By John Bromley
Despite now supplying more than 50 different markets around the world Aurivo Co-operative Society remains “very committed to being rooted here in the north west”, its CEO Aaron Forde has said.
In the course of an interview this week with the Sligo Weekender, Mr Forde spoke about:
• The tough times being experienced by dairy farmers, with the “real pain maybe yet to come” this year.
• The decision to move the production of Connacht Gold butter from Achonry to Cork.
• His hopes to sustain the co-op’s network of stores in the region.
• And the future for the family farm.
Mr Forde was speaking following the release of the financial results for last year for the co-op which employs around 150 people in Sligo and around 700 overall.
Total operating profit of just over €3m, was down on the €6.73m in 2014, largely due to the co-op supporting milk prices to the tune of around €8m.
He acknowledged it wasn’t one of their better years but said it was still a “good year”.
“We managed to produce a profit, which is important so that we can invest and develop the business for the long term, and it showed the strength of the business that we could support our members and end up with a strong balance sheet.”
He said it was also good year as they won 44 new business and milk quality awards.
Mr Forde said that in a difficult dairying year they ran the second year of the farm profitably programme with about 16 events involving around 800 farmers.
“That’s important in helping people through these difficult times”, he said.
On milk prices he said that Aurivo paid an average of just over 30 cent in 2015, but “unfortunately the journey has been sharply downward since then”.
“The outlook now, being honest with people, is that there will be very little recovery in prices until very late 2016 or very early 2017, with markets as they are and milk supply as it is and a stock overhang and product in public storage in intervention.”
And he warned: “The real pain may be ahead as we head into peak milk at these low prices. We will do everything we can to support members as best we can but we also have to keep a strong business here for them in the medium and long term as well.”
But he is optimistic about the future for dairying. “In dairy we think we have a strong, sustainable supply basis of just over 1,000 farmers from the top of Donegal down into Galway and into Offaly and Westmeath, etc. We are working hard with those on the farm profitability programme and the best of them can produce milk as sustainably as anywhere in the world.”
He admits that things are more “challenging” in the beef sector.
“On the beef side we are probably going through more of an evolution in terms of how many times an animal gets traded in its lifetime and the changes in farm structure and operation that brings. There will be more changes in terms of numbers and farm structure.”
But he feels that over time grass fed beef will attract a premium and “we are well placed to play in that market place”.
Asked about the decision to move the production of Connacht Gold butter from Achonry to Mitchelstown, he said the move is about “sustainablility and building a sustainable consumer packing operation for the future”.
“A number of options were looked at and clearly the most sustainable one was to partner with Ornua plant in Mitchellstown which will have throughput of approximately 10 times the Achonry site.
“We couldn’t hope to invest more money in Achonry and produce maybe five to six times less volume and hope to have a sustainable operation. The most viable option was the one we took.”
Mr Forde said they were currently working with the “most impacted people, the employees”, to help people “transition from their role in Achonry” and if they’re not going to take one of seven jobs advertised to find other roles for those that want to.
He said if there was a viable case for keeping production in Achonry “by all means that would have been our first choice” but he said that “in a world in which we don’t have unlimited capital at our disposal it entails making choices and making the best use of that capital as we see it”.
Although Aurivo describes itself as “globally focused”, Aaron Forde doesn’t see it as having outgrown the region.
“Our reach is much bigger than the region in that we are in about 50 markets throughout the world but we are certainly rooted and very committed to being rooted here in the north west and being part of the communities that we are operating in.”
Asked about keeping the co-op’s present network of stores, Mr Forde said that if they weren’t a member owned business “the store footprint would be dramatically different”.
He pointed out that up until fairly recently their “store footprint” was unchanged from the early 70s despite dramatic changes in farming.
“We have made some modest changes but we are aiming to keep a service to members even where that may be at a cost to the society.”
But encouraging people to support the store network, he said that was the best way to sustain it.
In 2015 Aurvivo made an operating profit of €3.03m on revenues of €420m but profits were down from €6.73m in 2014 and revenues were also down from €447m in what the co-op describe as a “volatile” year for dairying.
Aurivo say that while supporting its milk suppliers through a milk stability fund and through co-op reserves did impact the financial performance of the organisation, the impact was significantly lessened due to a good performance across the Consumer Foods business, Agribusiness, Livestock Marts and their investment portfolio.
In all the co-op paid out €112m in milk cheques to around 1,000 dairy farmers in 13 counties.
The co-op also processed record volumes of milk at 411m litres, with milk supply up 12% in the post quota era from April to December.
Aurivo’s Consumer Foods business performed strongly with sales increasing by €5.1m to €80.4m.
Agri-business also performed strongly, albeit turnover declined marginally by €1.4m to €101.4m.
Marts business had a good return with year-on-year turnover increasing by 6.8% in 2015 to €86.5m.
2015 financial summary (with 2014 results in brackets)
Group revenues €420m (€447m)
Group operating profit €3.03m (€6.73m)
Consumer Foods revenues €80.4m (€75.3m)
Dairy Ingredients revenues €99.5m (€135.8m)
Agribusiness revenues €101.4m (€102.8m)
Marts revenues €86.5m (€81.0m)
Other activities’ revenues €52.1m (€52.1m)
Total equity/ Net assets €56.8m (€56.9m)