The decision by Nestlé to close down the long-established infant formula plant in Askeaton should sound alarm bells in the Irish dairy industry.

Nestlé has not become the biggest food company in the world by accident.

Based in small, land-locked Switzerland, it has a well-deserved reputation for competence, meticulous research and a continuing determination to pursue steady incremental growth in profitability.

As enormous purchasers and processors of farmers’ output, Ireland as a supplier ticked a lot of their boxes when they bought the high-quality milk powder plant in Askeaton from the long-standing owner Wyeth.

We are due much more than hand-wringing about job losses and statements about the declining birth rate in China.

Infant formula

Over the last few years, Ireland was estimated to supply approximately 16% of the world’s infant formula. The advantages that took us to that figure were and are real.

The components for success were quality control at farm and processor level, excellent technical back up from the Teagasc food scientists at Moorepark, and a grass-based system that delivered excellent quality milk.

Nestlé stepped in

When Wyeth was selling the plant back in 2012, efforts were made to assemble a group of Irish co-ops, together with Ornua (the Irish Dairy Board) to buy it, but the efforts ran into the ground and Nestlé stepped in, and it was assumed secured its long-term future.

So what went wrong? We would like to see a breakdown from Enterprise Ireland on what the components were that resulted in Nestlé’s decision to close the world-class plant.

For years, there were reports of the very high wages paid in the Askeaton plant – were these high operational costs a significant factor, and how amenable was the workforce to negotiate changes that might have safeguarded the plant’s future?

At this stage, we don’t know, but from observing Nestlé’s mode of operation down the years and across various countries, they inevitably choose withdrawal over confrontation.

The Irish agriculture sector – and particularly the dairy industry – need to arrive at answers as to why this decision was taken, and what lessons can be learnt from it.