The board of Dairygold has greenlighted a cost-cutting plan targeting €14m in cost savings over the next three years.

The plan foresees a reduction in headcount that the co-op has said can optimise performance and give flexibility to manage fluctuations in milk production.

The cost cutting plan comes after the processor initiated a review last November to identify measures that could structure the business for “optimum efficiency, cost competitiveness, margin enhancement and future growth”.

It is envisaged that staff numbers will decrease by 70 head, achieved by natural attrition, redeployments and some voluntary redundancies between now and 2027.

The roles in the crosshairs as part of the organisational restructuring are agri business, business support and management positions.

It is timely now that we take stock, review our structures, and right size our business

Dairygold has said that it is initiating a communication and consultation process with employees and their representatives.

Further cost savings are to be achieved through manufacturing and operational efficiencies and a rationalisation of third-party expenditure.

Competitiveness

Dairygold chief executive Michael Harte stated that boosting competitiveness and optimising core business performance sit centrally in the co-op’s growth strategy out to 2030.

“A period of significant labour, energy and materials price inflation together with interest rate changes have increased the cost base of the business,” Harte commented.

“Meanwhile our milk forecasting confirms that milk production is stabilising at 1.4 billion litres.

“It is timely now that we take stock, review our structures, and right size our business and optimise our performance while maintaining the flexibility to manage fluctuations in milk production when necessary.”

Harte said that the strategy is guided by the goal of maximising co-op members’ income by paying the strongest possible milk and grain prices and by keeping costs in check.

“Implementing the measures identified in the review will improve our long term competitiveness and ensure that we continue delivering on that goal,” he added.