Maintaining some of the highest milk, pig and beef prices in the State last year has led to a sharp fall in profits at the Cork-based co-op, Dairygold.
Although turnover at the co-op was marginally higher at £625.8 million (794.6 million), operating profits fell from £16.2 million to £13 million, while pre-tax profits were down to £8.1 million (10.3 million) from £13.7 million. That pre-tax profit figure, however, understates the real level of profits as the 1999 accounts include a £3.1 million exceptional charge because of payments to employees for the harmonisation of pay and conditions.
Maintaining an average milk price of 105.45p per gallon - very much at the upper end of the market last year - meant that Dairygold's operating margins fell from 2.6 per cent to 2.05 per cent.
Dairygold's members, however, are to receive share interest - the co-op equivalent of dividends - of £966,000, while the coop has made a £2 million provision for bonus shares to be paid to suppliers based on their level of business with the co-op.
In the dairy business, Dairygold processed 188.3 million gallons of milk but suffered from low prices for skim milk powder in the first half of 1999. This price weakness continued until the second half when better prices for skim improved returns.
Pig throughput at the group's factories fell from 556,000 to 524,000, although Galtee pig-meat division had a good year despite depressed prices for pigs, which for many producers meant that returns fell to below break-even by year-end. The outlook for this year, however, is better.
In the beef business, Dairygold chairman, Mr Denis Cronin, warned cattle available for slaughter this year would be significantly lower than last year, when Dairygold slaughtered 124,000 head. Throughput at the Charleville plant was sharply lower because of higher specifications demanded by European buyers.
The beef division was profitable last year, said Mr Cronin, but he warned that the dependence of the Irish industry on export markets, as well as increased processing costs, put Irish suppliers at "a serious price disadvantage vis-a-vis the rest of Europe".
