Dairygold has confirmed that it will reduce cheese production over the coming months due to a drop in milk volumes.
The processor, which is based in Co. Cork, said that milk volumes to date this year are 9% lower compared to the same period in 2023.
It is also forecasting that volumes will be back by around 7% for the entire year.
“Dairygold has no choice, but to take measures to mitigate the impact of reduced milk volumes on the business and milk suppliers
“As a result, Dairygold has made the difficult decision to reduce cheese production over the summer months and allocate milk volumes elsewhere within Dairygold,” a spokesperson told Agriland.
The co-op acknowledged that the move would create “uncertainty for employees” and said that it is consulting with trade union representatives.
“Dairygold recognises the ongoing success of its strategy, relies on the support and flexibility we receive from our employees, which we very much appreciate,” the spokesperson added.
Dairygold
Dairygold said that its primary commercial focus, is “to maximise the margins it can achieve, from its dairy product portfolio, by optimising its processing capacity and considering individual product returns”.
The co-op, which is owned by 7,000 shareholder members, saw its turnover fall by €254.7 million to €1.4 billion for 2023 (2022: €1.6 billion).
Dairygold collected and processed 1.41 billion litres of milk last year, a decrease of 70 million litres compared to 2022.
The co-op has around 1,200 employees across its three divisions; dairy ingredients, agribusiness, and its retail network of shops across the Munster region.
Last Friday (May 17), Dairygold announced that it will hold its base milk price of 40c/L for supplies in April, and will continue to pay a weather/fodder relief payment, albeit at a reduced rate.
The relief payment, introduced last month at a rate of 2c/L, will be paid at a rate of 1c/L for April.
The base price is paid at standard constituents of 3.3% protein and 3.6% fat and is inclusive of sustainability and quality bonuses, as well as VAT.
The processor said that its attainable milk price for April is 41c/L, including the base price and weather/fodder relief payment.
This April milk price will equate to an average farmgate milk price of 44.2c/L, based on the average April 2024 milk solids achieved by Dairygold suppliers.
A spokesperson for Dairygold said: “The Dairygold board recognises the significant challenges that the continued adverse weather conditions caused for our milk suppliers through April, and therefore remained committed to paying a strong milk price for April.
“Dairy market returns continue to be uncertain, primarily due to the ongoing weaker demand, as global milk supply generally remains flat. The Dairygold board will continue to monitor markets closely and review milk price on a monthly basis,” the spokesperson added.