Dairy market will find route to sustainability, Carbery chief

By Jess Halliday

- Last updated on GMT

Related tags Milk

As the depressed dairy demand, falling commodity prices and less support from Europe take their toll, it will be down to the dairy market to find its way to sustainability, says Carbery’s big cheese.

Carbery Group has reported pre-tax losses of €0.8m for 2008, compared to €8.5m for 2007, and EBITDA of €1.9m, down from €12.2m. Turnover dipped 8 per cent to €204m.

Although no break-out has been released, the dairy group has attributed the falling fortunes last year to its dairy and cheese operations; the ingredients division is said to have seen strong performance.

Global dairy markets were least year hit by price volatility and decreases in the dairy market. This led to reduced operating marketing and low prices in supplier milk, and for the cheese operations – a major part of its output – a drop in prices of 26 per cent, and these low prices are said to be continuing into 2009.

“Demand for dairy products has and continues to be depressed due to the recession, said Dan MacSweeney, CEO. “Commodity prices on the international dairy markets have continued their fall into 2009. With current EU support proving incapable of providing an acceptable dairy market and a sensible income for farmers, it is likely that the market will have to find its way to sustainability.”

Carbery’s approach has been to ensure it can keep a strong, high quality supply of milk from its suppliers. This has meant it has subsidised the milk price throughout 2008 by helping the West Cork Cooperatives pay strong milk prices to farmer-shareholders.

MacSweeney said that amongst he key goals for this year Carbery is looking to “produce its dairy portfolio as efficiently as possible by minimising cost and maximising support for our dairy farmers.”

Processing improvements have recently been brought on line, and the cheese processing facility is the recipient of new investment, of an undisclosed amount, in 2009.

Ingredients up

Carbery said that its ingredients division has seen a rather different story in the last year, as demand has increased and new markets have opened up. The ingredients division encompasses Carbery Dairy Ingredients, which supplies whey-based ingredients, and its flavour arm Synergy.

MacSweeney said that driving more value from ingredients is a key goal for 2009.

Recent news from the ingredients side includes the commission of research from North Carolina State University for new whey ingredients. Carbery also invested in its whey processing facilities in Ballineen, Cork.

On the Synergy side, the launch of natural flavours have been a huge driver; it is aiming to gain more local consumer understanding with new technical centres in Thailand and Brazil.

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