19 Jan Interview with Conor Galvin, Chief Executive of Dairygold, Ireland
BF: Demand in Ireland’s dairy sector is rising. In 2021, Irish farmers produced 8.75 billion liters of milk, an increase of more than 2 billion since 2015. What factors are pushing the demand for Ireland’s agri-foods sector and how does it compare with other regional markets?
Conor Galvin: Ireland’s dairy sector over the last nine years or so has developed almost exponentially. There are a number of reasons for the development. First and foremost, the abolition of European Union dairy quotas in the early part of 2015 released the potential of the sector. The sector had been limited for about 30 years previous to that. We saw measured growth from our milk suppliers to produce products that we could process and sell as ingredients in overseas markets. There’s no doubt that the Irish way of producing milk is very sustainable, and that’s recognized by those who consume and purchase the product. Our product is a grass-based system, meaning the cows graze predominantly on the grass outside for up to 240 days. But they’re also fed with saved grass for most of the rest of the year when they’re held indoors. The quality of the milk that’s produced as a result has a higher nutritional value to it than most milk produced from grain, nevertheless, it’s equally produced in a very sustainable way.
BF: Dairygold is doing well, despite the challenges caused by the pandemic and other international crises. The company posted a turnover of €1.65 billion euros in 2022, an increase of 40.9% from the year prior. Can you give our readers an overview of the company’s operations and the latest facts and figures?
Conor Galvin: We’re very proud of the performance of the Co-Op, given that it’s owned by the members who supply us. Financial performance is critical to creating that sustainable closed-loop model. Our 2022 turnover has been sterling. We have about 1.5 billion liters of milk that we process into dairy ingredients and sell overseas. We also have local activities in agri-inputs and agri-stores in the Irish market. We have four processing sites in Ireland; two are in Mitchelstown producing proteins and cheese. We have a large powder site in Mallow and a cheese site in Mogeely. Those four sites process the milk that our members supply to us. We also have two overseas sites in the UK, in Leeds and Crewe in England, that produce both formatted cheese and box cheese for consumption in the UK. We have a sales office in Germany and China. We’re truly an international business and that reflects where our product is purchased and consumed. It’s the culmination of a significant amount of investment that our shareholders have made in the last 10 years to ensure that we’re able to take their milk and turn it into a product of value that we can pass back the benefits to them.
BF: The company is undergoing an €11.5-million retail store expansion that recently saw three new Co-Op stores open at the beginning of 2023. Additionally, the company completed an upgrade of its wastewater treatment plant last year. What major milestones has the company passed in 2022 that most highlight its recent rise in revenue?
Conor Galvin: Investment is critical to Dairygold and it’s part of the sustainability model that we have to be here for the next generation, in the same way as we’re here for the current generation. We’ve invested in our store network where our members, milk and grain suppliers, can purchase their inputs and purchase high quality, sustainable inputs that they’ll use on their farms. We equally serve the local communities where the stores are also situated, and they get the benefit of the investments that we’ve made. During the pandemic, we were classed as an essential service. Many of our stores could stay open when others had to close because of the service that we provide. We’ve also invested in wastewater treatment plants in all our sites, but most recently in Mallow. There’s been a €4 million upgrade of the Mallow site because we must process milk responsibly and ensure that the environmental impact of milk processing is as low as possible. Investments in treating the water and treating the byproducts of milk processing are critical and that investment will continue. We have a capital program into the future that will continue to keep our facilities state of the art, so we can take milk from our milk suppliers and create ingredients of value that we can sell overseas.
BF: The agri-foods sector is one of the larger segments of regional SMEs in Ireland. Dairygold continued its DairyFlex Loan scheme in 2021 to help its members. It also implemented a rise in payments to its farmer suppliers in 2022. What is Dairygold doing to actively support its local businesses and ensure that business owners can continue to thrive?
Conor Galvin: We employ almost 1,200 people and that’s the money going back into the local economy. We always strive to pay the best price possible for our product, be it milk or grain. We’re at the upper end of the list in relation to how competitively we pay our suppliers. That’s important because they depend on us for livelihood. We support a few financing schemes that are available to our meat and grain suppliers to allow them to develop their enterprises. These enterprises are privately owned family farms and it’s a real strength of the model that it’s families feeding other families on the other side of the world. We need to support that model and ensure that those families can access the type of finance that’s appropriate to them and recognizes the returns will be long-term returns. We support Dairyflex, and other schemes such as Milkflex, to ensure that our milk suppliers can access appropriate finance to continue to develop their business.
BF: The company has pledged to have a 40% reduction in carbon intensity by 2030 from a 2018 baseline. Additionally, the company has pledged to plant half a million trees by 2030 through the Biodiversity Tree Project. Can you give us an overview of the company’s efforts to cut down carbon emissions from Ireland’s agri-foods sector? What more needs to happen for the company to meet its goals?
Conor Galvin: This is a very important area because we have a society that’s founded on sustainability and being able to hand on a business in better shape than it was inherited. Environmental impact is a real challenge in food production and one that we need to face head-on. Dairygold takes it very seriously, and we were one of the first processing Co-Ops to introduce a sustainability bonus back in 2019 to incentivize our milk suppliers to act in a more sustainable way. We’ve now upgraded that scheme as of 2022 to the Grassroots Bonus scheme. This scheme looks at what areas the farmers should focus on and start making changes, such as water quality, soil health and biodiversity. Over time, we can deliver on the commitments that have been made through the Green Deal in Europe and through the Climate Action bill in Ireland and agriculture’s contribution to those commitments. There’s a significant amount of investment required, but there’s also a change in certain work practices that will be required over time. Dairygold is here to support its suppliers and ensure that happens. Biodiversity is something that our farmers are already very aware of given that they manage hedgerows and pasture lands. We’ve provided a significant number of those trees already and we’ll continue through the Trees-on-the-Land initiatives in the next number of years. We believe that with education, support and patience, the sustainability agenda can be progressed and milk can be produced in a more sustainable way.
BF: Recently, the company partnered with Munster Technological University to offer laboratory apprenticeships. The company also awarded undergraduate bursaries at University College Cork. What kind of gaps are we seeing in necessary talent in Ireland’s dairy and agri-foods market and what efforts are the company doing to educate and train the leaders of tomorrow?
Conor Galvin: We’re very fortunate with the university system and the higher education system we have in Ireland as it’s so close to the agri-food industry. We’re a massive employer in the Munster region. We have a responsibility to ensure and employ the talent that the province is producing. We’re also seen to be leading in the technology that’s required for the industry in the future. We have very close links with University College Cork through Professor John O’Halloran and Frank Buckley. We’re making sure that we give a strong perspective on what the industry requires. We’re also working closely with the college to get the right fit of people into the industry to have that sustainable model. We work very closely with Teagasc, the national food development and agriculture agency, on making sure that the right type of training programs are in place and that skills are kept current with the use of the best technology, so we produce the product in the most efficient way with the highest quality.
BF: In 2021 the company made a move to up its U.S. presence by promoting its Pastureland brand in the U.S. as part of the rise in demand for naturally sourced cheeses. How significant of a market is the U.S. for Dairygold’s exports and what other foreign markets currently top the company’s international portfolio?
Conor Galvin: We recognize the significant value of the U.S. market for dairy consumption. The U.S. is a very strong dairy producer in its own right and produces high-quality products. However, we’ve found there’s also a desire for imported high-quality, grass-fed dairy products. We’re on a journey there to make sure we can get the right value from those products because our farmers depend on them. We’ve been around for more than 100 years and we’re very patient about how we develop. We’ll never allow the products we sell to be devalued because we have a very strong view of the quality and that will continue. We sell a significant amount of our product into overseas markets and all our cream goes into the Kerrygold product. We have significant access to the U.S. through a third party that we’re very proud of. There’s a significant amount of value going back to farmers. We sell a great deal of powder and cheese in Europe. We also have a large market going into the UK. Most of the cheddar consumed in the UK is Dairygold cheddar. It’s also going into our offices in Germany, Barcelona and North Africa. Asia is a large market for us through our whey business where we sell significant amounts of demineralized whey for the infant formula industry. That’s something that we’ve developed over the last 20 years or so. We have a very strong partnership in China, and we opened an office in Shanghai in 2016. We now have a full-time team in China who are native Chinese speakers but who also understand the market and are developing out the business there. We’ve recently launched a canned powder product in China to take advantage of the trend towards healthy living and aging nutrition. Our skews are doing quite well, having been in the market for less than a year. We’re very happy with the progress that they’re making.
BF: You stepped up into the role of CEO-designate at the beginning of 2022 after holding a variety of executive roles since joining the company in 2014. Previously you worked at Procter & Gamble and worked as the finance director of DCC Food & Beverages. What are your current top three priorities as CEO of Dairygold, and what kind of future do you envision for the company rolling into 2023 and beyond?
Conor Galvin: My number one priority is to deliver on our purpose: to provide livelihoods for those who supply us with the product. That’s a very important role that we fulfill to our members who own shares in the business. To do that we need to ensure the financial stability of the business and deliver value for our member shareholders. We also need to look to the future. Therefore, my second priority is to ensure that this business has a strong environmental agenda, so we have a solid pipeline of opportunities that will give value to members for future generations. My third priority is around developing our people. They do their jobs and provide value for this business. There’s also the challenge of making sure that we have the right people doing the right jobs; but also having the right opportunities for those people is absolutely critical. I’m very focused on making sure that we have a strong development agenda for our people and that we can all grow together.
BF: What is your final message to the readers of USA Today?
Conor Galvin: Try Irish products and the sustainable grass-fed products we produce. Come visit Ireland because it can be hard to visualize how we farm and produce milk that goes into the products that are being consumed globally. See Irish farmland and Irish cows grazing naturally because that’s what nature intended and that’s where our product comes from. That’s what gives us the fuel that we use to produce the products that we supply to consumers in the U.S. If you do that, you’ll never eat another dairy product that isn’t produced from grass.