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What is Centralised Research, Marketing, and Processing Worth?
Walter Powers
â‚Ź150 Million in Total or â‚Ź7,500 Per Farmer
Mission Discussion Groups of Ireland To be a major player on World Dairy Markets “To establish a fully integrated new entity, incorporating milk collection, processing, marketing, research and development, with one management structure that is sustainable, profitable and farmer owned.�
Why? Gain market strength
EU milk policy is now market orientated Cost & efficiency savings – short and long term Need to facilitate & encourage future milk
Need clarity of vision for future direction Its illogical for Irish co-ops to continue competing against each other to sell product nationally and internationally
Why not? Where will all the milk go? • India and Asia • IDB Working relationships
We have enough processing capacity • Peak supply problems – don’t’ want to be there • Flexibility • New milk – Plan Now!
High cost of capital investment • €150m over new milk = 6c/litre or existing suppliers pay one third (1 c/litre) • IDB co-finance (they want right R&D) • Tax incentive scheme
Why not? Dry shareholders are a problem?
• Some Business models can bring in all shareholders • Arla/Friesland dividend
Co-Ops need to mind there own patch? Competition Authority will stop? • EU report Irish consumers not disadvantaged as all exported • Arla sell x% of product
Where has centralisation worked? •
Onno has spent the last 30 minutes telling us why
Possible Dairy Business Model Dairygold Milk
Glanbia Milk
Arrabawn Milk
Your Co-op’s Milk
Irish Dairy Board (Marketing) Processing Research and Development (2% retained)
Milk Price
Shareholder Dividend
New Capital Expenditure
Global Power
Dairy Business Model • All farmers have a share in Dairy Business Model based on valuation
• Only milk processing components go into the Dairy Business Model (eg. Agri sales not included) • Dairy Business Model centralises processing, marketing and R & D as an independent body • New Ireland own/lease 100% of the steel so ‘Dairy Business Model’ decide what to keep and replace etc
Summary
A Unified Irish Structure can become a Real player on a Competitive World Export Market
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