Market volatility and the downturn in price- is this the new norm?

[caption id="attachment_5840" align="aligncenter" width="1024"](l – r) FUW Carmarthenshire county chairman Brian Richards, FUW milk and dairy produce committee chairman Rhydian Owen, FUW president Glyn Roberts, Glanbia Cheese CEO Paul Vernon, HSBC regional agriculture director - Wales and South West Euryn Jones,  Castell Howell and president of the Welsh Dairy show committee Brian Jones MBE (l – r) FUW Carmarthenshire county chairman Brian Richards, FUW milk and dairy produce committee chairman Rhydian Owen, FUW president Glyn Roberts, Glanbia Cheese CEO Paul Vernon, HSBC regional agriculture director - Wales and South West Euryn Jones, Castell Howell and president of the Welsh Dairy show committee Brian Jones MBE[/caption]

Market volatility is not a UK or EU problem - it's a global problem and a trend we will continue to see – is what delegates heard when Glanbia Cheese CEO, Paul Vernon, addressed the Farmers’ Union of Wales eve of dairy show function in Carmarthen on Monday October 19.

Paul Vernon has worked in the dairy industry for the past 28 years and prior to this he held a number of senior sales positions with a leading fast-moving consumer goods (FMCG) company.

He commenced working in the dairy industry with a Co-Operative based in Northern Ireland and for the past 20 years has been chief executive of Glanbia Cheese, which is head quartered in Northwich, Cheshire.

Speaking at the event he said: “From an economic point of view we need to stay in the EU – despite market volatility and abolition of quotas. Dairy markets are oversupplied and that will only change if we have a correction. There are so many factors affecting milk prices but even if Russia lift the ban we will not likely see the same demand for European dairy products in Russia,” said Paul Vernon.

Since his time in office, Glanbia Cheese has grown turnover to circa £250m and has become the largest manufacturer of mozzarella cheese in Europe, accounting for over 30 percent of all UK cheese exports and is the second largest cheese manufacturer in the UK.

From its manufacturing facilities in North Wales (Anglesey) and Northern Ireland (Magheralin) the company provides cheese solutions to the leading pizza providers in all the countries of the European Union as well as exporting to a growing number of other counties across the world.

“The demand for dairy will continue to grow worldwide and the milk supply in both the EU and worldwide will continue to grow. What we must recognise is that world pricing will be driven by demand versus supply balance and will exhibit ongoing volatility. The USA, New Zealand, EU and UK milk prices will be driven by the global supply chain and producer margin will become the new “quota”,” said Paul Vernon.

“Sustainability of supply aligned with cost competiveness will see milk production migrate to the more efficient , regions, producers and processors and tools to manage volatility for the entire supply chain need to (will) emerge,” he added.

The company processes circa 1.8 million litres of milk per day, supplied by its contracted farmers in both Wales and Northern Ireland. It employs 350 staff and is the major local employer in the rural areas where its manufacturing facilities are located.

In addition to his role in Glanbia Cheese, Mr Vernon is a member of the group management committee of Glanbia Plc. He is also chairman of Dairy UK (NI), the trade association that represent the interests of both milk producers and processors, and is vice chairman of the main Dairy UK Board.

“The FUW was delighted to welcome a speaker of such quality to address our dinner on the eve of the Welsh Dairy Show function,” said FUW Carmarthen executive officer David Waters.
“The dairy sector is facing immense challenges at present, with falling prices forcing many farmers to re-evaluate their businesses and having to decide whether to stay in milk production or not.

“Mr Vernon helped to give farmers an insight into the way the dairy industry is likely to develop in the next few years and we thank him for being part of an informative day.”

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