Irish dairy facing innovation challenges, says industry

By Neil Merrett

- Last updated on GMT

Related tags Irish dairy board Milk Idb

The Irish dairy industry must step up innovation if it is to remain
competitive in a changing European market place, according to one
of the country's leading processors and ingredient suppliers.

Noel Coakley, chief executive of the Irish Dairy Board (IDB), a major national cooperative, said that despite an increase in turnover for its operations during 2007, the ongoing reform of the EU dairy market would ensure that volatility remained a fact of life for producers.

"The removal of EU export refunds now means that Ireland is no longer insulated from the vagaries of international dairy markets," he stated.

"In order to build a strong dairy industry for the future we will need to be more innovative and responsive to the realities of the marketplace in this new era.

Product development will be very important with a specific focus on added value and consumer convenience."

Despite the current challenges facing dairy producers, particularly with the fluctuating cost of dairy products and the EU's decision to evoke export refunds, the IDB said that turnover was up two per cent to €2.1bn in 2007, compared to the previous year.

The company said that strong organic growth for its dairy products globally, especially in resource rich import nations, had helped to drove profitability over the year.

Demand for its product was further bolstered by supply constraints in key producing regions like the EU during the year, IDB added.

Overall, the company said that world dairy stocks were depleted during 2007, with EU intervention warehouses emptying as demand peaked during the third fiscal quarter.

However, the demand surge tapered off toward the year-end as buyers held back from purchasing, the company said.

Despite general international growth for its products, the IDB said that the consumer foods in particular proved to be a challenging segment for its operations, especially in the timing of selling price hikes.

Nonetheless, the company said that sales of its Kerrygold butter brand had increased by 1.8 per cent in 2007, aided by improved market shares in a number of key markets like Germany and the US.

Other international markets such as Africa proved to be more difficult for the group though, with higher prices impacting on milk powder sales on the continent, the IDB said.

In terms of ingredients, the company said that sales values were also up during 2007, though price volatility of commodities had led to a drop in cheese volumes.

Despite this, the company said that its three UK business units, Adams Food Ingredients, Dairy Ingredients UK and Meadow Cheese, performed strongly.

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