Dairygold processes 190m gallons of milk annually at four plants in Cork: two in Mitchelstown, one in Mallow and one in Mogheally. The plans to close down the milk-processing facilities were part of a rationalisation at the co-op.
Earlier this month the company caused consternation in Munster when it announced plans to close its pig-processing plants in Cork and Tipperary with the loss of 270 jobs.
One of those plants is located in Mitchelstown. Any attempt to close two milk-processing plants in the same town would make life even more difficult for Jerry Henchy, the relatively new chief executive pushing through the rationalisation.
In a statement the company said: “Dairygold has confirmed that its analysis of its milk processing options and plant configurations does not at this time give rise to pursuing a joint-venture processing option with Carbury Milk Products, which had been under consideration by both parties in recent months.
“Dairygold is continuing its analysis of how best to configure its product portfolio and processing-plant configurations in response to its strategic plans to add maximum value to its milk pool and to achieve least cost production for the future.”
Advertisement
Henchy gave an insight into his thinking on how best to configure Dairygold’s processing plants in a paper he delivered to Teagasc, the government agricultural advisory body, last November.
He said: “We will look internally to see how best to upgrade some of our assets to move from four processing sites to two or one. We will benchmark the capital costs of all investments against acting in a federated co-operative processing manner with our fellow processors and we will move without pride or prejudice in this direction of shared processing facilities if it serves our purpose best.
“This will involve controversy as we will be looking at all of the assets we either fully or partially own and determining their role for the future — are they core or is their value best realised and ploughed into our core strategy for the future?”
Henchy has taken 825 people off the Dairygold payroll since he took the helm last year. His radical plans are in line with a report prepared by Prospectus Strategy Consultants for Enterprise Ireland and the Department of Agriculture last year.
That report recommended that Dairygold should merge its milk-processing facilities with those of Glanbia and Kerry Group to create a super-dairy capable of processing 70% of the country’s milk. The report made the case for reducing the number of plants processing milk into butter, milk powder and curd from 11 to four.
Advertisement
According to one industry source, Dairygold’s decision not to outsource to Carbery was a significant setback for Carbery, which is probably best known for its Dubliner cheese. The company was founded by Cahill in 1965 as a joint venture between Express Dairies and a group of west Cork milk producers.
Grand Metropolitan, which acquired the Express Dairies stake in 1970, sold it to the local suppliers in 1990. Since then the company has expanded into alcohol production and has acquired two food flavour business, Synergy Flavours in the UK and US Flavors & Fragrances in America.