Farm Ireland

Wednesday 17 January 2018

'Explosive' growth after 2013 predicts Glanbia chief

Caitriona Murphy

Increasing processing capacity for the explosive growth expected in milk production post quota posed a huge challenge for policy makers and the entire dairy sector, Glanbia Ingredients chief executive Jim Bergin has warned.

The level of planning needed to facilitate the levels of growth forecast for the sector would have to be addressed at government, processor, and farmer level, Mr Bergin told the Agriculture Science Association (ASA) conference on Friday.

"We have to consider the trajectory of growth in milk production, which we believe will be explosive post-quota," he told delegates in Tullow.

"A new processing plant, based on a greenfield site, would take two years to complete, allowing for planning issues, maybe three years in the worst case.

"Should this be a Glanbia or a national project? Definitely there is significant growth planned in the Glanbia area.

"But this is a true business case for the country. This is a very good opportunity for the industry to coalesce around top-class facilities."

Mr Bergin said the challenge was to determine who should put in the seed capital.

"Irish co-ops have low equity accumulation compared to their European counterparts so we need to look at the industry partners -- shareholder, processors and Government," he said.

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"Perhaps there is a case for long-term funding at low interest rates -- that is a challenge to Government."

The Food Harvest 2020 report, which targeted a 50pc growth in milk production, received a very positive reaction from speakers at the ASA conference.

Teagasc's head of dairy production research Padraig French described the target as very achievable but warned that there were plenty of hurdles in the way.

"Prior to quota introduction, milk production in Ireland increased by 70pc," he reminded conference delegates.

Mr French told the conference that better fertility, targeted calving and a better seasonal spread of milk could improve processing capacity utilisation from 65-66pc at present to the low to mid-70s.

However, the dairy expert warned that there was a big risk that farmers would try to drive output by buying inputs.

"That is a very dangerous strategy in a year like 2009," he pointed out.

"Grass is our only competitive advantage and the average dairy farm currently uses 8t/ha but there is potential to bring that up to 12t/ha of dry matter," he said.

Glanbia's Mr Bergin added that he would be concerned about the potential for the superlevy to frustrate farmers who wanted to expand between now and 2014.

Irish Independent