Thursday 19 September 2019

Brexit-proofing blamed for UK's milk price hikes

Aurivo CEO Aaron Forde
Aurivo CEO Aaron Forde
Donal O'Donovan

Donal O'Donovan

A surge in UK milk prices this year may be an early indication British buyers are actively sourcing within their home market to limit the fallout from a hard Brexit, according to the head of Aurivo, one of the biggest food producers in the west of Ireland.

Aurivo CEO Aaron Forde said the dairy itself sells "next to nothing" into the UK, but it is exposed to risks if a hard Brexit makes it more difficult and costly to process milk from its suppliers in Northern Ireland. The group's UK-based sports nutrition business For Goodness Shakes is also potentially exposed if Brexit triggers a UK consumer downturn, he said.

He described Aurivo results yesterday as "solid and robust for ourselves in a volatile and challenging year" for the sector.

The co-operatively owned agri-foods business is best known for brands including Connacht Gold and Donegal Creameries.

Those results showed profits at Aurivo down 23pc to €3m, as sales rose 4pc to €443.8m.

Mr Forde said volatile weather last spring and summer had affected profits, including the impact of efforts to support milk prices to suppliers. Last year's heavy spring snow also led to the close of the marts business last year for a week - hitting turnover.

Weather-related costs are an increasing issue, Mr Forde said.

Last year the business was one of several co-ops that sourced fodder from other EU member states for farmers.

Aurivo invested €22m into the business in 2018, in line with a five year €48m programme announced last year.

The programme include boosting capacity at the Aurivo Dairy Ingredients plant in Ballaghaderreen, Co Roscommon. Investment is planned for a liquid milk processing facility in Killygordon, Co Donegal, and €10m is earmarked for the Homeland retail business, including new store openings.

The business is positioned as a potential consolidator, particularly in the North West region where it is based, Mr Forde said.

Aurivo lost out last year when it was among the bidders for cross-border rival LacPatrick, which was ultimately bought by Lakeland Diaries.

"We would have active dialogue with all our neighbours, consolidation tends to work best where you have physical or operational synergies," he said.

With volatility in markets, weather and the potential for a messy Brexit, Mr Forde said best response the business can make is to focus on operational excellence to build resilience.

"The world has gotten more volatile, all we can do is make sure the business is as robust as possible to buffer that," he said.

Indo Business

Also in Business