HOW MUCH is the price of a pint of milk in your local shop? Do you know – or do you even care?
If you care about your local economy, particularly the farmers who supply that milk, then David Dobbin suggests you should be keeping a closer eye on what you pay for products such as milk.
Dobbin is the chief executive of the United Group, the North’s largest dairy business, which is owned by a co-operative of 1,900 farmers, the majority living and farming in Northern Ireland.
Latest financial accounts show the United Dairy Farmers’ Co-op has just reported a record annual turnover of £437 million.
In the 12 months to the end of March 2012, United Dairy grew its turnover by more than 9 per cent and boosted pre-tax profits by 25 per cent to a high of £5.2 million.
Dobbin acknowledges that 2011/12 was the most successful year ever for the group but he is far from complacent.
If anything, he is worried about how the co-op’s farmers, who are “under huge financial pressure”, are going to cope with “increased winter feeding costs” in the months ahead. It might have been a record 12 months for the United Group, but so far 2012 has been anything but good for farmers in the North.
“The current year started with falling dairy markets and farmer milk prices and very poor weather which has pushed up farmers’ costs,” Dobbin said.
He said that although its members will share in its financial success through the group’s bonus share payout, United Group is also keen to “add value to members’ milk” by continuing to successfully diversify.
The United Group is also the parent of Dale Farm, a company that produces and distributes a wide range of dairy products from cheese to butter and yoghurts.
Its home delivery service provides fresh milk to an estimated 80,000 homes throughout the North while the company also exports to more than 45 countries.
The United Group’s latest annual report shows Dale Farm’s turnover grew by 10.7 per cent to £212 million in the 12 months to March. Its consumer product sales alone increased by 16 per cent to £134.6 million and food ingredient sales increased by 60 per cent to £52.4 million.
Cheese and whey protein products are two key areas of growth for Dale Farm, and this is just one of the reasons why the United Group has earmarked a new £6 million investment at its cheddar cheese plant in Tyrone.
The investment injection is expected to double the output of cheese produced at Dale Farm’s Dunmanbridge plant in Cookstown to eight tonnes of cheddar per hour.
Dobbin says the expansion will increase demand for milk and also create more processing capacity to handle the growing volume of locally produced milk.
The 1,800 farmers in the co-op supply more than 1 billion litres of milk each year.
The North’s agriculture industry sustains vital jobs in rural communities that have been hard hit by the construction slump.
Add to the fact that a once lucrative sideline in selling off plots of farmland to eager developers no longer exists and it is easy to see why co-ops such as this are playing an increasingly important role in the North’s economy.
But the Ulster Farmers’ Union is warning that the diary sector in the North is under severe pressure because of the price paid for milk in Northern Ireland.
In the North a large percentage of milk is bought for commodity markets which means the price is influenced by rises and falls in those markets. The United Group’s annual report reflects just how fickle these can be.
Dale Farm may have processed record volumes of milk in the year to March this year but its results show that sales of commodity products fell by more than 40 per cent to £25 million in 2011/12.
The United Group has highlighted that “as production overtook demand growth, prices continued to weaken and buyers shortened their books”.
The Ulster Farmers’ Union says dairy farmers in the North are making a loss on milk. Ian Marshall, deputy president, says that while production costs have soared, farmers are getting farm gate milk prices “below the costs of production”.
