Ingredients giant Kerry Group is confident it has “adequate” dairy processing capabilities to manage the anticipated European Union (EU) milk production increase.
According to Kerry Group’s director of corporate affairs Frank Hayes, the Republic of Ireland-based firm have no plans to expand their existing processing capabilities in anticipation of the EU milk quota abolition in April 2015.
The milk quotas were introduced in 1984 to address the problem of over-production in the region. Milk production in Ireland is expected to increase by around 50% in the five years following the abolition.
Once the quotas are fully dismantled, it will be the first time in more than 30 years that dairy farmers in EU Member States will have the freedom to produce as much milk as they like without risk of financial penalties.
Earlier this year, Irish milk suppliers were handed fines totalling €16.6m for overshooting the country’s national quota by around 60,000 tonnes (1.1%).
Adequate processing capability
Hayes told DairyReporter.com that as it stands, the ingredients and flavours manufacturer has sufficient dairy processing capabilities in Ireland to manage an expected milk production increase of up to 20% in its catchment area.
“At Kerry, we are confident that we already have adequate processing facilities to meet the anticipated milk production increase. We have three processing plants, and we could actually process 120% of the current EU milk quota,” said Hayes.
“We have said before that the milk production increase in our catchment area is expected to be between 15% and 20%.”
“Our production area is well developed. There isn’t any more land available for development. The increase in milk production in our catchment area will be purely organic. As a consequence, we don’t actually need to increase our processing capabilities," Hayes added.
Dairy processors across Europe have secured investment to expand their processing facilities in anticipation of the milk quota abolition, with many eyeing the export potential of their surplus products.
Earlier this year, Irish dairy processor Glanbia was granted permission to build a new processing plant in Belview, County Kilkenny.
Glanbia sought permission for the build in anticipation of a proposed joint venture with its majority shareholder, Glanbia Co-operative Society Limited in regards to its Dairy Ingredients Ireland (DII) business.
The deal, which is nearing completion following approval by Glanbia shareholders, was designed to develop the firm’s DII business and boost its processing capacity in anticipation of the milk quota abolition.
(*Register here for free access to the first ever online event devoted to Operational Efficiency in food and beverage processing on November 29, organized by our sister site FoodProductionDaily.com and William Reed Business Media.)