Amalgamations are needed in the dairy industry and could yield benefits which would be in the long term interest of farmers, the chairman of the IFA dairy committee said yesterday.

Mr Liam Foley, responding to the possible merger between Avonmore and Waterford Foods plc, said suppliers to both existing concerns would expect any new amalgamated entity to pay top-of-the-league milk prices.

Rationalisation was needed to allow for the investment necessary to face market challenge in the next century, he said.