Farm Ireland

Monday 25 March 2019

Milk price outlook 'very positive' says co-op boss

Average prices for 2018 could hit 34.5c/litre, predicts Arrabawn CEO

Arrabawn CEO Conor Ryan
Arrabawn CEO Conor Ryan

Martin Ryan

Milk price cuts may not be finished but they are close to bottoming out.

That was the verdict from Arrabawn CEO, Conor Ryan at the co-op's AGM last week where he told suppliers that he was "encouraged" by the turn around in the butter market - he was optimistic that the society could return a milk price average for 2017 within 3 to 3.5 c/l of the record payout to suppliers last year.

"Over the last few weeks we have been encouraged by the growth in the price of butter where we see the price recovering and I can see the future from May onwards being very positive." Arrabawn is projecting an average milk price of 34-34.5 c/l for 2018, said Mr Ryan.

It paid an average of 37.45 c/l for milk in 2017, with butterfat at 4.11pc and protein of 3.45pc.

"We are not saying that the changes in milk price are finished, but, certainly we feel that we are nearly there."

Milk intake at Arrabawn has increased for each of the past three years, following the ending of milk quotas, with growth in the dairy division up 30pc.

Mr Ryan said that the growth in supplier production will continue in 2018 at a slower rate of between 2pc and 4pc, but one of the challenges ahead of the society is to ensure capacity for continued expansion.

The society estimates that further capital investment of up to €30m in processing and associated facilities will be required over the next two years.

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"We need to future-proof the plant and put in extra capacity. Our plan is to put in a new casein plant and run it alongside the current one," said Mr Ryan.

"Not alone will it add capacity but it will add reliability so that we will not get caught," he said. "We are very clear in our co-op as to what we want. We want our farmers to be able to expand.

"We were restricted long enough, so we need to put in money to the development of the plant so that no supplier is restricted and that they can expand as they wish," he added.

The society processed 361m litres from its own suppliers in 2017 and foresees further growth in production to 380-390m litres over the coming years.

It had a turnover in 2017 of €249m, an increase of €50m on 2016 and profit of €4.7m which was up €0.5m and net debt of €16.38m after capital additions costing €10.1m during the year.

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