February 11, 2010

Irish dairy processors to co-operate to meet challenges

The leaders of the Irish dairy processing industry have undertaken to continue meeting under the aegis of the Irish co-operative movement to try to resolve the challenges facing the sector.

The Irish Co-operative Organisation Society (Icos) has been attempting to have the organisations work well together in sharing processing facilities, milk collection systems and to cut out duplication in the system.

The industry is focused on how to cope with an expected increase in milk output from farms when the EU ends its milk quota system in 2015.

The quota system limits the volume of milk a farmer is allowed to produce, and when it ends Irish farmers are best placed in Europe to expand to meet the expected surge in demand for dairy products globally.

"The dairy processing industry is currently undercapitalised, and over the past two seasons, loss-making. This undermines the industry's ability to fund any necessary expansion from margin," said John Tyrrell, director general of Icos.

Tyrrell said new systems to replace the milk quota would also affect the shareholding rights of co-operatives, and new systems would have to be found to accommodate a new era. Because of the static milk volume under the quota system, shareholding policies had not needed to provide for increased production.