Dairy farmers pinpoint most pressing issues
The clamour for change in the Irish dairy industry is gathering pace. Last week's meeting of the Discussion Groups of Ireland in the Horse and Jockey highlighted the frustrations felt by committed milk suppliers at the slow progress being made towards industry consolidation and rationalisation.
Farmer anger at the Tipperary meeting centred on several issues:
- The difficulty in getting elected to co-op boards and in effecting change if you managed to get onto one;
- A view that the dairy sector was slipping from farmer control;
- Frustration that the Irish Dairy Board (IDB), as it is currently constituted, allowed dairy processors to compete with the board in certain export markets while the chief executives of the same processors remained on the IDB board;
- That despite dairy farmers funding the IDB to the tune of €4.5-5m annually through the dairy levy -- which delegates claimed cost the average 70-cow supplier around €500 a year -- they received no direct return for this investment and very little recognition.
The Discussion Groups of Ireland don't have all the answers but their proposals for changing the manner in which the IDB board is constituted has already stirred debate.
However, it has to be admitted that changing the board shareholding from the current co-op ownership model to farmer ownership has legal implications and is going to be very difficult to push not only at co-op board level but also within the farm organisations.
The KPMG study will add further fuel to this particular fire. The dairy industry needs massive investment if it's to cope with the 50pc increase in output that is targeted in the Food Harvest 2020 report.
But reading between the lines of this latest study, it appears that there is no scope for the co-ops to fund this expansion out of their current profit margins.
With processing costs here in line with international competitors and gross margins apparently unaffected by the product mix, the report seems to be suggesting that dairy farmers themselves are the only ones that have scope to cough up the dough that's required for expansion.
Why else would the report have recommended switching to a new price-setting mechanism that could see farmers receiving a lower price?