With the first quarter of 2021 over and done with, the rest of the year should be “relatively stable” from a dairy prices perspective, judging by current indications, according to Ornua CEO John Jordan.
Speaking to Agriland following the publication of the exporting giant’s 2020 financial results last week (Wednesday, April 21), Ornua CEO John Jordan commented on a range of topics.
Dairy market
Asked by Agriland what the dairy market outlook is for the rest of 2021, CEO of the dairy exporting co-op said:
“It’s becoming more and more challenging to call where markets are going.
“If you look at supply and demand at a broad level, supply last year, milk supply globally grew by 1.7%.
“In a normal year that’s a very significant growth in output; but we didn’t see a collapse in pricing, so that would lead you to believe that strong demand driven through retail was able to absorb that.
“The expectation for 2021 is that milk output would be more muted, probably in the 1-1.2% [category], although the US is very strong within that – probably over 2%, so that’s a watch-out.
“That muted supply is really driven by Europe; if you look at the big players like France and Germany, they’re well back year-on-year. That would say slightly muted supply.
Demand
“On the demand side, it’s interesting in that we all thought 2021 would see an opening up of food service, rebalance of where people buy their food.
“If anything, Q1 of 2021 has shown more severe lockdowns and more retail. But we think through the year food service will open back up.
“You might get a bit of supply chain filling into food service while you have the retail demand, so you could get some short-term spikes in prices, but we would say it will be relatively stable from where we are here to year-end on product pricing, driven by slightly muted supply and reasonable demand.
Commenting on how this will translate for a farmer’s milk price, Jordan said:
“The Ornua PPI for March was 33.3c/L including VAT; I’d say, and it’s very hard to call a milk price, but we’d be saying [things will be] relatively stable at those good prices out to year-end.”
Growth strategy and acquisitions
When asked if Ornua has any major plans on the cards for the rest of 2021, Jordan said:
“We’ve rolled out a new growth strategy out to 2025 and we’re really ambitious and positive about the platform on which we have to grow.
“We certainly see some very positive, exciting new product launches of the Kerrygold brand; they’re not quite at the point where we can reveal it but they will be through 2021.
In terms of recent new products, the CEO said:
“On the Irish market we’ve launched the Kerrygold Spreadable and the Kerrygold Unsalted here in Ireland, which are great additions and are very well received.
“And then, one of the things we haven’t done in the last few years is on the M&A side, mergers and acquisitions.
“Certainly we’re keen to get back in and acquire businesses as part of our growth agenda.
“We’re very fortunate that we’ve a strong balance sheet that will allow us to do that and hopefully we’ll deliver that in the short to medium term,” Jordan concluded.