Ornua has no ‘current’ plans to reintroduce €7m dairy farmer levy

Ornua has no current plans to reintroduce its dairy farmer levy, which had cost Irish dairy farmers approximately €7 million per annum in previous years.

Ireland’s largest exporter of primary Irish dairy products suspended the levy 12 months ago, in recognition of the on-farm challenges experienced by Irish dairy farmers.

From the January-to-May period of 2016, Ornua collected €1.5 million in levies from Irish dairy farmers.

The remainder, accounting for approximately €6 million, was not collected due to the global dairy market downturn.

Speaking to members of the press earlier today, Ornua Chairman Aaron Forde said: “It’s not our current intention to bring it [the levy] back”.

The levy was introduced in times when the organisation wasn’t as strong or profitable, he said, to help develop markets outside of Ireland.

“The organisation has grown up and earned its own stripes. It’s not critical to the survival of the brand spend or investment. There may be times in the future where that changes,” he said.

Such instances would include the development of a new plant or accessing a new market under a market development programme.

For that reason it’s not abolished, but we will keep it under review.

Joe Collins, Managing Director of Ornua Trading and Ingredients, said the funding collected from the levy goes towards promoting the brand in various markets.

“The idea, from day one, has been to develop the Kerrygold brand and our other brands. When you see a €6 million increase in our brand investment [in 2016], the €1.5 million (collected from farmers between January and May) went towards financing that.

“At the end of the day it all becomes profit or loss and that gets shared out in the way of the bonus. But it is really supporting that €6 million increase in brand investment,” he said.

Strong results from Ornua

Earlier today Ornua published a review of its 2016 operational and financial performance, which included growth in turnover, EBITDA and operating profit.

Driven by €900 million worth of Kerrygold global retail sales, 2016 saw revenues climb in the business.

Excluding DPI Specialty Foods, which was sold by Ornua at the end of 2015, group turnover rose by 9.1% to €1.75 billion and group EBITDA increased by 18.4% to €43.1 million.

This result includes investment in new and existing facilities and a €6 million increase in brand and market development – bringing total group investment to €51 million in 2016.

The group also closed the year with net cash of €57.2 million, compared to net debt of €17.3 million in 2015 and a very strong balance sheet – with net assets in excess of €500 million.

Also Read: €900m of Kerrygold sales drive Ornua profits