The meeting of Dairygold suppliers on Monday 13 January heard from former Minister of State and Cork East TD Ned O’Keeffe who said that the level of indebtedness at the co-op is “very frightening” and that interest payments were a “huge figure”.

The Irish Farmers Journal analysed the interest payments made by the major processors in the country for 2023 – the most recent year available - and found that the cost from interest payments at Dairygold is the second highest in the country, when calculated on a per-litre-of-milk-processed basis (see Figure 1).

Kerry has not been included in the calculations as the plc does not break out numbers for the dairy processing operation.

While the net bank debt level at Dairygold increased from €108m at the end of 2021 to €144.5m at the end of 2023, the biggest driver of the increase in interest payments has been the rise in bank interest rates across the period.

This is reflected in the rise in interest costs for the processor from €6.8m in 2021 to €22m in 2023. Dairygold chair Pat Clancy indicated that interest payments rose again in 2024.

Annual interest payments include the cost of working capital and bank overdrafts as well as outstanding loans.

Market interest rates in the first half of 2024 remained high, having rapidly risen in 2023 as a result of ECB (European Central Bank) policy and didn’t start falling until the summer. In the months since those rates – and by extension the cost to Dairygold – have dropped.

Indications suggest that further falls in interest rates are to come in 2025, with the ECB expected to make the first of as many as four cuts in its lending rate this year at its meeting in Frankfurt on 30 January.