IN April 2017, Dairygold chief executive Jim Woulfe described Brexit as a “sleep disturber”. Continuing the analogy, then the Covid-19 crisis must be a nightmare. Last week, Dairygold announced its financial results for 2019 but the business landscape now in 2020 is very, very different.
For the record, in 2019 Dairygold broke the €1 billion revenue ceiling for the first time. The dairy and agri business co-operative delivered an annual turnover of €1.02 billion, an increase of €27.5 million (2.7%) on the prior year. An operating profit for the year of €35.8 million, an increase of €6.8 million (24%) on the 2018 operating profit of €29 million.
Now, Covid-19 is a rapidly evolving situation which will have a significant negative impact on agri dairy business, operationally, commercially and financially, with significant challenges being experienced from farm to market.
The agri dairy industry is deemed by the government as an essential service, therefore, milk continues to be collected from farms and all are following the HSE guidelines to ensure continuity of processing operations while providing a safe environment for critical staff from farmer to consumer.
Last week, Dairygold assembled 1,550 loads of milk from its 2,750 milk suppliers across Munster for the manufacture of cheeses, butter, milk powders and speciality dairy Ingredients at its four processing sites.
At peak in mid-May this will rise to over 1,800 loads of milk per week, a total of 46 million litres peak week. The logistic challenges at this time are enormous but are being accomplished.
Commenting on the challenges the industry faces, Mr Woulfe told Farm Leader that every effort is being made to do the right thing for all Dairygold stakeholders during these uncertain and challenging times.
“While our focus is on business continuity our priority is the health and safety of our members, employees and customers.
“Tremendous credit is due to the frontline people across the entire supply chain, from the farmer producing the milk on farm, to milk collection staff, to key operatives at processing level and in supply chain to ensure we meet our customers’ needs.
“A special mention to our milk hauliers who are collecting milk from farms 24 /7 and delivering to Dairygold processing sites,” said Mr Woulfe.
The Ardagh native said with peak Covid-19 impact coinciding with peak milk/manufacturing period, in an industry that utilises a perishable raw material like milk, the industry is exploring all contingency measures available.
“Dairygold is working with the other dairy processors, to identify all options for co-operation and pooling of resources. As we are in unchartered territory it is important to state that Dairygold’s contingency plans will continue to evolve.
“In addition, our Co-Op Superstores Team are doing everything possible to meet customer needs. The staff have had to adopt to a new call and collect model and equally our customers have been very patient and have embraced the new trade arrangements during this extraordinary time. Dairygold will keep all measures under review to ensure that we maintain service to all our customers,” said Mr Woulfe.
The global dairy market is experiencing very significant challenges on the supply chain and demand due to the impact of Covid-19.
The food service industry which includes restaurants, convenience food, fast food and ready meals has essentially closed. These are no longer a route to market for dairy products during these times.
While milk prices have held up to date, Mr Woulfe doesn’t mince his words about the future.
“With so many countries around the globe in lockdown, dairy commodities and ingredients have fallen very significantly in value. As a result, regrettably, this will impact milk price at farm level as well as the financial performance of the business itself. The turmoil caused by Covid-19 is in stark contrast with the positive business results Dairygold experienced in 2019,” Mr Woulfe noted.
Dairygold now have 350 people working remotely across their businesses which is a huge change from the traditional way they operate.
“I am pleased with how this is working, and I thank all our staff for the trojan work they are carrying out to ensure business continues as normal as possible.
“While this is a difficult period, our farmer members, employees and our customers as well as the Dairygold organisation are resilient. Everything that can be done will be done to confront the challenges ahead.
“We remain positive, patient and determined. We are all in this together, not only in Dairygold, but nationally and globally.
“I’m confident that once we strictly adhere to HSE advice and government guidelines it will enable us to return to normality at the earliest possible date,” Mr Woulfe concluded.