Belfast Telegraph

Dale Farm profits drop 50%: Boss warns 'this is make or break time for many of our dairy farms'

By John Mulgrew

Dale Farm boss David Dobbin has said the group's 50% profits slump is "strong performance against very difficult markets" as the entire industry faces one of the "most challenging markets" in recent history.

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Dale Farm - along with its parent company United Dairy Farmers - saw turnover fall slightly to £421m.

And the entire group's operating profit fell by around 50% to £3.55m, which was blamed on "depressed market returns... made worse by adverse exchange rates with the pound gathering strength versus the euro".

Dr David Dobbin said the next six to nine months would be some of the most challenging facing our dairy farmers.

He said dairy farm incomes have dropped on average by £60,000 in the last year.

On the upside, Dale Farm itself saw a 10% boost in turnover - rising to £320m for the year ending March 2015.

During the year, farm gate milk prices "roller-coasted", according to the firm - starting the year at a high of 32.4p per litre and finishing at 21.4p.

But Dr Dobbin, United Dairy Farmers' chief executive, said it was a "strong performance against very difficult markets".

"If you look at others, there are quite a number of companies which are in distress, or losing money. In that same market we generated growth.

"Yes, profits are down, but if you look at the movement of sterling this year, which has gained significantly against the euro and dollar, and since a third of business is in exports, it's a significant impact."

And he said an end to EU milk quotas meant several other countries had boosted their own supply of milk, resulting in more competition.

He said part of a drop in trade was due to the Russian export ban, banning EU dairy products, and the slowdown in China.

"Market returns declined significantly and there are more producers chasing fewer orders.

"We are continuing to hold our own, but if you are a dairy farmer, it's one of the most challenging markets I have ever seen."

"The pressure in the market is intense."

He added that the "rule book had been torn up" with the milk and dairy market not expected to see the same swing back it has done in previous slumps.

"We would believe that 2016 could see some recovery, with Chinese demand increasing, and sterling may not remain as strong."

Regarding any concerns over jobs at the group, Dr Dobbin said it had grown staff numbers to 1,300 with plans to add around 50 to 60 new jobs at its cheese operation in Cookstown.

"We are three to four times bigger than we were 10 to 15 years ago," he said.

But he said there remained serious concern for both farmers and processors, "particularly those who have invested and borrowed money who have to survive this downturn".

"I would fear for a number of farm enterprises - it's a market where you have to work hard to survive and prosper."

"If you survive the next six to nine months, you can come back.

"We can survive, but it will be challenging."

It's a tough industry which is "very price sensitive" and has been hit by currency fluctuation, according to PwC chief economist Dr Esmond Birnie.

"The euro has been falling and may be set to fall further in relation to the pound," he said.

"Dairy and other industries such as beef are very price sensitive. This is likely to be an ongoing situation. The whole industry has changed at the EU level."

Belfast Telegraph