Farm Ireland

Friday 19 January 2018

Dairy processor to consider further expansion as milk supply exceeds expectations

Dairy processor to consider further expansion as capacity grows 45%

Margaret Donnelly

Margaret Donnelly

Arrabawn Co-op has hit its 2020 milk supply targets three years early and embarked on a capacity review with the likelihood of further investment as a result, CEO Conor Ryan told suppliers at its AGM last week.

Ryan said that milk supply has increased more than was anticipated and that the co-op will have to adjust its capacity plans accordingly.

“We’ve reached our 2020 target capacity in 2017. As we stand at the moment, we have an immediate plan that would give us another 10pc headroom but the longer term plan for 2020 needs to be reviewed and we need to ensure we have increased capacity.

“Previously, we had expected supply to increase slightly this year but it’s increasing faster than we had anticipated. We need to come up with a concrete plan over the next few months to deal with this. Our Kilconnell site has capacity but our Nenagh site is the one that will need capacity adjustment.”

After an unprecedented round of investment that has seen capacity grow over 45pc in the past four years, the post quota increase in milk supply has been such that the Co-Op is now recalibrating its capacity plans to cater for greater supplies again.

Ryan was speaking at the processors annual general meeting at the Abbey Court Hotel last week and said that it had been a strong start to 2017, in particular on feed, with fertiliser also strong initially and the outlook on both feed and fertiliser prices positive.

“With regard to milk, year to date we are up 6.4pc on milk and running now at 7pc plus week on week,” he said.

The outlook, he said, was positive.

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“Overall EU prices have stabilised, though butter is probably driving it on longer than we expected.  Overall with milk prices we would be reasonably confident that current price levels are sustainable over the next few months.”

Referencing the Bord Bia Sustainability Scheme, the CEO said that 97.7pc of Arrbawn suppliers are participating, up from 53pc of our suppliers just one year ago.

“There’s a lot of money involved for the good of the Irish farmer so this scheme is at a critical juncture. The next six months will determine whether it’s a success and it would be a terrible pity for the sake of 1pc not being committed or involved that the other 99pc would suffer,” he added.

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