Speaking as the new national chairman of Dairy UK, representing the entire UK dairy industry, United’s Group chief executive, David Dobbin, said that the aid measures announced so far by the EU Commission have been disappointing, however at least the Commission is starting to accept that there is a market crisis.
“More action is needed,” said Mr Dobbin. “Raising intervention prices would put a floor to the market and result in an immediate increase in market returns for powder. In the meantime lower milk prices haven’t resulted in the expected fall in output that the Commission was hoping for.
“While recent improvements in the GDT and Dutch Dairy Board reference prices were welcome, the crisis in the dairy sector is far from over and global milk production, especially in Europe, is still running ahead of demand.”
“Until milk production falls back in line with demand, markets will remain weak. EU milk production is still running well ahead of last year. For each additional percentage of milk production, the EU must export 8% more produce to clear the market. There is little sign that this is happening with demand from China remaining weak and the Russian ban on EU imports still in place.”
Mr Dobbin believes that in Ireland farmers will make maximum use of any autumn grass and that production will not slow down until November.
While pessimistic regarding a short term recovery in international dairy markets, Mr Dobbin is much more bullish about Dale Farm’s performance.
“It now looks likely that United/Dale Farm will be Northern Ireland’s only surviving indigenous Coop, indeed we are rapidly becoming the UK’s largest indigenous Coop. Not only have we survived but we have continued to grow throughput the recent dairy crisis.”
“Clearly consumer products are the best show in town in providing returns significantly ahead of milk powders and bulk commodity dairy produce. Dale Farm’s strategy to target growth in consumer and nutritional products has allowed us to pay a more competitive milk price this summer and put us in a better place going forward versus the majority of our local competitors.”
“We are well through our investment programme whereas others are still to bring additional powder capacity into an already oversupplied market. Our strategy was to expand ahead of the Southern Irish and get to the market first. We have now close to 95% of Dale Farm’s milk Red Tractor accredited, allowing us to further grow our consumer cheese and butter sales into the GB market and we have continued to gain market share. While whey returns have collapsed in line with the fall in powder markets we have been able to move into WPC80 whey protein powder targeted at the nutritional sector and thus deliver a better return than otherwise would have been the case.
“Dale Farm has a pipeline of new consumer products which we are launching over the next six months including new milk protein drinks and protein yogurts. We are continuing to see strong growth in our cheese and butter sales which we have more than doubled over the last two years.
“Most importantly of all for a farmer coop, we are paying a competitive milk price and will be paying our members a winter milk price bonus in October and November.
“While we are looking for Government and the EU Commission to help the industry through this difficult period we are taking action ourselves to reduce our dependence on volatile commodities and while there is much more to be done, we are making good progress.”