Co-op boss: Let's be realistic about all of this
Published 23/11/2010 | 05:00
"A 50pc increase is possible in theory. But we're working off the assumption that it'll be closer to 30pc on the basis that this was the level of expansion achieved over the past 10 years in Northern Ireland, where quotas became irrelevant years ago.
"We shouldn't be under any illusions here. The only home for all of this extra product is in commodities. This will become self-fulfilling because of the determination to promote the extra production through spring calving systems. I think the product mix will depend on what the market looks for year to year, but the main home for it all will be in Asia.
"I'd expect every processor to take on with some of the extra processing demands. But I don't think processors are half as excited about processing this extra milk as farmers are about producing it. I don't really think the extra output is going to reduce our overhead costs if we are required to invest in facilities to cope with a huge seasonal spike in May and June.
"Why are we dismissing a model similar to Northern Ireland where the ratio between summer and winter supply is only 1.5:1? This is four times less than the Republic and represents a significant saving in capital investment at processor level.
"I'm concerned about everybody piling into extra milk production.
"The extra milk that we produce is not going to have any impact on world milk prices. But it will make us even more exposed to the already volatile world market price. "How will farmers cope with another 2008 if they've borrowed heavily to expand?"