Dairygold: A processor’s perspective to dairy expansion
Jim Woulfe CEO of Dairygold gave an overview of its expansion plans going forward after milk quota abolition in 2015 at today’s Teagasc dairy expansion conference in Tippearay.
“We have 12 months left of quotas. There has been a huge amount of containment of opportunities at farm level. How can we help our members avail of this opportunity?” asked Woulfe.
He commented: “We have a single goal. To maximise our members income by means of sustainable faming.”
When analysing the global dairy market going forward, Woulfe highlighted that: “Demand is rising. Average growth in demand has been two per cent globally over the last decade. The outlook for demand is really healthy.”
He cited: “It is clear where the demand is coming from. The Middle East, North Africa and China, the emerging markets are the growth areas. We have to be conscious of what the market demands are in these countries.”
Going forward Woulfe noted: “These markets will continue to be unable to supply all their own milk requirements for a variety of reasons including production problems and costs of production … Required products are also different in these developing regions. This is due to income levels and taste in these regions.”
Woulfe stressed: “Food inflation is a genuine concern for civil stability in these regions. The hand of government is often seen in securing strategic supplies such as milk.”
In outlining Dairygold’s expansion programme he said: “We have been working hard on growing our business in advance of the abolition of milk quota. We have invested €120m in the past five years. Making this investment while trying to drive down costs and debt and paying a fair price for milk to our members.”
Woulfe commented: “Looking at the future, central to our focus is cheese and speciality IMF products.
“We have committed to accepting all the extra milk from our members. Working hard on having bank and member funding in place for expansion. This shows the confidence in the industry. The investment plan has been modular and sustainable.
“We are already seeing expansion. Since 2009 there has been a 14 per cent increase in milk supply. So it is already happening despite the restraints.”
He outlined Dairygold members have positive sentiment towards expansion. “Some 97 per cent of members have signed up to milk supply agreements. They are all completing forecasts of there supply,” he noted. “They are on the journey with us.”
For Woulfe: “Forecasting has been essential and important guide when Dairygold is making investments.” It expects a 57 per cent increase in milk supply by 2020 based on pre quota growth.
This will impact on the total capacity will be required, he said.
“Capacity for peak milk in 2011 was 2.9 m litres. In 2020 the capacity required will be 5.29 million litres. We are investing in bridging that gap. However there won’t be investment unless the milk is there, this is why forecasting is key going forward.”