A controversial study of the dairy industry which will attempt to rationalise the fragmented sector will be available in December, a conference was told yesterday.
The study, being carried out by the consultancy firm, Prospectus, in collaboration with other interests including the Department of Agriculture and Food and the Irish Co-operative Organisation Society (ICOS), will conduct an examination of the existing structure of the dairy processing industry.
It will also identify the market opportunities for dairy products and the product options with a view to making recommendations to improve the industry's efficiency and long-term competitiveness.
At the ICOS annual conference in Limerick, the 300 delegates, representing co-operatives in the food sector, heard that the dairy processing industry was made up of 36 co-operatives including 23 milk-processors with seven milk-processing sites, 15 butter plants, 13 powder plants, 10 cheese factories and seven casein plants. ICOS is the representative body for the co-op movement.
The president of ICOS, Mr Dessie Boylan, said the challenge for the sector, which had an output of €3 billion and exports of €2.2 billion, was how to provide a more secure future for dairy farmers.
Mr Boylan and many of the delegates questioned the Minister for Agriculture, Mr Walsh, on the difficulties which dairy farmers faced this year.
Mr Boylan said co-ops had been paying farmers significantly more than the markets were returning after processing costs were covered.
"This is not a sustainable situation. Co-ops risk weakening their position unless they reflect what is happening in the market," he said.
"Co-ops have strongly supported their members and they have certainly shared the pain this year."
The President of the European Parliament, Mr Pat Cox, who had urged farmers to develop and register traditional speciality guaranteed foods, said he supported the idea of rationalisation of the sector to make it more efficient.
Mr Walsh said the Government accepted the need for rationalisation of the dairy processing sector. Developments in the World Trade Organisation and likely trends for the future of CAP made such moves in Ireland imperative.
He said some significant developments had taken place recently, citing the acquisition by the Kerry Group of Golden Vale and the more recent purchase by Lakelands of the Bailieboro milk-processing business from Kerry Group. These were moves in the right direction.
Mr Michael Feeney, director of Enterprise Ireland, said the product mix in the dairy sector had historically been influenced by the subsidy regime as opposed to market forces.
In future, the focus would have to be on the consumer as the key driver, and the industry must develop the capacity to adapt to changing consumer needs and at competitive prices, he said. There were many positive features in the dairy sector here including the grass-fed cow system.