Editorial: is milk price of €1/l possible?

If milk prices moved as much as the beef price, we would be talking about milk suppliers in 2025 getting more than €1/l for milk instead of the 48-50c/l forecast. This week, two of our largest milk processors, Dairygold Co-op and Lakeland Co-op, released annual financial results for 2024. It’s another measure of how both these successful co-ops are performing. Align the financials to milk price paid out to suppliers for the same period and you get a feel for how both dairy businesses are operating. Couple this with a wider lens view on investment and what markets the businesses are operating in, and you get a real sense of where they are at.

The transparency is 100 times better than what beef farmers can see from private beef processors. However, beef farmers are not contracted and can move where they want with product.

That fluidity is bringing exceptional beef market highs at the moment, as global supply significantly undercuts demand. The dairy market globally is in a similar supply space. The forecast is for less milk globally. Demand continues.

Those exceptional market highs are also seen in dairy markets at the moment for individual products. Whey protein isolates are now making €25,000/t. The more normal price is in the region of €10,000/t.

Of course, it’s only one specialist product in a myriad of dairy fractionates, but can our processors get a piece of that action? Can they deliver the likes of this product and more to the pot to drive on milk price and reinvestment to match inflation? For some, the answer is probably no at the moment.

I suspect both Dairygold and Lakeland have one eye on leading edge companies operating in the protein space. However, given resources and recent investments, they are effectively shackled on what they can actually do. Both have made significant investments in processing capacity over the last 10 years. Both could probably do with spending €100m to €200m on further investment to drive them further up the protein value chain. However, they can’t. They can’t bet the farm. They have made decisions, they need to make them work first.

I’ve no doubt both would like to dabble more in the human and health nutrition space. Again, both are probably priced out of some investments and acquisitions in a hot market for specialist whey ingredient companies. Frustratingly, they have the core raw material, but not the capacity to deliver.

Funding restrictions are the very reasons we are seeing huge centralisation of resources, call it what you like – consolidation, rationalisation at a European and global level. Think about it.

This week, DMK, the largest German dairy co-op, that was already three times the size of either Lakeland or Dairygold, merged with the largest Danish milk co-op Arla. They plan to form a co-op that will have close to 20bn litres.

There is a new world order. Currently Lakeland has 2bn litres, and Dairygold has 1.4bn litres. Scale isn’t everything and our Irish co-ops have shown, up to now, they can compete globally despite our smaller size.

However, will the new Arla be stuck for €100m to invest in the leading edge technology and companies? No.

We need to work better and smarter together in Ireland. It’s obviously not just in milk processing. Take for example the whole water quality project in Ireland. We all know water quality needs to improve – not just at a co-op level, not just on dairy farms or at water treatment plants.

So what’s the Irish solution? We have ASSAP, Catchments, Nitrates, Local County Councils, Teagasc, Signpost, you name it.

We launch project after project, each co-op gets a slice of European money to launch an initiative to effectively hammer the farmer. The world and it’s mother is involved. We need an umbrella organisation or someone to steer the ship.

If we are not successful in improving water quality, we might not secure a nitrates derogation and a half billion litres of milk might disappear overnight, or is at risk.

To stay delivering on the Irish way to success, we just need to collaborate better. We do it, but slowly over time and often too late. Our elected co-op representatives are still the best bet for change, but it’s a grassroots movement that drives change.