The unique institution that is Ornua continues to go from strength to strength in managing the growth in Irish dairy commodity sales.
It’s uniqueness comes from its structure, which now sees Ornua employ over 3,000 staff, sourcing product from eight member co-ops that have 14,000 Irish dairy farmer suppliers.
Internationally, this type of marketing and sales business does not operate as a co-op structure.
Most global export-orientated dairy businesses have moved away from this type of structure to a more direct business-to-business arrangement.
The Irish solution to our relatively small scale is for the co-ops to work together under the Ornua banner to manage sales of product outside of Ireland under the remarkable Kerrygold brand.
Interestingly, Ornua sees the next five years as a growth phase in value rather than volume, with a plan to build on the already successful US and German story. While the most recent US Whitehall acquisition doesn’t use any Irish dairy product, except some casein, the profits still come back to Irish farmers.
As the Ornua chair said, the advantages of a co-op structure are probably even more apparent when times get tough. For dairy farmers, 2023 is looking like a low-margin year so any benefit Ornua can deliver is more crucial.
The provision of working capital funds to co-ops is a big advantage to the member co-ops of Ornua. In 2022 alone, this rose from €500m to €555m (see Lorcan Roche Kelly).
Farmers have to carry this working capital facility themselves as sole traders, which can be difficult, especially when they have huge input price increases and output falls like dairy farmers are experiencing this year.
Milk suppliers need a strong Ornua in 2023 more than any other recent year.