There was speculation on Wednesday that a decision is being considered to close Arrabawn’s liquid milk plant at Kilconnell, Co Galway.

When the Irish Farmers Journal contacted Arrabawn Co-op to substantiate the rumour a spokesperson for Arrabawn said: “Due to the challenging nature of the liquid milk industry here in Ireland, Arrabawn is exploring best possible options for its liquid operations.

“Notwithstanding the sectoral challenges, Arrabawn’s liquid milk plant is a best-in-class facility and any decision on its future will be made democratically by the board, with the best interest of the co-op, its members and staff in mind.”

Arrabawn volumes in liquid milk are trending downwards and proportionally are now about 9% of the total Arrabawn pool, down from 12% last year.

Background

Its 2021 accounts show that the liquid milk business was pulling down co-op profitability.

Arrabawn’s liquid milk business has had a turbulent time for the last few years. In 2020, Arrabawn had to recall product from its bottling plant at Kilconnell. In 2021, a restructure of the liquid business was initiated after the Food Safety Authority (FSAI) brought court proceedings and subsequently fined the co-op for breaches of food law.

Leaving all that aside, the margins in liquid milk have struggled for years.

The retailer dominance and a willing band of participants to meet supermarket requirements that are tendered regularly means farmers up and down the country are essentially undercutting each other.