The only way is up at Dale Farm
Dale Farm remains committed to paying a leading milk price to its farmer-suppliers in both Northern Ireland and Great Britain, according to the co-op’s chief executive Nick Whelan.
“All the milk price leagues confirm this is the case. But what these indicators do not show is that we are also offering an additional 0.3p/L across our milk pool when our nine month volume growth bonus is taken into account.
“Our milk pool continues to expand. This has been achieved by a combination of existing suppliers increasing their output and our welcoming of new farmers into the dairy sector. We have 25 new entrants on our books at the present time.
“We are currently 8% off full capacity, relative to the processing facilities we have and the current milk supply that is available to us. Our share of Northern Ireland’s milk pool has risen from 32% to 34% over recent times,” he added.
“Yes, we will continue to look for new suppliers. But once the 100% capacity target has been reached, we will go into lockdown mode. At that stage we will have all the milk that we need.”
Strong financial performance
Whelan points to Dale Farm’s continuing strong financial performance as the driver that is allowing the co-op to pay such a strong milk price.
“We are on track to record another record year in terms of both turnover and profits,” he said.
Our current base price including our loyalty bonus is 28p/L. That’s 4p above the average prices being paid at the Global Dairy Trade event.
All sectors of the Dale Farm Business are performing well at the present time. Whelan cites cheese, ice cream and animal feed as three strong examples of this trend.
“Our branded cheese now features in 8,000 Lidl stores worldwide. All of this product is manufactured at our Dunmanbridge factory in Co. Tyrone,” he said.
“In addition, the Dale Farm ice cream brand is fast securing additional market share in the Republic of Ireland. In achieving this we have had to go head-to-head with Unilever, the world’s largest ice cream manufacturer. We already enjoy a 47% share of the impulse ice cream market here in Northern Ireland.
“Where animal feed is concerned, we are currently increasing the capacity of the United Feeds’ Dungannon to 120,000t. The new facility will come on-stream next spring.”
A volatile sector
Driving down costs across the Dale Farm business as a whole is a continuing priority for Whelan and his management team.
“We take nothing for granted. The dairy sector can be extremely volatile and we must be in a position to deal with all eventualities,” he stressed.
The Dale Farm chief executive is also very aware of the challenge that price volatility can pose for dairy farmers.
“We have come forward with two fixed price contract offers over the past year or so,” he said.
Both have been very well received. In fact, we now have a number of suppliers that have up to 60% of their milk output covered by contract price agreements.
“I am aware this is not an option for everyone. But farmers and processors must do everything they can to reduce the impact that volatility can have on their businesses.”
Looking towards the early months of 2019 and the prospect for producer returns, Whelan indicated that international dairy markets could weaken to some extent.
“Butter prices continue to fall and milk output from New Zealand is on the rise,” he explained.
These factors are driving market prices down presently; therefore milk prices have to react accordingly. But it’s impossible to predict how markets will react beyond the first quarter of next year.
“Our branded business is helping to insulate Dale Farm from these commodity trends. The last 12 months have been really exciting for the co-op. The potential to grow the business further is immense. Moving forward, the challenge is to convert all of this potential into reality for the benefit of our farmer-shareholders,” Whelan concluded/