The €40 million Kerrygold Park expansion in Mitchelstown, Co. Cork, currently underway, is expected to be completed by March 2023, according to CEO of Ornua, John Jordan.
In late 2020, the board of Ornua approved the expansion of the existing €38 million facility, which opened in 2016, to facilitate increased levels of manufacturing, packaging and distribution of its Kerrygold butter products.
Pre-expansion, the facility had the capacity to produce and package up to 50,000t of butter per annum; post-expansion, that figure is expected to almost double.
Progress on the expansion plan was delayed following an appeal to An Bord Pleanála of the planning approval given by Cork County Council. That appeal was not upheld and in January 2022, the green light was given again.
Commenting, the Ornua CEO told Agriland:
“It was all approved last year but we couldn’t get diggers and builders on site until earlier this year.
“It is a construction site at the moment but the ambition is to get it up and running by March 2023.
“It will be a bigger facility, with bigger processing capacity. We will be putting more cream through, so we will be buying more cream from co-ops and we will be producing more Kerrygold butter.”
Kerrygold Park currently employs over 120 people with a further 30 permanent jobs to be created once the project is completed, the company has confirmed.
Additionally, the construction of the expansion is expected to create 120 jobs.
Growing share of Irish dairy
In 2021, Ornua purchased €1.2 billion in premium Irish dairy products and that figure is set to rise in 2022, and beyond, the Ornua CEO said.
“That will increase in 2022 and we see that increasing as the years go ahead. What changes that €1.2 billion [figure] is product price, but we are seeing volume increase year on year and that volume increase is above the milk [volume] increase in Ireland, so we are growing our share of Irish dairy.”
He said there is no concern at present about Irish milk production reducing, despite estimates that indicate otherwise.
“Ornua is not worried about the ability to provide cream or butter into Kerrygold, we think there is plenty of capacity in Ireland to do that, and move product up the value chain.”
“Estimates are out that there is a reduced rate of milk growth over the next five to 10 years, compared to the last five to 10 years. Some of that is driven by sustainability, and some of that is just down to farmers having invested and grown their facilities post the abolition of quotas, and there is a natural slow down of that growth.
“But we are not worried about a supply issue for Kerrygold and we believe that there is plenty there to achieve our needs.”
Does he envisage a time when Ornua would have to look elsewhere to source the milk and cream for its market-leading, and growing, Kerrygold brand?
Kerrygold volume growth was up 12% in 2021, compared to 2020, with over 11 million packets of butter and cheese sold globally each week; it is the fastest-selling brand on supermarket shelves in Germany; and is the number-two selling butter brand in the US.
“Not for Kerrygold,” he said.
“Ireland has a world-class reputation, world class. We are the most carbon-efficient producers of dairy in northern hemisphere, and potentially in the world. Kerrygold and Irish dairy are underpinned by that.
“But at the same time, we can’t have the Environmental Protection Agency (EPA) coming out every year saying that Irish waterways are getting dirtier. That would undermine customer and consumer confidence.
“I am absolutely adamant that farmers want to drive a more sustainable business, want to address water quality, want to address biodiversity, but they need some help. We all have to look at that – government, state and industry resources need to be focussed on supporting farmers.”
Emissions targets
Just this week, an EPA report highlighted a gap between the ambitions of Ireland’s Climate Act in achieving a 51% reduction in greenhouse gas emissions by 2030, and the actions that are being taken to get us there.
Part of that ambition includes an emissions-reduction range of between 22-30% for the agriculture sector. A definite figure/ceiling has yet to be announced by environment minister, Eamon Ryan.
Does the Ornua CEO believe that the range is too ambitious?
“Ireland has moved to put those targets in law, so we now have a responsibility to meet those targets. So, that debate has passed,” he said.
“How we address the carbon and nitrogen elements of those [targets] needs to be looked at and the Food Vision Dairy Group has come up with 17 recommendations [related to that].
“The group now needs to scope those [recommendations]: what is the impact on those targets; what are the resources required; and what is the investment required to achieve these,” he said.
Food Vision Dairy Group
Jordan sits on the aforementioned Food Vision Dairy Group, which recently submitted its final draft interim report to the agriculture minister, so what has his message been to that group?
“Our position is, what underpins the quality of Irish dairy, and Kerrygold, is family farms with a grass-based system. That is the fundamental fabric that delivers what we have got. So, Ornua wants to protect that.
“So I go back to the point that we cannot have deteriorating water quality, because consumers and customers will question that, they will ask ‘is it nitrogen fertiliser leaking off the land and into waterways that is causing the issues?'”
Asked if he supported the level of nitrogen reduction that is being proposed by the Food Vision Dairy Group – 22-25% by 2025, and 30% by 2030 – he said:
“I think the government is being fair in that it is saying, as a committee, we are asking for some support, advice and recommendations as to where we want to go.
“I’d have a fear that if we don’t do that, it could potentially back the government into a corner with blunter instruments. That said, the Taoiseach, the Tánaiste and the minister have come out and said that there won’t be a milk-quota, so we should take some reassurance from that.”