Co-op and processor Dairygold has said that its processing capacity will be sufficient “well past 2025”.
Both Glanbia and Lakeland have put peak milk supply control measures in place – Lakeland last month and Glanbia a year ago last month.
There has been concern expressed in farming circles that other processors may decide to put similar measures in place for reasons of capacity shortage, oversupply or environmental action.
However, Dairygold chief executive Conor Galvin has said that he has no concerns around the issue of capacity at present.
Speaking to Agriland yesterday (Wednesday, April 13), Galvin said: “All the investments that have been made by Dairygold over the last eight to nine years as we’ve expanded have followed the grass curve.
“We have a very strong view that grass and the production of milk off grass, particularly around peak and supporting members to supply the majority of their volume across the peak period, is the most efficient way to produce milk,” Galvin added.
He went on: “So we’ve invested behind it, and that’s what members wanted us to do. So, as a result, what we now have is processing capacity that can process our peak. We have a 52 million litre processing capacity, which is available year round, with a peak currently forecast for the year of between 47 and 48 million litres.
“So in terms of that headroom, it is currently there and has always been there through expansion, and we’ve expanded and invested as milk has grown always with a view to the overall capacity…making sure that we weren’t overinvesting, but at the same time, preparing for those peak weeks.”
He highlighted that Dairygold’s ratio of highest weekly supply to lowest weekly supply is 10 to 1, and supply is heading towards the higher end of that at present.
However, Galvin also noted that the company is making a number of investments that will add further capacity.
These include the installation of a new evaporator in its Mallow facility. This, Galvin said, will allow the two dryers at the site to keep running while evaporators are cleaned, allowing for an additional capacity of three million litres.
Further investments over the coming 12 to 18 months will add another three million litres, the Dairygold chief executive said.
“In a world where we would anticipate our milk growing by 2% to 2.5%, all other things being equal…that give us processing capacity well past 2025… It leaves in the high 50s [millions of litres] for capacity while at the same time the peak at that stage is probably in the low to mid-50s.
“The thing you have to be careful of here is you don’t overinvest…but we need to support members to produce milk in the grass curve, that’s very important. When you’re talking about a 10 to 1 jump, those assets need to be there when they are required,” Galvin said.
He added: “We have four plants at full clap. They’ll be at full clap until the middle of July, and that’s to process a peak.
“So in terms of do I have concerns, I don’t. I think the members have quite rightly invested behind a grass curve and they’re getting the benefit of it and that will continue.
“We’ll do our surveys. We do a rolling two to three year survey to understand were members are on milk supply, and that’s what we’re currently looking to cover between here and 2025,” Galvin concluded.