2022 Chairman’s Report to Members
On behalf of the Board I am pleased to report another very positive year for the Society. The year began with the continuing impositions of the Covid-19 pandemic. As the burden of Covid began to ease and case numbers reduced, the world was hit with the Russian invasion of the Ukraine on February 24th. The resulting geopolitical instability had a significant knock-on effect for the Society.
Natural gas and consequently energy prices increased to unprecedented levels. Supply chains were disrupted, and the availability of farm inputs was uncertain. Prices of raw materials, in particular fertilizer costs escalated to levels never seen before. Against the backdrop of these very high farm input costs, world dairy market prices increased significantly. Lower than expected supply combined with strong demand led to record milk prices in 2022.
The year proved to be another very successful year for the Society’s trading activities with group turnover showing an increase of 38% on the previous year to a record €237.3 million. While big ticket volumes were a little lower (Milk -0.5%, Feed -3.1% and Fertilizer -13.9%), substantial market driven price uplift accounted for the increase in turnover. Milk price was 42.6% higher at year end compared with 12 months previous; average feed prices increased by 34.8% and average fertilizer prices increased by 140.9%. Despite similar increases in direct material input costs together with substantial non-direct cost increases, such as energy up 32.9% and fuel up 33.9%, the Society’s operating profit, before accounting for trade bonuses, was up 11% to €7.62m from €6.87m in 2021.
Carbery reported another solid financial performance across all divisions for 2022 with group turnover up 30.8% on 2021 and operating profit 4.5% greater than the previous year. This enabled a bonus of 1.0 cent per litre on 2022 milk supplies to be declared by Carbery at year end. Also, the Carbery board approved the addition of €10.0 million to the Stability Fund in anticipation of lower milk prices in 2023.
The performance of both Drinlis and Shinagh Estates continues to contribute positively to profit for the financial year while market value of the Society’s investment portfolio by year end had mirrored the decline in the investment market performance generally. Values were driven significantly lower with the global economy experiencing a sharp increase in inflation which, in turn, prompted swift, unexpected, successive interest rate rises which led to heightened uncertainty in equity markets.
Milk supply reduced by 1.1 million litres to 218.6 million litres. Supply was down in the first six months but recovered well in the second half of the year.
Sustainability both at farm and processing level is extremely high on the agenda. To help meet our emission reduction targets a new sustainability initiative was launched. Suppliers that committed to competing the ASAP farm visit, benefited from a FutureProof bonus of 0.5 cent per litre on 2022 milk supply. FutureProof for 2023 will allow suppliers benefit from a bonus of up to 1.0 cent per litre for competing three key sustainability measurers.
The Society was particularly well represented both at local and natural awards. Mr. Ian Kingston, Sillertane, Dunmanway was the Drinagh and overall Carbery Milk Quality and Sustainability Award winner. Mr. John Collins, Caheragh North, Drimoleague was the recipient of the Farm Development Award at the NDC and Kerrygold Quality Milk Awards.
The board approved a bonus of 1.0 cent per litre plus VAT on all 2022 milk supplies, at year end. The average price paid on 2022 variable supplies was 60.18 cents per litre after levies and charges and before VAT (63.49 cents per litre including VAT).
Although throughput was down 3.1%, the mill had a very satisfactory trading year. Significant increases in raw material, energy and transport costs resulted in substantial increase in finished product prices.
The board approved capital expenditure to increase bulk storage of finished product and to enable the addition of molasses to bulk coarse feeds.
By adhering to the strict requirements of the European UFAS standard, the mill continues to operate to the highest levels of quality feed production.
Feed bonuses similar to last year were approved at year end to reward our customers for their loyalty. In addition, the board approved a rebate on all feed purchased in the first three months of the year to offset the rising costs of farm inputs.
Our stores division had a very positive year. Turnover was well up despite a reduction in the volume of fertilizer traded. The Society took the unprecedented step to temporarily withdrawing fertilizer from sale in March to ensure that all customers were equitably able to avail of cheaper product before necessary price increases were implemented. As prices increased sharply in the spring, the Board approved a rebate of €15.00 on all 2022 fertilizer purchases at year end.
Our pharmacy sector had another satisfactory performance for the year in question. It represented the first full year of the Bantry pharmacy trading in its new location. Turnover and profitability were both up in the division.
The Board continues its policy of rewarding trade with the Society by issuing bonus shares to members based on the level of purchases during the year. In addition, the board is proposing to members at the AGM that a bonus based on membership be issued at a rate of one bonus share for every three shares held on the 31st December 2022.
The current year marks the 100th year of existence of the Society. This significant milestone will be commemorated during the year by a number of events including the publication of a book on the history of the Society. The Co-op began from humble beginnings just after the civil war and has grown into an organisation that today has a huge impact on the social and economic life of West Cork. I hope that you will be able to join us in celebrating this momentous achievement.
I wish to acknowledge the continued support and guidance of my fellow board members. A special thanks to the two retiring board members, Mr. Jerome O’Mahony and Mr. Donie O’Donovan, for their contribution to the Society during their terms in office. I welcome Mrs. Marguerite Crowley and Mr. Jerry O’Neill, their replacements, to the Board and wish them well in their tenures.
A special thank you to our customers and milk suppliers for your continued support of the Society in an ever-changing environment.
Finally, I wish to express my appreciation of the efforts of the staff and management in ensuring the smooth running of the Society’s business.
Donal McCarthy
Chairman
Attachments:
Drinagh Annual Report 2022
Drinagh Annual Report 2021
Drinagh Annual Report 2020
Drinagh Annual Report 2019
Drinagh Annual Report 2018
Drinagh Annual Report 2017
Drinagh Annual Report 2016
Drinagh Annual Report 2015
Drinagh Annual Report 2014
Drinagh Annual Report 2013
Shareholder Data Protection Notice