The period of “high growth” following the removal of milk quotas is set to be replaced by “more moderate milk volume growth”, according to the chief executive of Tirlán, Jim Bergin.
Bergin said 2023 had already delivered a “difficult start” for the co-op’s farmers and that there had been “significant drops in “market returns” for both grain and milk.
According to Bergin, “dynamics” have made it a tough year for farmers so far and he acknowledged that it was a challenging environment because of high input costs and ongoing inflationary pressures.
Specifically in relation to milk price, the Tirlán CEO said that commodity markets appeared to be beginning to “bottom out” but they were doing so “at a number that is south of 40c/L”.
The co-op today (Wednesday, May 10) published its first set of accounts and annual report as a 100% farmer-owned business, which showed an operating profit for 2022 of €71.9 million.
In its annual report, Tirlán highlighted that its milk pool totaled 3.2 billion litres in 2022 and that it sold more than 423,000t of dairy products and ingredient solutions into 100 markets last year.
The co-op is the largest dairy processor in Ireland and has four separate ingredient processing facilities in Ballyragget and Belview in Co. Kilkenny, Virginia, Co. Cavan, and in Co. Wexford.
The Kilkenny-headquartered co-op operates across three key business categories: Ingredients, agribusiness, and consumer.
Its latest financial results show that its ingredients division was the star performer during 2022 growing turnover by 40% to €2.1 billion.
Bergin said 2022 had been a strong year “in the global commodity market” but it was also a year heavily influenced by “sharp inflationary increases in the cost of inputs” and supply constraints heightened by the war in Ukraine.
In its 2022 annual report Tirlán also highlighted that in relation to its ingredients division, “selling prices advanced strongly in 2022 reflecting strong dairy commodity markets” but that overheads had also increased substantially.
“The price paid to milk suppliers similarly increased. From an operational perspective, milk volumes were down by 0.5% in calendar year 2022 compared to 2021, while milk volumes in peak week showed a 2% reduction on the figures at peak in 2021,” the co-op said.
Tirlán also detailed that it delivered the highest milk price in its history last year – of 63c/L (including VAT) – to its 4,327 dairy farmers, but all indications point to this not being repeated this year.
Bergin said that the remainder of 2023 will be a very different year from 2022.
He warned that markets were more challenging and to date, Bergin said there may be some pick up in the last quarter but there is no significant change to supply patterns currently.
Additional reporting by Charlotte Morrey