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Standing out amongst the challenges faced in the dairy market is volatility, John Jordan, Ornua CEO, told a Carrigaline Macra na Feirme event on the opportunities and challenges facing Irish agriculture on Monday night.
Prior to 2007 the largest difference in a year between highest and lowest milk price was 8c/l, Jordan said.
From 2007 onwards this has become much more volatile, with a 21c/l differential between the peak and trough in milk price. Jordan admitted this makes for an extremely difficult market for everyone.
Given these variations, he gave the example of how Ornua has continued to invest in trading expertise by hiring people with experience from the oil sector to gain from their experience of dealing with price fluctuations.
The other challenge he highlighted was the political uncertainty either side of the Atlantic. He said: “Brexit is the biggest [uncertainty] at the moment. It will change the status quo and that is bad news for Ireland. Even without tariffs, there will be 6% to 8% in additional costs, with tariffs it will be worse, while currency will be unstable until Brexit is resolved.
“While we’re not in the direct line of fire of the protectionism measures being implemented in the US, Ireland may be collateral damage to that.”
Growth targets
With a global team of 2,000 people which exports 60% of Irish dairy products through the Kerrygold brand to 110 countries, the Ornua CEO said the organisation has ambitious growth plans.
The Ornua chief then gave tangible examples of the higher value of the Kerrygold brand. In Irish supermarkets, Kerrygold sells at €3.75/lb, while own brand butter retails at €2.19/lb. German consumers buy German butter for €1.69/lb while Kerrygold, which is found in half of German consumers fridges, trades at €2.49/lb. There is a similar trend in the USA.
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