Dairygold capital spend is excessive — here are the correct figures

It was interesting to read about the new study proposing Cork as a dairy centre hub creating 4,000 jobs (Irish Examiner, January 21).

As a Dairygold shareholder, I hope one issue that is dealt with, one which has not been dealt with in previous expansion studies, is, where are the acres for the extra cows in County Cork?

I believe there is confusion in the article with regard to the capital spend by Dairygold. This is easily understandable considering the various combination of figures being circulated over the past while.

The correct figures for Dairygold in recent years are the following:

€89 million has been spent on Castlefarm, Mitchelstown, dealing mainly with whey de-mineralisation, partial drying and drying.

A further €22.5m has been spent on the cheddar cheese plant on the other site in Mitchelstown and in Mogeely on the Regato cheese plant. This is a total of €111.5m.

The €33.5m spend which was in the media last September at the time of the Taoiseach’s visit is part of that €111.5m.

None of this investment is connected to the manufacture of Kerrygold butter on the site by the Irish Dairy Board (IDB). This plant will be owned by IDB.

Dairygold indicated in 2013 that, they were also going to spend a further €120m in Mallow, in two phases. This comes to a total spend on the plant of €231.5 million.

The first phase would cost €68.2 million. This involved installing a 7.5tonne/hour drier to make milk powder on this site in 2015. Since first announced, this cost has increased to €83.5 million.

I find it difficult to see the justification for either figure. Mallow is a brownfield site, meaning it has much of the infrastructure on site, electricity, natural gas, waste management etc. I compared this development with others across the world in a study in 2013. I concluded that its figures seemed to be out of line with other similar developments, in Australia, New Zealand, USA and Ireland. That doubt I raised at that time, has never been replied to or answered.

Dairygold also indicated in 2013 that it would require further capital of €125m for funding holding stock and delayed payment by purchasers of milk powder produced at the Mallow plant. This would see a total spend of €356.5 million between plant and working capital.

The future milk price to the farmer is what will be asked to carry the burden should the spend be in excess of what is needed.

David N Murphy,

Knockboy,

Lissarda,

Co Cork