Dairy industry must address the challenge of adding value

Despite the fact farmer milk prices have risen considerably over recent months, international dairy consultant Bruce Woodacre has told AgriLand that the Irish dairy industry must seek to add value to the entire range of products it is offering the market.

This, in many ways, reflects a number of the presentations made at the recent ICOS conference, which provided representatives from Ireland’s leading dairy processing businesses highlight the investments they are making for the future.

“We can no longer compete as a supplier of commodity products,” Woodacre stressed.

“That will be left to those regions of the world where land and labour are cheap.”

Significantly, the East Anglian-based milk production specialist believes that the challenge of adding value is one which individual farmers must also address.

“Farmers must seek to reduce the number of links in the production and marketing chain,” he further explained.

“This means producers cutting out as many middle men as possible when it comes to sourcing feed and, where possible, dealing directly with consumers and retailers. Consumers have been brought up in an environment where subsidised and cheap food was the norm. And it will take time, possibly up to a decade, for the average man and woman in the street to recognise the true value of the food they are eating.”

Woodacre also believed that consumers are much less likely to pay a premium for food while the credit crunch impacts on family budgets.

“We are already seeing this where sales of organic produce are concerned,” he confirmed.

“The reality is that price and perceived value-for-money are now the key factors determining dairy and other food purchasing decisions.

“And these are issues that the farming sectors must take on board. In my opinion the challenges now impacting on the food industry will bring about major changes in the structure of the farming sector. Competition from imports will continue unabated, which means that we may well end up with a much smaller production base. This is already happening within the dairy sector. Efficient producers will continue to make money. But for those herdowners who are not achieving high levels of performance, the future looks bleak.”

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