Dairy groups urged to overcome petty rivalries

There is no place in the modern world for "petrol-pump politics", according to the chief executive of Dairygold Co-operative, …

There is no place in the modern world for "petrol-pump politics", according to the chief executive of Dairygold Co-operative, Mr Jerry Henchy.

Speaking at the Teagasc National Dairy Conference in Cork, the recently appointed head of the milk-processing co-operative stressed the need for co- operation between dairy processors.

While he accepted that there were traditional rivalries between dairies as the environment became more challenging, the realisation would grow that the enemy was not your next-door neighbour.

The enemy was New Zealand, Argentina or Uruguay, and it was now a case of how the dairy industry here could restructure and best position itself in the commodity area.

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"Really and truly, the petrol-pump politics or worrying about your next-door neighbour compared to the damage large euro players can do to you is crazy. There is no room for petrol-pump politics," he said.

Mr Henchy, who is to present a major restructuring plan for the co-op by the end of March, which could lead to the loss of 1,500 jobs, said the cost-cutting exercise would reach right across the co-op's structure.

The company had already let about 100 people go, some through attrition and some through outsourcing, but the plan could mean reducing the number of processing plants operated by the dairy from four to two or even one.

"We will look internally to see how best to upgrade some of our assets to move from four processing sites to two, or perhaps one," he told the conference attended by 700 farmers, many of them suppliers to Dairygold.

"We will benchmark the capital cost of all investments against acting in a federated co-operative processing manner with our fellow processors and we will move without pride or prejudice in the direction of shared processing facilities if it best serves our purpose."

Dairygold's 3,500 dairy suppliers, with an average quota size of approximately 55,000 gallons, were not badly placed by Irish standards, Mr Henchy said.

However, Ireland's position in European terms was weak, ranking ninth in the EU average quota league, with those below Ireland serving primarily high-value internal consumer markets.

"The committed dairy farmers of the future, living in the tough world of deregulation, would be severely impeded if a mechanism for a quota transfer is not quickly established," he said.

The farmers were also told the cost at which they produced milk would determine their future.

Mr Pat Dillon, a leading research scientist at the Teagasc Dairy Research Centre in Fermoy, said the projected drop in milk prices from the CAP reforms would make thousands of Ireland's high-cost producers unviable.