Last week’s news of very healthy profits being the order of the day at Dale Farm represents a real boost for the dairy sector and agriculture as a whole across the island of Ireland.
Profitable processing is the only way to deliver sustainable prices at farm level. It is also worth noting that Dale Farm continues to achieve this high level of performance while still paying its producer-members a record price for their milk.
So let’s hope this momentum can be maintained.
Troubling times
Dale Farm CEO Nick Whelan makes no secret of the fact that inflationary pressures within the business represent the biggest challenge for the co-op in the here and now. So it really is a case of getting retailers to recognise this and pay their suppliers accordingly.
All of this is taking place at a time when the issue of food security is back on the agenda throughout Europe and beyond
Potentially, this is a win:win scenario for Irish agriculture. When consumers get a sense of food being in short supply, all of a sudden they start to take real notice of the work that farmers carry out on their behalf, every day of the year.
It also means that the price of food becomes a secondary issue. Or, at least, that’s the theory.
But the reality remains that primary producers must get more from the market place, simply to survive.
Irrespective of whatever future support package is drawn up for farming Ireland, Common Agricultural Policy (CAP) and national funding sources, the amount of public money coming into agriculture is set to fall-off, in real terms, over the coming years.
Up to this point, it has been nigh on impossible to get meaningful price increases delivered back to farmers for the food they produce.
This is now starting to change. And yes, it had to, given the raging pressure that has impacted on all input costs over the last year and more.
But it’s important that the gains secured in terms of better farmgate prices are retained for the future.
The world’s food commodity markets are truly international in nature. They operate on the basis of supply and demand pressures.
If one takes the UK – Ireland’s most important market – as a case in point; the levels of national food self-sufficiency continue to fall.
Given events in Ukraine and the surrounding regions, I think it is unlikely that countries such as Australia and New Zealand will be focussing that much attention on the British market over the coming years.
They will be too busy making up for the shortfall created by the drop-off in Ukrainian food output across markets in the Middle and Far East.
Under these circumstances, one would like to think that the opportunities Irish food processers to make greater inroads with all of the main UK food multiples is significant.