The conclusion is drawn from an industry analysis conducted on behalf of ICOS - the Irish co-operative body. Looking at ways local dairy co-ops can improve their competitiveness, KPMG found that spending on R&D was an area of weakness.
“The analysis shows that investment in new product innovation is low when compared with our international peer companies,” said ICOS.
But through focused innovation and marketing the study said this picture can change.
Jens Bleiel, CEO of Food for Health Ireland (FHI), which brings together Irish dairy processors with government and academia to mine milk for new ingredients, agreed with the report findings.
Bleiel told DairyReporter.com: “I think the report is a fair reflection on the Irish dairy industry. I also believe that the comment on the lack of product investment is right – which again was exactly the reason to create Food for Health Ireland.”
As the Irish dairy industry prepares to work towards government targets to double national milk output by 2020, Bleiel said investment in the software of science and innovation will be needed alongside the hardware of milk production.
He suggested that his organisation could be a model for future innovation programmes. “FHI is starting to generate very promising results and could indeed be a model for future initiatives when adding science and innovation to a commodity product.”
Seasonality barrier
Looking beyond R&D, Other aspects of the KPMG study of the Irish dairy industry were more complimentary. The analysis concluded that both the return to Irish milk farmers and milk processing costs “compare favourably” with international peers.
But concerns were expressed about the seasonality of the largely grass-based Irish dairy industry. Processors struggle to match the return per litre of international competitors as milk supply at peak season is channeled into long life commodity products.
“Significant consideration will need to be given to peak milk supply and related working capital finding if we are to provide a more favourable return to enable better R&D, investment and marketing,” said ICOS.