The dairy industry and the country’s dairy farmer representatives appear to be at loggerheads over the potential scale and impact of the Covid-19 pandemic on the sector over the coming months.
At processor level significant concern has been raised with regard to peak milk production coinciding with the projected peak of the virus’ outbreak in Ireland; while at farmer level the message appears to be “keep processing our milk; and stop talking down price”.
But in order to reach the best outcome all parties need to row together.
Industry sources say that business continuity planning is “going well so far”; and that employee absentee levels on production lines are “manageable” for now.
However, they also make it abundantly clear that “there’s a lot of road to travel yet” before reaching the far side of the twin peaks – in mid to late May and early June. During this period processing is expected to surpass 253 million litres per week – that equates to somewhere between 7,000 and 10,000 lorry (tanker) loads of milk in a single week.
In the same vein as Taoiseach Leo Varadkar’s Easter Sunday communiqué, another industry insider went so far as to caution that the sector still faces “some of its darkest days” in the pandemic.
And while optimism is rising over the gradual reopening of the Chinese market, lowly fears remain over just how quickly the trade will bounce back – not to mention concern over the dormant situation in markets like South Korea, Japan and the spread of the virus in Africa’s sub-Saharan countries.
Understandably, such updates are difficult for dairy farmers to digest and, while this position appears to be accepted by industry, it is also their view that “knowledge is power” when it comes to tackling and overcoming this crisis.
But the way this “knowledge” is disseminated is key.
‘Irreplaceable’
The industry’s main worry continues to be couched as a “human resource issue”.
It continues to track employee absenteeism rates based on Health Service Executive (HSE) models, which sources say are proving accurate to date.
However, it must be duly noted that it is a very specific demographic of worker that poses the greatest potential risk to a plant’s processing capacity. While 8,000 people work in primary processing alone, about 1% of these workers are considered “irreplaceable” to the chain.
The industry continues to warn that if some of these critical, highly-skilled, technical employees, with specialist knowledge of operating dryers and robotic machinery contract the illness, it would cause untold disruption.
Likewise, if there was a mechanical failure at a plant and the processor was unable to access a replacement machine because of issues with travel restrictions, the fear here is that a plant would go down.
‘Respect’
Speaking to farm organisation sources, they too say they are “fully aware” of the implications and gravity of the situation – but they also assert that the nature in which this message is communicated “must be respectful” to the primary producer who is also grappling with significant new restrictions on farm.
Many of them have invested heavily in their capacity to produce record levels of milk. These farmers in particular need the support of their co-ops to keep their heads above water at this time.
Farm organisation sources say they are not hiding from “the high probability that a plant will go down over the coming weeks”.
However, they warn that such forecasts are causing a severe backlash from suppliers on the ground – who are becoming distressed by reports over the impact that the situation is having in other countries that are heavily reliant on liquid milk production.
The associations have challenged milk price cuts for March supplies – ranging from 1.8c/L to 2c/L, from Lakeland Dairies, Glanbia and Kerry – coming just days after a slight rise was recorded in the most recent Global Dairy Trade price index.
Farm organisations want their members to know that there are ongoing communication efforts being made across the sector to ensure “optimum solutions” are attained in the possibility of a worst-case scenario – including processors leaning on each other to get supplies through the system.
In fact, both sides insist that necessary and satisfactory contingency plans are ready to be rolled out should the need arise.
Rescue Reverie
But, as for pinning hopes on a Brussels rescue, at this stage both sides are dubious of such interventions.
An industry source said: “Negotiations for the opening of Aids to Private Storage [APS] have been like banging one’s head against a wall.”
“The EU’s priority is health; that’s where the money is being focused right now. Dairy supports are further down the list.”
Perhaps greater light will be shed on the situation over the coming days when a third-party report, on the exposure of the dairy industry to Covid-19, will be published by Ernst & Young (EY) Consultants.