Is market volatility and price downturn the new norm?

DAIRY SHOW FUNCTION: From left, FUW Carmarthenshire county chairman Brian Richards, milk and dairy produce committee chairman Rhydian Owen, president Glyn Roberts, Paul Vernon, HSBC regional agriculture director Euryn Jones and Welsh Dairy Show president Brian Jones.

DAIRY SHOW FUNCTION: From left, FUW Carmarthenshire county chairman Brian Richards, milk and dairy produce committee chairman Rhydian Owen, president Glyn Roberts, Paul Vernon, HSBC regional agriculture director Euryn Jones and Welsh Dairy Show president Brian Jones.

MARKET volatility is a global problem and a trend we will continue to see, an FUW function during the recent Welsh Dairy Show in Carmarthen heard. The prediction was made by Glanbia Cheese chief executive Paul Vernon, who has worked in the dairy industry for the past 28 years and previously held a number of senior sales positions with a leading consumer goods company. He began working in the dairy industry with a Northern Ireland co-operative and for the past 20 years has been chief executive of Glanbia Cheese at its headquarters in Northwich, Cheshire. He said: “From an economic point of view we need to stay in the EU – despite market volatility and abolition of quotas. Dairy markets are oversupplied and that will only change if we have a correction. “There are so many factors affecting milk prices but even if Russia lift the ban we will not likely see the same demand for European dairy products in Russia,” said Mr Vernon. Since his time in office Glanbia Cheese has grown turnover to around £250m and become the largest manufacturer of mozzarella cheese in Europe, accounting for over 30 per cent of all UK cheese exports. It is the second largest cheese manufacturer in the UK. From its manufacturing facilities in Anglesey and Northern Ireland (Magheralin), the company provides cheese to leading pizza providers in the EU and exports to a growing number of other countries across the world. “The demand for dairy will continue to grow worldwide and the milk supply in both the EU and worldwide will continue to grow,” Mr Vernon added. “What we must recognise is that world pricing will be driven by demand versus supply balance and will exhibit ongoing volatility. The USA, New Zealand, EU and UK milk prices will be driven by the global supply chain and producer margin will become the new ‘quota’. “Sustainability of supply aligned with cost competiveness will see milk production migrate to the more efficient regions, producers and processors and tools to manage volatility for the entire supply chain need to emerge.” The company processes about 1.8 million litres of milk per day, supplied by its contracted farmers in Wales and Northern Ireland. It employs 350 staff and is the major local employer in the rural areas where its manufacturing facilities are located. In addition to his role in Glanbia Cheese, Mr Vernon is a member of the group management committee of Glanbia Plc. He is also chairman of Dairy UK (NI), the trade association that represent the interests of both milk producers and processors, and vice chairman of the main Dairy UK Board. “The FUW was delighted to welcome a speaker of such quality to address our dinner on the eve of the Welsh Dairy Show function,” said FUW Carmarthen executive officer David Waters. “The dairy sector is facing immense challenges at present, with falling prices forcing many farmers to re-evaluate their businesses and having to decide whether to stay in milk production or not. “Mr Vernon helped to give farmers an insight into the way the dairy industry is likely to develop in the next few years and we thank him for being part of an informative day.”

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