I sat in with a dairy discussion group explaining to them how Irish milk is produced compared to the intensive indoor production in Finland.

Valio, while relatively small by international standards, is the biggest milk processor in Finland with a net turnover of €1.9bn. Valio is the market leader in all key dairy product groups in Finland and a world class pioneer as the developer of functional foods such as Benecol etc.

Valio is also strongly positioned in neighbouring countries Russia, Sweden and the Baltic States.

International operations including licensing encompass 65 countries accounting for one third of turnover.

Traffic light returns

Over 70% of production is consumed on the home market in Finland compared to Ireland where over 85% is exported.

Milk price to farmers is consistently over 40c/litre and, last week, the chief executive explained to us that they operate a traffic light system for products to alert management to the net value in cents per litre a product is returning.

For example, if a product is returning less than 30c/litre it is shaded red. Valio try and limit the quantity of milk in this pool to less than 400m litres (20% of total).

Yellow denotes products returning 30c to 40 c/litre while green is for products returning over 40c/litre and blue is for products returning over 60c/litre.

Valio new products

Valio release over 100 new products to the market and take off 100 products each year that are not working.

The company boss said: “New products need to make our company €60m turnover per year and we need more products that return a higher cent per litre – more blue box products (>60c/l) than red box. We have devised a small calculator which allows us to calculate the price return per unit of product.”

Selling more of these higher value products is the main reason why Valio can pay their farmers over 40c/litre consistently.

Valio on industry research

While in discussion in Teagasc, Tina Mattila-Sandholm, head of research and development at Valio said: “The Irish government need to wake up because it’s all very well having strong government funded research but industries such as dairy companies also need researchers and they need the best researchers. It’s not a question of what percentage of turnover a company spends on research but they need to be intelligent, talented and the drive to do the right things well. Both government and industry research need to have a critical core size to function effectively.”

Industry centralisation

Valio went from managing 34 processing sites in 1984 down to 15 sites in 2004 and the board members involved suggested that this was worth at least 2c to 3 c/litre in terms of milk price. At the time, they were pushed by local government authorities to reduce the number of processing sites so they had little choice in the matter.