Speaking to Farming Life following this week’s disappointing GDT auction, United Dairy Farmer Chief Executive, David Dobbin, said that despite the recent fall in returns he was relatively upbeat and that Dale Farm was entering this spring in a much better position than last year.
He added: “European milk output is surging following the decision to spread super levy over three years, however I expect Dale Farm to perform better this year on the back of our investment programme which is now completed. We are up and running and seeing success in building our consumer cheese and butter sales.
The last six months have been very difficult and our milk price lagged the market and even though we paid every penny of income back out to our farmers it wasn’t enoughUnited chief David Dobbin
“Where others still have to complete their investments, our new cheese facility is fully operational and we have now secured retail customers for our additional output. Where others are talking about growing their milk processing by 50% over the next three to five years, Dale Farm has in fact grown by 77% over the last three years. As per our strategy, we got into the market first, ahead of a wave of milk coming out of Southern Ireland.”
“We have made our key investments including the large cost of building cheese stock. We are securing long term cheese contracts and with our new packing facilities at Dunmanbridge, our investment in Ash Manor Cheese in Wales and in Fivemiletown Creamery, our orders in consumer cheese products are currently running at twice last year’s levels. Our milk price has started to edge up and we plan to pay out a winter bonus in October and November 2015 to encourage our members to produce much needed winter milk,” he added.
“The last six months have been very difficult and our milk price lagged the market and even though we paid every penny of income back out to our farmers it wasn’t enough. Last year was the first major run for our new cheese plant and we built up a stock of mature cheese over the spring, summer and early Autumn, made with milk at a much higher price than now. It takes nine months for cheese to mature, unfortunately when the cheese was ready for sale, prices had fallen. We had contracts covering most of the cheese however due to the record local milk output we made more than we originally planned to. It took time to develop new cheese customers but we have now done that, our cheese stocks are falling and most of the more expensive cheese is now largely through the system.
“Dairy returns will be affected by the expected surge in EU milk production and the fall in the value of the Euro. However as a result of increasing the amount of milk we process into consumer products from 40% to 60%, Dale Farm’s milk price should be less volatile and we should be able to offer our farmers the opportunity to forward fix some of their supply this coming year should they wish to,” said Mr Dobbin.
“The dairy industry should not be considered a sprint but a marathon and while we fell behind in last year’s lap after a good 2013, the coming season in 2015 holds relatively better prospects for us. No one is getting a living out of dairying and the situation is unlikely to pick up until 2016. Having said that United members should see our relative performance versus others improve as the year progresses.”
Meanwhile, Stormont Agriculture Committee member William Irwin MLA has spoken of his concern at this week’s Fonterra milk auction results where prices were down 8.8%.
He stated: “This illustrates just how volatile our local market is to the effects of global trends and I know producers had been hoping for a continuation of the improving pricing picture we were seeing through early 2015. Having spoken to producers they are again concerned by this latest auction price and they are hoping it is a blip in the market and that prices will recover sooner rather than later. In terms of the wider industry in Northern Ireland, it is important that processors avoid any knee jerk reaction to the auction result and assist producers in attempting to absorb this latest shock to the local dairy industry.”