OVERSEAS product and services will account for more of the turnover of the Irish Dairy Board this year than domestic sales, the board has stated.

Its managing director, Dr Noel Cawley, said yesterday he expects foreign product and services will account for around 60 per cent of turnover in 1997, compared to 45 per cent last year.

The Irish Dairy Board's profit before tax last year was £22.1 million, a 6.2 per cent increase over 1995. Group turnover was up 5 per cent to £1.33 billion. The group's borrowing, net of cash, reflects a net debt to equity ratio of 19 per cent as compared to 26 per cent in 1995.

Of the 1996 surplus, £6 million is to be allocated to the Annual Bonus Fund. Annual Bonus Fund monies go to member coops and plcs in proportion to their sales to the board.

The board augmented prices paid during the year by an end of year bonus of 0.5 per cent, based on initial prices paid. This amounted to £3.2 million.

"With Irish milk production limited by quota and a fall in dairy product prices, the increased turnover and profit for 1996 is attributed to an improved performance by the board's overseas subsidiaries and the full year effect of 1995 acquisitions," Dr Cawley said.

He said the board did not break down profits into "home and abroad" categories as a lot of the business was interlinked. However, "non Irish business would have made a significantly greater contribution than hitherto" to profits.

Given the fall in world prices and demand, a reduction in export refund rates and volumes, and the pound's appreciation within the FRM, the board had a "satisfactory trading performance" in 1996, he said.

If the pound continues to remain strong against other European currencies, it will adversely affect the competitiveness of Irish dairy exports in 1997.

With increased production at world level and downward pressure on EU exports as a result of GATT, Dr Cawley forecast that returns for Irish dairy products are likely to stay close to support price levels during the year.

A total of 28,387 tonnes of butter and 46,056 tonnes of skim milk powder were sold into intervention during 1996. There were no sales into intervention the previous year.

Irish dairy products suffered "indirectly" from the BSE crisis. Surveys found a tendency among buyers to buy dairy product from their own countries. The Kerrygold brand tended to "stagnate". Irish dairy product was hit by around 1 to 2 per cent in some countries. "I believe the worst is over in terms of BSE."

Asked for his view on the need for mergers in the Irish food sector, Dr Cawley said the dairy industry "needs to be efficient". He did not want to comment further.

Dr Cawley expects the board will make a number of acquisitions this year. "We can't grow in Ireland so the only strategy is to grow overseas." Every purchase is designed to sell Irish product and to generate profits.

The chairman, Mr Thomas Cleary, said that when people ask for the abolition of intervention they should reflect on what happens during a bad year. "What would have happened to prices last year if intervention had not existed?"

The board is awaiting publication of an EU discussion paper on the future of the quota system "and everything to do with dairying". The paper is expected in the autumn. The board has commissioned a new study from Teagasc on the post2000 situation, and this should be ready within months.

"The only thing we can be sure of is that we are not going to have the level of support in the future that we had in the past," Mr Cleary said.