Aurivo: investing €30m in post-quota expansion

Aurivo may not be a household name but its roots go back to 1897 when groups of farmers in the northwest came together to boost their incomes by churning butter.

They could hardly have imagined that their descendants would one day be shipping dairy produce to almost 50 countries and supplying almost one-third of Nigeria’s milk powder requirements.

Those pioneering farmers would go on to form NCF Co-op which later became Connacht Gold, before the name changed to Aurivo in 2013.

The creamery was at the heart of many rural towns in the 1900s, and today Aurivo co-op is still the main business for many towns in the northwest and west.

It employs more than 700 people in dairy ingredients, consumer foods, retail stores, marts and an animal feed mill. It also has a 67 per cent share in the ECC Teoranta sawmill in Corr na Móna, Co Galway. Between its three sites in Ballaghaderreen, Co Roscommon, it employs 105 people, making it the town's biggest employer.

"In lots of the communities it would be the biggest employer in the area," says Aurivo chief executive Aaron Forde.

The 1,000 dairy farmers who supply Aurivo are dispersed from Gort in south Galway to the top of Inishowen in Donegal and across to Westmeath.

“We touch pretty well every parish in that region. It’s an area almost as big as the area covered by Glanbia,” he says.

“Most of the money that comes into those rural communities is kept in circulation in those communities, in local small businesses. I can think of no better way of injecting support into rural communities.”

Aurivo suppliers produce 350 million litres of milk a week, and 75 per cent of that milk leaves the island in the form of products such as enriched milk powder and butter. Its customers are in countries as diverse as Afghanistan, Costa Rica, Iraq and the US.

Milk supply

Now its farmers are planning to increase milk supply by up to 25 per cent by 2020. Forde says there will be no problem selling the extra product.

“There’s no lack of demand from customers. One of our challenges will be in having enough product to keep up with the growth in demand. The continent of Africa has a billion people across 52 countries, and it offers tremendous opportunity as population grows and income per capita grows.”

How will that impact on small towns such as Ballaghaderreen and Tubbercurry?

“We’ll have existing farmers expanding by 10, 15, 20 cows and we’ll also have about 30 new entrants into dairy scattered across our region, some of whom are sizeable enterprises with several hundred cows.

“They’ll make an impact in each of their communities. They’ll have more money to spend, whether it’s on improving their farm or whatever. Currently the Aurivo milk cheque to farmers comes to more than €120 million a year.”

Expanding farms should also boost Aurivo’s 40 stores, the shops that would have been attached to creameries in years gone by. Now called Homeland, they sell everything from cattle wormers to washing powder.

Milk quotas

So will the removal of milk quotas have a bigger impact in the northwest than in the south or east of the country?

“Yes, we have more dependence on indigenous industry than foreign direct investment or multinationals,” says Forde.

Aurivo has its fair share of smaller suppliers and volatile prices could put their livelihoods in jeopardy. With that in mind, it is running a farm profitability programme with Teagasc to help farmers be as efficient as possible and be prepared when a tough year comes.

It has invested €30 million in its post-quota expansion programme in the last four years, and plans to invest €40 million more by 2020. So what will Aurivo look like in five years’ time?

“We’ll certainly be processing more milk. We’ll be bigger, stronger. I would be very optimistic about the future.”