Sustainable growth is on the agenda at Dale Farm

Farmers heard from the Dale Farm leadership team on the strong results for the last financial year, 2023/2024, as well as outlining plans for future growth and discussing industry challenges.

The cooperative recorded a strong set of results for the year ending March 2024.

With group turnover of £631.4m and net profit before tax up 11% at £29.8m (previous year £26.8m), Dale Farm significantly improved its turnover to profit ratio.

Key topics for discussion among attendees included the next steps of Dale Farm’s Future Strong sustainability framework, as well as an update on the cooperative’s £70m investment in its cheddar processing facility at Dunmanbridge.

One of the largest investments of its kind within Northern Ireland’s agri-food sector, the project is on track to be completed in February 2025.

Farmers in attendance were also updated on the enhanced winter milk support for the season ahead.

The Chairman’s perspective

The annual report was published to coincide with the AGM. Courtesy of his foreword, Dale Farm chairman, Fred Allen, confirmed that continued input cost inflation, a volatile global dairy market and difficult weather patterns all impacted profitability on-farm in the 2023/24 period.

He continued: “As a result, Northern Ireland volumes only increased by 0.6% while GB volumes remained flat.

“Challenging weather in the first half of May 2023, delayed most farmers first cut silage which affected quality but increased bulk.

“The subsequent heat wave in June limited the yield of second cuts. With rain returning from July onwards, it was difficult to get sufficient weather opportunities for the subsequent silage cuts.

“This also impacted the grazing season resulting in cows being housed early in many parts of the province.

“Milk volumes fell over the autumn, but returned to growth from December onwards, due to an improving milk price versus meal price.”

According to Mr Allen, this trend has continued into the 2024/25 season, despite relentless rainfall which delayed turn out to grass on many farms this spring.

He further explained: “Autumn 2023 saw the launch of our Future Strong sustainability programme.

“This programme will develop and evolve in due course as we endeavour to meet environmental targets.

“The information collected in the sustainability survey has been used to calculate a baseline carbon footprint of our milk pool.

“Having this baseline assessment and the accompanying data has already enabled us to showcase the positives within the milk pool, which has proved invaluable in retaining and winning new business for the cooperative.

“On this note, we as a business, appreciate members taking the time and effort to complete and return the survey.”

A challenging environment for all businesses

Writing in the annual report Dale Farm chief executive, Nick Whelan, confirmed that these are challenging times for businesses.

He added: “Over the past number of years across all industries we have had to deal with a global pandemic, and subsequently inflation and the cost-of-living crisis.

“Against this challenging backdrop, we can take great encouragement from our business performance at Dale Farm.

“For the last financial year we recorded £29.8M net profit before tax which equates to 3.24ppl net profit per litre purchased. Net profit before tax was up from £26.8M in 2022/23 and £22.1M in 2021/22.

“The success of the business over this period comes down to people, culture, and strategy.

“Our farmers continue to excel and lead the industry on quality and hygiene, delivering for our customers while operating in challenging conditions including input cost inflation and unusual weather patterns.

“At our processing facilities across Northern Ireland and Great Britain our driven, innovative team members continue to shine.

“We have a high performance culture at Dale Farm, and our farmers and people across the business share a can-do attitude and a determination for the cooperative to continue to succeed. Our strategy that has brought us to this position is built around four key pillars: growth, focus, data, and people.”

According to the co-op’s chief executive, a laser ‘focus’ was paramount to taking the business forward which has been critical to improving performance and delivering growth.

He continued: “We have focused our energies on the parts of the business that are best delivering for our customers, and ultimately the farmers who own the cooperative.

“We have exited categories that were not delivering for us, such as yogurts and desserts, and while we reported a lower turnover for this year following the closure of two of our factories in GB, our profitability has increased over the period, so that sharp focus has been effective.

“As we move forward the focus is now firmly on sustainability, which will be pivotal to growth as customers work towards their sustainability targets and require us to respond to independent verification.

“This past year we signed an agreement with the Science Based Targets initiative in which we have committed to setting achievable, evidence-based pathways to bring down our greenhouse gas emissions.

“We have initiated our Future Strong sustainability framework, through which we are working to be more sustainable in every sense of the word.

“It’s not just about reducing carbon footprint but ensuring our farmers businesses are resilient and profitable for generations to come and that Dale Farm retains the trust of customers and government, for whom having strong environmental credentials is now a must.”

Operations and supply chain

Employing over 1,200 people across the UK and Ireland, Dale Farm is one of the most expansive dairy companies in the UK.

The 2023/24 year saw Dale Farm processing over 900 million litres of milk and 58,000t of cheese produced.

According to group operations’ director, Chris McAlinden, this is the largest ever output from Dunmanbridge and outlines the continued improving performance in efficiency in Dale Farm’s factories.

He further explained: “Less milk was used to produce this record volume of cheddar which has delivered the much improved year-on-year yield performance for the group.

“Costs were well managed in a challenging environment.

“Cost inflation and regulatory headwinds continued to pose challenges.

“Against this backdrop and a volatile global political landscape, the operations team performed exceptionally ensuring we continued to have supply of all key inputs while manufacturing our products at a competitive price.

Chris McAlinden continued: “Our focus on effective tendering, looking at alternative technologies, value engineering our products and the relentless improvement and cost reduction activity have all played a key part in this.”

The 20223/24 annual report also confirms that Dale Farm operations performed well during the year with strong efficiencies achieved across the main categories.

Effective measurement of performance across all areas, implementing LEAN manufacturing principles to drive improvement and a culture of continuous improvement were all key enablers.

Specifically from a quality perspective Dale Farm made significant progress during 2023/24 in improving performance across a number of areas.

These include: investing in tanker Clean-In-Place (CIP) systems, site building upgrades and improved focus on ex farm milk quality through increased testing.

These were all targeted developments during the 2023/24 year.

Chris McAlinden again: “We have made significant strides forward in developing our capability and delivering on our strategy to pay a long-term competitive milk price.

“Over the past year we continued our investment in a second cheddar cheese plant at Dunmanbridge.

“Totalling £70m this marks one of the largest investments by a NI agri-food company to date.

“The investment includes the replacement of our old, inefficient milk powder driers at Dunmanbridge.”

He continued: “Once complete, the expansion at Dunmanbridge will increase our cheese manufacturing capacity and enable us to improve returns on circa 100M litres of our current milk pool.”

Milk supplies

Dale Farm is synonymous with dairy in Northern Ireland, with a rich heritage of family farming that has spanned generations. The farmer members work hard every day to maintain healthy, sustainable, dairy farms and produce the best quality milk, all while embracing new technology and sustainable farming methods to nurture the land.

Milk supplies from Dale Farm’s 1,244 Northern Ireland’s producers increased slightly during 2023/24 to an average of 717,924 litres per business.

Dale Farm’s managing director of agribusiness takes up that story: “Milk production during the year was impacted by lower milk prices, poor forage quality and prolonged periods of wet weather. The core Dale Farm producers were joined by 16 new entrants commencing milk for the first time and five new suppliers coming on board.

“However 22 members retired throughout the year so by year end the cooperative finished with one less producer.”

He continued: “Milk components improved for the eighth year in a row.

“While protein remained at 3.34%, butterfat improved to an average of 4.26%.

“Bactocount fell to average 47,000/ml, however, somatic cell count increased year-on-year to average 192,000/ml.

“The base milk price plus loyalty bonus paid to members began the year at an April price of 33.55ppl.

“Due to a continually weakening global market, milk price declined from May onwards reaching a low of 30.55ppl by August.

“This reduction was primarily driven by a decline in powder and butter price, which meant Dale Farm was somewhat sheltered from the full effects of the market.

“With global milk supplies in decline throughout the autumn, milk price rallied, increasing to 32.55ppl in November and continued to strengthen reaching 35.55ppl by the close of the year,” he added.

“Thus, over the 2023/24 year, the average base milk price paid by the Society was 33.26ppl, rising to an actual paid out price net of transport of 34.81ppl.”

In conclusion

Nick Whelan points to the fact that ongoing investment will drive the future of Dale Farm.

He explained: “Significant progress has been made at Dunmanbridge as we expand the site following the £70M investment in our cheddar operation announced earlier this year.

“As one of the largest ever investments of its kind by an agri-food company in Northern Ireland, it is a statement of intent and is a mark of our position as a leading European cheddar manufacturer.

“It is a testament to the commitment of the team at Dunmanbridge that such progress has been made on construction while maintaining dayto-day operations at the site.

“Across all of our processing sites, operations teams have delivered exceptional quality and service throughout the past year, supporting the growth of the cooperative and strengthening our customer relationships.”

Dale Farm’s group chief executive concluded: “Every decision we take as a cooperative is about ensuring the 1,300 farmers who supply us with milk have sustainable, profitable farm businesses for the future.

“That is what drives every part of our strategy and it is through investment in our facilities and pursuing further growth as a cooperative that we can drive further competitiveness on milk price.”