Aurivo Co-Operative reported a profit after tax of €997,000 for 2023, down from €13.6m the previous year.

The co-op described 2023 as an “extremely challenging” year, saying the more than 16% drop in turnover to €638.6m was driven by falling milk prices and a 39% plunge in the volume of fertiliser sold.

The almost complete wipe out in Aurivo’s profit for the year was driven by the co-op’s decision to support farm gate milk prices as far as it could, CEO Donal Tierney said.

The co-op reported that its average milk price for 2023 was 41.04c/l (ex VAT), down from 58.47c/l in 2022.

On milk supplies, there was a strong performance, with the pool at 509m litres in 2023, a less-than 1% reduction from the previous year.

Aurivo said it gained 30 milk suppliers last year, and has more than 20 set to join in 2024.

While there were more exits, Tierney told the Irish Farmers Journal that while the trend is for fewer new suppliers to enter every year, those that do are significantly larger operations than the ones exiting.

One big event for the co-op in 2023 was the completion of the takeover of Arrabawn Co-Op’s liquid milk and butter van sales business for a total cost of €8.8m, including fees and stamp duty. In the wake of that acquisition, approximately 25% of Aurivo’s milk pool will be used for its liquid milk business.

The co-op also fully commissioned its new €15.5m evaporator at its Ballaghaderreen site, which Tierney said will ensure the processor has sufficient capacity across the peak milk delivery weeks in future.

Aurivo’s dairy ingredients and agri business divisions saw respective 30.6% and 13.9% drops in turnover during the year.

However, revenue at its consumer foods division, which includes liquid milk and butter sales, were flat for the year at €137.5m. The marts division managed to increase revenue by 4.2% to €103.1m.

On the outlook, Tierney said that right now the milk price is being supported by the price of butter. He added that powder prices continue to be weak.

While he expressed a hope that there would be less volatility around dairy prices in future, there was is no clarity at the moment as to whether that would be the case.

He said that Aurivo “will continue to manage the business prudently, supporting our farmer members and making effective and necessary investment for the future.”

In common with other processors the Irish Farmers Journal has spoken to over this earnings season, Tierney said that the co-op was “well invested” in facilities for the future and has little interest in adding to capacity. He did, however, say that Aurivo remains open to accepting new milk.

On future milk supplies and the risk to production from a further cut in the derogation, he said that despite Aurivo being relatively well insulated from the cut to 220 – due to its catchment area generally less intensively farmed – a further loss of derogation would be devastating for the industry as a whole.

This is mostly a function of the fact that Aurivo sources its milk from the west and northern region, which is generally less intensively farmed.

With many of Aurivo’s customers being large multinationals who are increasingly pushing for stronger environmental credentials, not least because of the introduction of Corporate Sustainability Reporting Directive (CSRD) legislation, Tierney said that good environmental practice is essential for the co-op’s business.

Updated reporting of Tierney’s comments to show Aurivo was relatively well insulated from the cut to 220, rather than from a cut to 170