Farm Ireland

Wednesday 25 April 2018

Milk sector crisis narrowly averted

Supplies go 'on tour' as dairies struggle to cope with volume surge

Martin Ryan and Declan O'Brien

A major crisis for the milk processing sector was narrowly averted after a surge in production pushed dairies to the limit last month.

Although companies were not forced to "dump" supplies, one industry source admitted that "milk was on tour" around the country in the first fortnight in June as processors struggled to deal with the volumes coming at them.

The pressure mounted at the end of May and into June when excellent weather and grass growth combined to drive milk production to near record levels.

While dairies have remained tight-lipped on the crisis, some have admitted privately that the difficulties highlighted the capacity limitations in the industry.

"There were no reports of milk being dumped but there were weekends when some processors came close," one senior industry official said.

"Most liquid [milk] plants don't process on Sundays so that pressure falls back on the manufacturing plants," he said.

It has been established that several of the processors experienced difficulties in handling the intake at peak times, with some smaller operators appearing to have been among those worst affected.

Some dairies were hit by two peaks within a three-week period, and a serious crisis was only avoided by the movement of milk between processing plants and co-ops and the full usage of all available storage.

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A spokesman for Kerry said intake in May was up two million litres on last year, but he claimed that their processing scale meant they had not been under pressure.

Pat McCormack, chairman of the ICMSA dairy committee, said a serious crisis was only narrowly avoided.

"I understand that it was serious. The incident has raised a lot of concern regarding the capacity of our processors to handle peak intake and this is going to have to be addressed," Mr McCormack said.

"The figures from ICBF [Irish Cattle Breeding Federation] are that there is a big increase in the number of dairy replacements being reared, and farmers are already gearing themselves for a big increase in milk production when quotas are lifted," he added.

The ICMSA official said the recent difficulties would have been even more serious had the spike in supply been sustained for a longer period.

This summer's problems should act as a "wake-up call" for the industry on how the expected additional milk production is going to be handled, he insisted.

"These issues have to be raised now because all of the indications are that there will be a surge in milk production once quotas are gone. There will be huge capital investment required and who is going to pay for it?" he asked.

The 2020 strategy document published last week called for a 50pc hike in dairy output over the next decade.

The cost of expanding the industry's processing capacity to handle the additional 2.75bn litres of milk was put at €400m.

Irish Independent

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