A ‘butter’ dispute

Three months after his appointment as chair of Tirlán, Ger O’Brien found himself at the helm of a co-op in a ‘butter’ dispute with Ornua. The former reserves its right to supply own-brand butter to US supermarket giant, Costco. The latter, parent of the €1bn Kerrygold butter brand, is less than enamoured by the decision made by a co-op that, ironically, not only supplies milk to Ornua to make Kerrygold, but is its biggest shareholder. Farming organisations have weighed in on the matter with their key concern being the farmers who supply both Tirlán and Ornua, and the returns that they get for doing so. The worry is that Tirlán’s partnership with Costco will, ultimately, weaken the Kerrygold brand, with the term ‘race to the bottom’ being used by Irish Farmers’ Association president, Francie Gorman. Irish Creamery Milk Suppliers’ Association president, Denis Drennan, claimed that the move would lead to the ‘potential self-destruction at marketing level’ of Irish butter in the US market.

But Ger’s take on this is that the US market is big enough for a greater spread of grass-fed Irish butter without negatively impacting Kerrygold’s status. “The US is a huge market,” he says. “Tirlán launched Truly Grass Fed in the US in 2019 to respond to growing consumer demand for high-quality grassfed butter and to create new value-added routes to market for our milk. Since Truly Grass Fed’s US retail launch, Kerrygold has continued to grow strongly in both volume and value terms. As Ornua’s largest shareholder, Tirlán remains highly supportive of the organisation and continues to engage constructively,” Ger adds.

And he is unapologetic about Tirlán’s responsibility to its suppliers: “Our farmers have grown milk volumes by over 90 per cent since 2015. When opportunities arise that create additional value from our grass-fed milk, and complement existing routes to market, Tirlán has a responsibility to evaluate them on behalf of our members. That’s why we have agreed a multi-year contract to supply grass-fed butter from Ballyragget for sale through Costco’s private-label Kirkland Signature brand.” 

Ger disagrees that price is the primary differentiator and insists the grassfed standard is the key differential and primary driver: “If Tirlán were to decline this opportunity, it is likely that Costco would source those grass-fed volumes elsewhere, either in Ireland or most likely from New Zealand. Tirlán is now one of a number of suppliers of grass-fed butter for the Kirkland brand. As consumer demand for grass-fed dairy grows, retailers are increasingly investing in premium private-label grass-fed offerings. Private label US butter now has 33 per cent market share.”

Ger’s progress through the Tirlán representative structures provided him with a strong base for his current role. He joined the board in June 2018 and served as vice-chair from May 2024 to May 2025. He says: “I have always been interested in the co-op movement and I enjoy representing members and advancing their issues. I joined our local advisory committee 24 years ago. A vacancy for a council seat came up in 2016 and the following year, an opportunity arose to sit on the board and I’ve been there since.”

His involvement has coincided with quite seismic changes in the structure and role of the co-op, as he explains: “I was farming through the period of evolution from Avonmore/Waterford to Glanbia, and finally the transition to Tirlán, where the co-op took over the Irish dairy assets of Glanbia Plc. A lot of change but change for the better. 

“Our milk-processing assets are top class. We’ve invested almost €800m in the past decade without the need for a member contribution. Right now, we are ‘maxed’ out in processing capacity. At peak, we process 98 million litres and that’s up from 54 million litres in 2015. We’re trying to manage the shoulders now to get more milk off-peak, extending our production and processing season.” Commenting on the low profit margin on which the co-op operates, he says: “It takes a margin of 1.6 per cent. Everything else goes back out to the farmer. When the drought developed, we introduced a scheme to support our producers and we extended that last month.” 

In June, Tirlán committed to three-month milk price indicators to provide some assurance to producers, explains Ger: “We added another half cent per litre to top up the March to June price when markets improved marginally. But the way it’s looking at the moment, 38c/L is the very top of the market. We thought a couple of months ago that milk supply would tail off, but it doesn’t seem to be happening. Droughts have affected European supply, but not enough to move prices. US production is driving on, up 2 per cent this year. In terms of the general commodities, it is all about protein. Butter and cheese are under pressure, and you must remember, they account for 50 per cent of our volume. But there are opportunities in proteins and a new investment in protein production at Ballyragget will help. Ultimately, the protein element, including WPI, currently makes up 20,000 tonnes, out of a total production of 400,000 tonnes. Our expansion will double our protein output to 40,000 tonnes. That puts things in perspective.”

Diversification

Tirlán has a dedicated fund to invest in non-core opportunities. Ger is pragmatic in regard to the 'what, when, and where' of investing the fund: “We sold Glanbia Plc shares to create the fund. The money gained is earning about the same as Plc share dividends at the moment and its liquid so available at short notice if an opportunity arises. It’s about spreading the risk, taking our shareholding in the Plc down from 17 per cent down to 13.2 per cent. James McCarthy, our chief information officer, regularly brings projects to the board. Two proposals, in particular, came close to being pursued, but to date, nothing has materialised as a definite investment.

“We have identified opportunities within the business as well over the last few years. The knowledge built up in looking at potential investment options led to the project for more high value WPI. So, we’re not sitting doing nothing. We’re not being complacent.”

Cooperation or consolidation

The case for improving Irish milk-processing efficiencies, generally, was addressed by the Tirlán chair: “We work collaboratively to make savings and find synergies with other co-ops.  We work closely with Dairygold, processing some milk for them and they do the same for us from time to time. There can be further synergies, but it’s about a meeting of minds, really. Do Irish co-ops need to be among the top-20 global milk processors, as some of our European counterparts aspire to? I don’t think so. We’re the biggest processor in the country. We have a good relationship with most of the co-ops around Ireland. it’s really about making the best use of assets at the production shoulders. That’s where savings are to be made. We have been talking to other processors around that.” 

Generational renewal

Ger is personally well aware of the need to encourage new milk  producers: “We have four adult children, none of whom are involved, or likely to be involved in farming. Tirlán put €15m into a generational renewal fund last year. We’ve got 42 new entrants in from that in less than a year. The average age of a Tirlán supplier is 57. That has to come down. We’re removing obstacles and putting as many supports as possible in place to encourage generational renewal. We’re open for business for the young generation, looking at options including partnerships, or whatever, in the future. The model for production can vary. A fair amount of our suppliers have no successor identified. When they want to step back there should be options to keep the business operating. There are definitely opportunities there. The Land Mobility Agency has a big role to play here, and we have to look outside the box a bit. Labour availability for larger herds is an issue. There are ways and means around it including adopting available technologies to reduce workload and time involved in producing milk. Collars and automated drafting are obvious examples.”