Arrabawn capacity rises by 40% as suppliers spur rival advances

Arrabawn has capacity to process 40% more milk from its 950 suppliers, none of whom has defected to a rival creamery, said the co-op’s chief executive, Conor Ryan.

Having finally ended summer-long speculation of a possible merger with Dairygold, Mr Ryan said members at the Nenagh co-op are now ready to reap the rewards of €8m in investments in a new evaporator, lab facilities and a natural gas network with Gaslink.

Arrabawn has also just signed a deal to distribute Koch Advanced Nitrogen fertiliser in the North Tipperary, Galway, Offaly and South Roscommon region. The new fertiliser, branded as KAN, will now be available in Arrabawn’s 13 agri stores.

Arrabawn insist its negotiations with Dairygold, Ireland’s largest farmer- owned dairy co-op, were amicable.

The two co-ops will continue their winter milk arrangement, whereby Arrabawn processes Dairygold milk in December, with the Cork co-op returning the favour in January and February.

“We’ve had that arrangement in place for the past four years, and there’s a good relationship between us for a very long time,” said Mr Ryan.

“We’ll continue to look at any other partnerships that are in the best interests of our members.”

Arrabawn’s milk output has increased 10% this year.

Once the new evaporator is operational in December, weekly processing capacity will jump 40% from 2.5m litres up to 4m litres.

Some 40 Arrabawn members shared an unexpected €700,000 windfall this year — thanks to a 2.5m allocation at the second round of fleximilk, offsetting its 2.5m litre excess for the quota year. The co-op’s members just scraped through without a superlevy fine, which would have cost members 28c per litre.

“We are continuing to operate a similar mechanism,” said Mr Ryan. “We are taking 14c per litre now to cover any potential superlevy fine next year. That way our members can take advantage of the good price now. We’ll take the remaining 14c per litre next year.”

Arrabawn also recently successfully concluded a tender with Tesco. That outlet, for around 60m litres, annually will be welcomed by 150 liquid milk suppliers at the co-op.

While some members had threatened to move their supply to Dairygold, ultimately they all stayed put.

“A handful of our suppliers said they were speaking to Dairygold,” said Mr Ryan.

“They’re entitled to do that. All we can do is ensure we are competitive, and give them a good service.

“We have performed quite well on milk price, and our members recognise that,” he added.