Dairy farmers need to concentrate on margin more than price, according to Dairygold CEO Jim Woulfe, who warned that milk prices will weaken over the next six months.
Volatility is the price to be paid for deregulation and Ireland, he warned, is just a small global player in milk and Irish production levels will not determine the price Irish dairy farmers are paid. “Prices will weaken over the next six months, but to where we do not know. It will coincide with the removal of quotas, but the two are not related.”
The biggest issue Dairygold has over the past few years was the ‘serious ambition’ of its members. He said that Dairygold asked its members what it wanted a number of years ago to get their views on the end of quotas. “Three years ago we went to our members with a blank canvas, not a prescription. The members came back and said ‘you must be able to process the extra we produce'”, said Jim Woulfle. This led, he said, to the milk supply agreement, which was a ‘slow and bumpy road but we got through it”.
Since he took over as CEO, he said his ambition has been to ensure the fundamentals of the business were right. “Some 70% of our business is milk and the first horizon for us is about doing the basics right.”
He also said that Dairygold wants its members to realise opportunities in the future in a sustainable way. “Our lenders have been with us the whole way and that has been critical.”
Reox, he said, brought a lot of pain to the co-op and until recently it was still resolving the issues around the failed Dairygold spin off. “We had our own Nama…but we are in a good position now.”
Jim Woulfe was speaking ahead of a visit to Dairygold’s Mallow and Mitchelstown plants by the Taoiseach Enda Kenny today (Friday). The commencement of construction work at the €83.5 million milk processing plant in Mallow will be marked by the Taoiseach laying the foundation stone.