THE IRISH Dairy Board was asked to pursue the possibility of setting up a global group similar to Opec to represent milk producers, with other big international companies or State agencies.
Hugo Maguire, a town of Monaghan co-operative delegate, proposed his idea to Kevin Lane, chief executive of the dairy board at the annual conference of co-operative societies yesterday.
Mr Maguire asked Mr Lane if it would be feasible to link up with international dairy marketing giants like Fonterra in New Zealand and Campina in Europe to meet the challenges from multinational retailers.
“We should try set up an organisations to do what the oil producers do in Opec for milk producers and processors worldwide,” he said at the Irish Co-operative Organisation Society’s national conference.
Mr Lane said he was in the process of meeting other major global marketing companies on a range of issues and it was possible the issue might arise.
He said fragmented marketing of Irish dairy products internationally was costing money and a unified marketing arm was needed rather than individual companies competing in markets and driving down the price. He also put a cost on increasing the milk output by 50 per cent here in 10 years' time as set out in the Harvest 2020report at over €800 million.
He said it would cost processors €400 million. There would be a need for up to €300 million in working capital, finance and storage facilities, and marketing infrastructure and investment in acquisitions and growth would cost a further €200 million.
Mr Lane said the expected growth in the dairy sector was a potential “good news” story at a critical time, but there were still many obstacles to overcome.
The society, which represents 150 co-operative businesses, also put forward its figures on the cost of expanding milk output. It said it would cost those increasing their milk output dramatically 30 cent per litre of annual capacity.
The society said the time was right to re-establish the link between milk supply and co-operative shareholding, which had been weakened by the imposition of EU milk quotas and co-ops diversifying into non-dairy areas.
It also proposed establishing a minimum shareholding by all members relative to their supply.