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25 Sept 2022

Local suppliers raise issues over Arrabawn decision to sell its liquid milk book

Local suppliers raise issues over Arrabawn decision to sell is liquid milk book

Local suppliers raise issues over Arrabawn decision to sell is liquid milk book

The sale of Arrabawn’s Galway plant that handles liquid milk supplies has raised a number of questions for the milk supply business in north Tipperary.

Arrabawn issued a statement last week confirming that the board of directors at Arrabawn had accepted an offer from Connaught-based Aurivo to purchase its liquid milk sales book.

“The site in Kilconnell is not included in the sale and Arrabawn is looking at options for alternative use. All sales employees will transfer with the business,” they said.

The deal is subject to due diligence and approval from the Competition Authority.

Subject to the sale going ahead, it is anticipated that processing at the plant will continue until summer 2023, the Nenagh-based co-op said.

The co-op said that milk supply and upcoming liquid milk contracts will not be impacted by its decision.

“Arrabawn’s priority is to support all employees and suppliers during the transition,” they said.

Fears have already been expressed for around 55 jobs at the Kilconnell plant, but any downgrading would likely have an impact on the wider local economy.

Arrabawn’s casein production is centred on Nenagh, and north Tipperary IFA chair Baden Powell said that they wouldn’t like to see too narrow a focus on Nenagh as the market can change.

“I would like to see broader diversification because there is a need to spread the risk for down the line,” he said.
capacity questions

Meanwhile, some Arrabawn suppliers are now wondering if the Nenagh facility will be able to take the milk that was going to Kilconnell.

“There’s a phenomenal amount of lorries going to Kilconnell. Where will those lorries go? What is the capacity of the casein plant in Nenagh?” they asked.

They also wondered what was going to happen to winter milk suppliers.

They said that while the casein plant at Nenagh had made the facility “stable” and had been a “smart move, they questioned if a deal had already been done with Glanbia to supply the new €140m cheesemaking facility at Belview in Waterford.

Arrabawn received planning permission in 2020 for a major construction project that will see a new entrance to the building being built at Kenyon Street, Nenagh, was well as an upgrade to the waste water treatment plant.

ICMSA president Pat McCormack described news of the sale as a “major disappointment” which the association viewed as a direct result of the growing and concentrated power of the top five retailers in Ireland.

Mr McCormack, whose own farm is near Tipperary Town, said that ICMSA had been in contact with Arrabawn stressing the importance of liquid milk producers still having an outlet for their milk under terms and conditions that - at a minimum - must be on a par with what is available in Arrabawn

ICMSA also wants a long-term guarantee that the affected milk suppliers can remain in the liquid milk business.

“The liquid milk business has been systematically undermined over many years by a relentless margin-squeeze exerted by the multiple retailers on both the processors and farmers,” said Mr McCormack.

“Unless and until politicians do something to stop this, there will be further closures in rural communities like Kilconnell where farming, food production and processing are the economic basis for everything else,” he said.

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