Ornua has insisted continued investment in Kerrygold will deliver the greatest "long-term value" for Irish dairy farmers, as Tirlán's planned US butter deal comes under growing scrutiny.

Agriland understands that Kilkenny based dairy co-op Tirlán has agreed to supply grass-fed butter to US retailer, Costco.

It is believed that the agreement will see Tirlán supply butter for Costco's private label brand, Kirkland.

Ornua is Ireland’s largest exporter of dairy products and the owner of Kerrygold which last year passed the $1 billion retail sales milestone in the US for the first time.

The Irish Creamery Milk Suppliers' Association (ICMSA) today voiced its concerns over a "potential competition" between Irish butter products in the US market.

It has warned this could present a danger for farmers' margins.

Denis Drennan, ICMSA president, said that Irish dairy farmers want to see "joined-up thinking" between Ornua and Tirlán to deliver a long-term sustainable milk price to their suppliers.   

"ICMSA is very concerned that it will, and we are very clearly saying that it is up to the executives and boards of the two co-ops to answer that question with the detail and foresight required and agree a strategy that is in the best interests for the Irish dairy sector.  

"Liquid milk suppliers saw their margins whittled away due to processors competing at unsustainable levels and selling milk below cost - that can’t happen here," he warned.

The Irish Farmers' Association (IFA) has also said it is seeking an "urgent meeting" with Tirlán management to discuss the co-op's US butter deal.

IFA president Francie Gorman said there was "huge concern" expressed about the implications of this move for the Kerrygold brand and Ornua.

Kerrygold

According to Ornua its objective is to "create value for Irish dairy farming families and to act in the best interests of the farmers who own us". 

"Competition is a feature of every successful marketplace, and Ornua has more than six decades of experience competing strongly around the world," the co-op outlined.

But the co-op strongly warned today that it does not believe "competing on price alone is in the best interests of the farmers we represent".

According to Ornua this "devalues the Irish grass-fed butter proposition, rather than building this through innovation, quality and long-term brand investment".

The co-op added: "When market value is eroded, it has a direct impact on the amount we return to our members and the Irish dairy farming families we represent.

"Ornua believes the greatest long-term value for Irish dairy farmers is created when our members continue to invest through Kerrygold, the brand they have built and supported for more than 65 years".