowcream Dairy soon to be the only remaining former Waterford Foods dairy processing industry left in Co Waterford, farmers may feel the county is getting a raw deal from the Kilkenny HQ.
However, unless farmers present a united front, they cannot expect to influence the policy of the company which they partly own, and which buys their milk.
The next time farmers complain about price cuts, Glanbia can point to the furore over their attempt to cut costs - as requested by farmers - at Kilmeaden.
Unfortunately, cutting costs means job losses. This realisation will be driven home for Glanbia’s 5,700 farmer suppliers in the coming months, as the company plans ongoing cost reductions in its agri-business division.
Announcements are on the way of closures of more of the 72 retail branches which deal directly with farmers.
Judging by the Kilmeaden reaction, IFA will soon be calling for an end to Glanbia’s cost cutting, whatever about the milk price.
