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Wednesday 18 October 2017

Arrabawn Co-op continues to explore its options

Prize Guys: Arrabawn Co-op quality milk award winners, Eoin Toohey, Moneygall (over 250,000 litres) and John Fox, Oranmore (under 250,000 litres) with Patrick Meskell (far left), Arrabawn chairman and Conor Ryan (far right), chief executive at the co-op's AGM in Nenagh
Prize Guys: Arrabawn Co-op quality milk award winners, Eoin Toohey, Moneygall (over 250,000 litres) and John Fox, Oranmore (under 250,000 litres) with Patrick Meskell (far left), Arrabawn chairman and Conor Ryan (far right), chief executive at the co-op's AGM in Nenagh

Martin Ryan

Arrabawn Co-op has confirmed that they have been exploring processing options with neighbouring dairy processors in the past year.

The co-op's chief executive, Conor Ryan, told shareholders attending the AGM last week that he remained "open to discussions with any processor" in the pursuit of a better milk price for their 950 suppliers.

The well attended meeting was dominated by outspoken suppliers concerned about the processor's poor standing in national milk price rankings.

One supplier said that he was €5,500 worse off supplying milk from his 80-cow herd to Arrabawn than if he supplied a neighbouring co-op.

Another pointed out that a milk price that was just 2c/l lower than another co-op would result in €30,000 per day less being paid to Arrabawn suppliers.

However, Mr Ryan claimed that there had been "little or no difference between Arrabawn's price and the top players last year."

Concerns were also voiced over the possibility of suppliers leaving the co-op in search of better returns.

"There is going to be huge changes whether we like it or not. If 10pc of the suppliers or 10pc of the milk left Arrabawn – there is a large possibility it is going to happen – the overheads are going to be the same. As farmers get bigger they are looking at different milk processors," said another supplier.

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Mr Ryan accepted that the co-op was at risk of losing suppliers.

"I would be very foolish to think that there will not be movement of suppliers.

"But we have to ensure that our facilities are where they need to be, because there will be a flush of milk next year and if we are not able to process it we will be out of business," he said.

Prepared

"We are very well prepared for that. We have very little debt and we run a tight ship, but we have to improve on our milk price and we are working hard to do that," said the co-op boss.

Mr Ryan told the farmers that the society returned a record high average milk price of 38.87c/l in 2013. However, he also accepted that more needed to be done to become as competitive as the best.

"Arrabawn milk suppliers should not be taking a lower milk price than anyone else. We are working to get a better return from manufacturing milk," Mr Ryan said.

"We are open to all options and I can promise you that there is no closed mind at the board or management level on how we achieve that.

"We are ruling no one out in pursuit of getting a good milk price.

"Last year we spent a long time talking to a co-op but did not manage to get it over the line, but relations have been maintained.

"We continue to look at all options," he added.

He pointed out that heavy oil fuel will be replaced by natural gas early in 2015, which would generate annual savings of €2.5m.

Mr Ryan said that this was equivalent to 1c/l of milk processed and would be passed on to suppliers.

New processing capacity at the co-op has allowed them to start processing milk for Glanbia, Tipperary, Lakelands and Town of Monaghan during the last three months.

Another €8m is due to be invested in evaporators and cleaning equipment this year as the processor gears up to produce value-added whey proteins used in sports and infant nutrition products.

However, the Arrabawn boss refused to be drawn on how much any of these developments would add to the milk price for suppliers.

Arrabawn chairman, Patrick Meskell, reported that 2013 turnover was a record at €220.5m, with an extra €30m returned to milk suppliers.

Retained profits for the year were €1.4m compared to €167,000 for 2012.

He said that the expansion of processing facilities to handle a daily volume of up to 1.5m litres by 2015 is still on target.

Indo Farming

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