7th March 2008
A further investment of £2.1 million by leading dairy company, Dale Farm, has confirmed it as Northern Ireland’s largest processor of cheddar cheese and given the region’s indigenous cheese production its biggest boost in many years.
Today’s (5th March) official opening by Minister for Agriculture and Rural Development, Michelle Gildernew, MP MLA, of a major extension to the company’s bulk cheddar and whey processing facilities at its Dromona Cheese centre for excellence at Dunmanbridge in Cookstown, marks the completion of a major investment programme at the plant totaling some £5million within the last three years. The Department for Agriculture and Rural Development and Invest NI provided £700,000 in grant-aid under the EU Agricultural Processing and Marketing Grant Scheme to support the latest expansion.
The investment will enable Dale Farm to increase total cheddar cheese processing capability at the Dunmanbridge plant to 20,000 tonnes per annum and allow it to expand production of Dromona Cheese – Northern Ireland’s top-selling local cheese brand – utilising up to 200 million litres annually. Group Chief Executive, Dr David Dobbin, said that in addition to significantly increased cheese processing capacity, the additional investment in whey processing facilities would allow Dale Farm to expand its food ingredients offerings and lead to further improvements on its overall return.
“This investment is a key part of Dale Farm’s strategy of growing in value added products, in particular in cheese products where there is growing demand, and follows on from a recent investment in cheese packing and processing. Dromona branded cheese and butter products made with excellent quality local milk are enjoying good growth at home and in other markets and this investment would provide much needed additional capacity. Our dual focus strategy of developing consumer products alongside food ingredients is proving very successful.“
David Dobbin said that the company appreciated DARD and Invest NI ‘s ongoing support not just for this investment but for the company’s investments in research, new product development and developing new markets. Dale Farm is a subsidiary of United Dairy Farmers and is the largest dairy business in Northern Ireland with a presence in every dairy category under the leading brands of Dale Farm, Dromona, Spelga, Loseley and Rowan Glen.
22nd February 2008
Prices at this month’s United Dairy Farmers’ milk auction rose by 0.6 pence per litre on last month to average almost 23 pence per litre. This increase will be welcome news for dairy farmers, not only because it comes at a time when their input costs are escalating, but also because it lifts prices almost 6 pence ahead of the equivalent auction last year as we approach the important supply Spring months.
“As we predicted a few weeks ago, dairy markets have stabilised and started to show some improvement. Increased market prospects due in part to an end of season drought in New Zealand and falling milk production in the UK, has helped the demand for milk resulting in better prices in this week’s auction,” said David Dobbin the United Group Chief Executive.
“We sold milk for delivery in March, April and the peak milk supply month of May. The higher volumes for auction at this time of year usually mean lower prices, but the improving market situation helped deliver a 0.6 pence increase on the January auction. While the main auction for the peak supply period will be held next month, the outcome of this month’s auction suggests that the United base milk price to farmers this spring will be in the low 20’s – at the turn of the year that would have seemed very optimistic.”
“In the run up to this month’s auction a number of processors again decided to reject their option milk supplies for March. However, as a result of the improved market conditions, this milk was resold at the end of the auction at a price higher than it would have originally costed as option milk.” said David
“It was at this time last year that the first signs of a firmer dairy market became evident. The February auction was the lowest of 2007, with prices just over 17 pence. This months auction was almost 6 pence, or 35%, ahead of February last year and, while we do not expect the exceptionally high prices of last autumn to be repeated, we are starting from a much higher base and over the year as a whole the average price paid for milk could be similar to or better than in 2007.”In the auction a total of 78 million litres of milk were sold. Of this, 45 million litres were sold on 3-month contracts for delivery in March, April and May 2008 at an average price of 22.73 pence per litre. The other 33 million litres, which included 29 million litres of rejected option milk, were sold on one month contracts for delivery in March an average price of 23.34 pence. The overall auction average was 22.99 pence per litre, compared to an average of 22.39 pence in last month’s auction and 17.07 pence in the auction in February last year.
7th December 2007
As expected, prices in this month’s United Dairy Farmers’ milk auction continued to move down from the record levels of previous months, reflecting falling commodity markets and a recovery in milk supply, but prices are still well ahead of last year’s levels. The average price in the auction was 23.56 pence per litre.
“Commodity dairy markets peaked in late summer and have fallen since then, particularly in the past month, making a correction in our auction prices inevitable,” explained David Dobbin, the United Group Executive. “This month’s average was 4.7 pence ahead of the equivalent auction in December last year, but 6.0 pence down last month’s auction.”
“Dairy commodity prices started to weaken in September and October and have fallen further in November on the back of increased global supplies, particularly in the USA; a weak dollar; and a change in buyer sentiment. While the market has not collapsed, butter returns are now about 25% below the peak levels achieved in mid 2007 and powder prices are about 15% lower. The bulk cheese market, which until recently had been still catching up on powder, has also started to come off its peak and is likely to come under increasing pressure as milk supplies are diverted from butter/powder.”
“Because of the market falls, processors have been caught with milk bought at record prices when the market was at its peak. They are now having to process this milk and then sell their produce into falling commodity markets and are experiencing significant losses as a result. The projected option milk price for January would have been largely determined by the high prices paid for 3 month milk in the October (32.0ppl) and November (29.6ppl) auctions. Current spot dairy commodity market returns are equivalent to around 23ppl to 25 ppl. With such a large gap processors had no alternative but to reject their January option milk supplies, as they were entitled to do. This is the first time for several years that all option milk supplies have been rejected, and this reflects the exceptional nature of the price movements in recent weeks.”
“Only option milk has been affected. Milk contracts bought through the auctions in October and November are unaffected, with the volume of option milk accounting for around 50% of the overall supply. But the rejection of January option milk did mean that this week’s auction had a much higher than normal volume for sale in the spot market. The 40 million litres of rejected option milk was sold at the end of the auction and averaged 23.69 ppl.”“At present trade in commodity products is thin, with the traditional lull around the Christmas/ New Year period being exacerbated as many buyers are covered through to after Christmas because of previous fears of produce shortages. Until these buyers come back into the market to buy for the first quarter of 2008 we are unsure what the eventual commodity price trend will be. While markets are moving lower, many of the underlying conditions which prompted the market improvement in 2007 remain and it is likely to be January/ February before the prospects for 2008 become clear. Supplies from the Southern Hemisphere are already past their peak and as we move forward European supplies will be in greater demand, and we will see whether the fall in prices continues or reverses. Meanwhile retail markets, which were slow to rise and did not approach the heights of commodity markets, are now looking more attractive and will also help to stabilise returns going forward.”
In the auction a total of 92 million litres of milk were sold. Of this, 45 million litres were sold on 3-month contracts for delivery in January to March 2008 at an average price of 23.51pence per litre. Of the remaining 47 million litres sold for January delivery, 7 million litres was the normal spot milk and this was sold at an average of 23.11 pence per litre, and the remaining 40 million litres of rejected option milk was sold at an average price of 23.69 pence per litre. The overall auction average was 23.56 pence per litre, compared to an average of 29.58 pence in last month’s auction and 18.82 pence in the auction in December last year.
6th November 2007
This month’s United Dairy Farmers milk auction was held on Thursday past and resulted in an average price of 29.58 pence per litre.
“This was another good auction result for United members,” said David Dobbin, the United Group Executive. “United has now sold all its milk supplies for the remainder of 2007 at prices close to or above 30 pence per litre. This will ensure good prices for our members in the run-in to the New Year. Our base prices will continue to move up, even though auction prices are now falling, because of the time lag between the sale of the milk in the auction and the payment for that milk to our members.
“As expected, the average price in the latest auction was below the exceptionally high levels seen in recent months, but was still almost 10 pence ahead of the same auction last year.
“At this time of the year auction prices normally fall as the volume of milk available for sale rises as we move away from the autumn trough in milk supply and closer to the spring peak. In this month’s auction 44 million litres of milk were sold for delivery in December, January and February - 60% more than was sold in the record auction 3 months ago.”“While markets remain firm, the increasing milk supply is coinciding with a gradual weakening in dairy markets. Prices for both powder and butter are moving down. The impact of the fall in powder prices is evident in the price the Irish Dairy Board pays processors for skimmed milk powder: this has been cut by 500 Euro per tonne in the past month – equivalent to around 4 pence per litre of milk. Cheddar cheese prices have also passed their peak and have fallen slightly in recent weeks.
“Commodity prices in the EU have moved ahead of world prices, partly because realisations from international markets are being depressed by the further strengthening of sterling against the US Dollar. Combined with the removal of export refunds, the current record high exchange rate of about 2.08 Dollars to the Pound is making exports outside the EU very difficult.
“For farmers the improved milk prices are welcome and much needed, but processors are experiencing real difficulty, with record raw high milk prices at a time when commodity markets are softening and retail markets are still playing catch up with the changed situation. The auction system has fully reflected the recent strength in dairy markets; however this has meant that local processors are generally paying more for their raw milk supplies than processors elsewhere in Europe. As a result United members received up to 9 pence per litre more for their September milk supplies than the lowest prices paid to their counterparts in GB,” concluded Dr Dobbin.
In the auction a total of 44 million litres of milk were sold. Of this, 39 million litres were sold on 3-month contracts for delivery in the period from December 2007 to February 2008 at an average price of 29.58 pence per litre. The remaining 5 million litres were sold on one-month contracts for delivery in December at an average price of 29.61 pence per litre. The overall auction average was 29.58 pence per litre, compared to an average of 32.39 pence in last month’s auction and 19.87 pence in the auction in November last year.
15th October 2007
United Dairy Farmers, Northern Ireland’s largest dairy company, has announced improved profits, driven by growth in consumer product sales in its processing subsidiary Dale Farm in its 2006/7 annual results. The Group’s profit before tax increased by15% to £3.08million in the financial year ending 31 March 2007. While United’s overall Group turnover at £292million was down 1% on the previous year, strong growth in added value consumer product sales, especially of the company’s own Dale Farm, Rowan Glen and Loseley brands, helped grow Dale Farm’s turnover by 4% to £140 million. United Group Chief Executive, David Dobbin, said: “The Group results reflect the continued progress being made in our long-term strategy of reducing costs and growing added value sales in consumer products and food ingredients, particularly in the GB and Republic of Ireland markets. For the first time, Dale Farm consumer product and food ingredient sales exceeded £100 million, representing 75% of total Dale Farm turnover. “This growth was supported by ongoing product and process development, which saw 22 new or rejuvenated Dale Farm products launched during the year, including new ranges of layered yogurts and cottage cheese under the Loseley brand and a new fat free yogurt range and In-Tune pro-biotic drinks under the Rowan Glen brand. Investment was also made in the established Spelga yogurt brand with a package redesign as well as in re-branding Dale Farm flavoured milk as Shakie. “Largely due to lower prices as a result of CAP reform, Dale Farm commodity sales fell by 7% to £35 million. This represented only 25% of total sales, compared to 75% six years ago, demonstrating the Group’s success in driving growth within added value product categories and markets,” he added. A fundamental part of the Group’s ‘growing in value’ strategy is to ensure cost competitiveness within target markets and that products, facilities and performance are best in class, supporting this with a structured programme of capital investment. In 2006/07, overall investment spend totalled £7.4million, including the official opening at Dunmanbridge of a new Centre of Excellence for cheese processing and packing and a new powder packing line, and further investment in cheese and whey processing begun. At Kendal, a new dry goods store was completed as the first phase in improving storage and distribution facilities at the site, now distribution hub for the Group’s GB sales. “Toward the end of 2006/07, international dairy product prices began to improve driven by strong global demand which outstripped supply following droughts in Australia and Southern Europe,” David Dobbin continued. “In spite of the total removal of all export refunds, the returns from international commodity markets strengthened significantly in the first half of 2007/08, firstly for milk powders and more recently for butters and cheese. As a result of the investments in its processing capability, Dale Farm has been well placed to benefit from these improved commodity returns. “However, the company faces considerable challenges in the current year as the resulting increase in the cost of milk supplies and other costs, has not yet been fully reflected in the realisations for its consumer product businesses,” concluded David Dobbin. Harold Hamilton, Chairman of United Dairy Farmers, added: “The volume of milk purchased by the Society was at a record level of 1.053 billion litres in 2006/07, up 1.4% on the previous year. However it was a difficult year for farmers, with markets for some dairy products hitting an all time low and milk prices depressed as a result of on-going EU reductions in intervention support and export refunds. Over the course of the year the export refund on whole-milk powder, the main product manufactured in Northern Ireland, was reduced by over 4pence per litre. Against this difficult background the average base price paid to United’s 2,200 local dairy farmer shareholders was 17.1 pence per litre, down 1.1pence on the year before. “I am pleased that United members will benefit from the solid results achieved by the Group in 2006/07 through the issue of bonus shares and an increased share dividend which together will be worth over £1.1million. In addition, the considerable strengthening in international markets since the start of 2007/08 has been reflected in our recent milk auctions. Although markets have now stabilised and in some cases eased back a little, there will be a significant improvement in the milk prices our members receive in 2007/08. After several years of depressed returns, this is both welcome and necessary.” Results at a glance:
Group profit before tax up 15% to £3.08 million United Group turnover down 1% to £292 million Dale Farm Turnover up 4% to £140 million Consumer Product sales up 5.5% to £89 million Dale Farm Commodity sales down 7% at £35 million Capital investment of £7.4 million Share dividend up 0.5 pence per share to 4.5 pence per share Bonus share issue of 1 share per 2000 litres