Department of Food Business and Development. Discussion Paper Series. The Cost and Efficiency of Milk Transport from Farms in Ireland

Transcription

1 Department of Food Business and Development Discussion Paper Series The Cost and Efficiency of Milk Transport from Farms in Ireland By Carrie Quinlan, Michael Keane, Pat Enright and Declan O Connor Agribusiness Discussion Paper No. 46 September 2005 Department of Food Business and Development University College, Cork Ireland Ollscoil na héireann, Corcaigh - National University of Ireland, Cork 1

2 The Cost and Efficiency of Milk Transport from Farms in Ireland 1 Abstract Increasing competition and globalisation of markets is leading to ongoing rationalisation in the global dairy industry. The structure of the dairy industry in Ireland is also changing. The number of milk producers is declining and dairy companies are consolidating their operations in terms of numbers and sizes of dairy processing plants. Milk transport represents a significant cost in the dairy industry and fewer and larger processing plants will lead to increased transport costs. The objective of this study was to contribute to the debate on dairy industry rationalization by establishing the cost of milk transport in Ireland by means of a survey of Irish dairy processors. From the survey the weighted average milk transport cost in the Republic of Ireland was estimated to be 5.15 cent per gallon (1.15 cent per litre). These costs ranged from 3 to 9 cent per gallon with 4 of the 16 respondents reporting a cost of less than 4 cent per gallon. Thus milk transport costs, estimated to be in excess of 57 million per annum, represent a significant element of dairy industry costs in Ireland. Milk transport costs in Ireland vary due to many factors including the size and location of suppliers and dairies, pumping rates on the farm and at the processing plant, efficiencies of the milk transport fleet, seasonality and frequency of collection. Frequency of collection was mostly alternate day at peak, two or three times a week off-peak, and twice a week at trough. There was no correlation between the size of dairy in terms of volume of overall milk intake and milk transport cost. The detailed results indicate areas where there may be scope for savings in costs to the benefit of milk suppliers and processors. 1 The support of the Irish Dept. of Agriculture and Food Stimulus Fund in preparation of this paper is gratefully acknowledged. 2

3 Section I: Introduction 1.1 Background Milk transport is an important cost component of the dairy sector. It involves the transportation of a bulky, perishable liquid collected from many spatially separated farms to centralized processing plants. Thus the achievement of high levels of efficiency in milk transport can be of major benefit to milk suppliers and processors. As milk transport economics in Ireland has received very little analysis in recent years, it was considered desirable to study its current status, efficiency and cost be studied. This was considered to be of particular relevance given the active debate on Irish and international dairy industry rationalisation over the last few years, Prospectus (2003), Henchy (2003), Jansen 2004, DIN (2005). Data used to estimate milk transport costs were collected by the use of a questionnaire sent to transport managers in the Irish dairy processing Industry. A similar survey was conducted in 1996 (Shanahan, 1996), so this survey also provides an update on milk transport costs. 1.2 Milk Transport and Economic Principles Ex-farm milk transport may be defined as the complete set of activities involved in transporting milk from farms to factories. While the term milk assembly is sometimes used, this is more commonly defined to include also the milk storage activity at farm level, as well as milk transport. Milk transport is subject to the principles of transport economics, where the primarily concern is the relationship between cost and distance. The general relationship between length of haul and cost of transport may be called the transfer cost function. If one takes a central processing point (or market), surrounded by raw material (or product supplies), scattered over a uniform, flat geographic area where travel in every direction is equally feasible, the transfer cost function normally has a characteristic shape. This involves cost increasing with distance but at a decreasing rate. Where cost increases with distance at a decreasing rate, the resulting isocost contours are concentric circles with radii that increase at an increasing rate, (Fig 1.1). The isocost contours are drawn to represent equal increments to transfer cost from one contour to the next. Thus in the cross sectional view the distance between D1 and D2, D2 and D3, etc becomes greater and greater, reflecting the increase in cost at a decreasing rate. 3

4 Figure 1.1: Length of haul to market centre Plan View Isocost contours R T1 T2 T3 T4 S Cross-sectional view T4 Transfer cost function T3 T2 T1 R D4 D3 D2 D1 0 D1 D2 D3 D4 Length of haul to market centre S Source: Bressler (1970) 4

5 With regard to milk transport specifically, there are six separate activities normally involved, Keane (1986): a) Transport Driving; this involves the time spent in driving from plant to first farm and from last farm to plant (figure 1.2). b) Assembly Driving; this involves time spent driving between farms on the route (figure 1.2). c) On-Farm Routine Activities; this includes time spent on activities such as attaching hose, agitating milk, sampling, rinsing tank, paperwork, on farms. d) On-Farm Pumping; this depends on pumping rates e) Plant Non-Pumping; this includes tanker washing, waiting time, office activities and meal times for drivers. f) Plant Pumping; this depends on the plant pumping rate Figure 1.2: Illustration of milk transport Assembly driving 2nd 4th 5th 7th 9th 1st 3rd 6th 8 th 10th Transport Driving Plant Many changes have occurred in the Irish dairy industry over time that affect transport costs. In particular, the major change in the number and average size of dairy farms (Fig 1.3). Other relevant changes include fewer and larger milk processing plants, larger milk tankers and faster pumping rates. These have resulted in changes in both overall costs and the proportion of costs accounted for by the different components of transport which are discussed in detail later. 5

6 Fig 1.3: Number of Suppliers and Average Quota Held 1996/7 to 2003/4. 250, , Litres 150, , Farms , / / / / / / / /2004 Quota Year Average milk delivery per producer Producers Source: Dept of Agriculture and Food, Dublin. Section 2: Research Objectives and Methodology 2.1 Research Objectives The research objectives were as follows: To determine the current status of milk transport from farms to dairies in Ireland in terms of overall cost and variation in cost by size of company and region. To investigate the effect of the changing structure of the production and processing sectors on milk transport costs. To consider a range of factors that affect efficiency in milk transport. These factors include frequency of collection, milk tanker type and milk pumping rates. To compare the survey findings with the results of a previous survey which was conducted in

7 2.2 Research Methodology: Questionnaire A postal survey was conducted with questionnaires sent to twenty milk transport managers in the Republic of Ireland. The twenty transport managers represented virtually all the dairy industry in milk intake terms, with just a few small dairies not represented. The five sections of the questionnaire, each having its own series of questions, were: a) Overall milk transport cost estimates b) Milk supply information c) Information on the milk transport fleet d) Milk transport components e) Specific cost information Responses were received from 16 transport managers, including respondents from all the larger dairies. Thus the survey results are estimated to reflect the milk transport situation of about 92% of the current dairy industry in milk intake terms. All questionnaires returned were completed in great detail with very few missing answers. Section 3: Results 3.1 Milk Transport Cost Estimates (Farm to Factory) The overall average milk transport cost in the country was estimated in two ways; a) Accumulation of information on specific company costs. b) Opinions of respondents on the national average cost. a) Specific Company Costs Based on specific company costs, the weighted national average milk transport cost was 5.15 cent per gallon 2 (1.13 cent per litre) or about 57 million per annum (Table 3.1). Hence any savings achieved in reducing milk transport costs are very significant. 2 Costs are expressed in the first instance in cent per gallon terms as this is the expression normally used in the industry as reflected in the survey. However costs in cent per litre terms are also widely used in this paper. 7

8 Table 3.1: National milk transport levels based on specific company costs Cent per litre Cent per gallon Simple average Weighted average Difference between North and South North versus South Company information provided in the survey was confidential, hence only broad indicators of cost variation in terms of size of dairy or region is provided in the report.. When respondents were divided into North and South based on milk catchment areas, the transport cost for the North group of dairies was on average 0.41 cent per gallon (0.09 cent per litre), or about 8% higher than the South group (Table 3.1). This difference reflects the lower milk density and smaller supplier size in the northern part of the country as discussed later. Cost Variation The distribution of milk transport costs among dairies shows that at one extreme four dairies had costs below 4 cent per gallon, while three dairies had costs above 6 cent per gallon (Table 3.2). About 87% of the total milk volume of survey participants had transport costs between 4 and 6 cent per gallon. Table 3.2: Distribution of milk transport costs Cent per No. of Simple Weighted % of total gallon Processors Average Average milk volume < > % b) Opinions on National Average As well as milk transport costs in their dairy, respondents were also asked for their opinion of the national average. All respondents replied to this question, thus 8

9 providing another means of determining a national average figure. The national weighted average transport cost on this basis is 6.32 cent per gallon (1.39 cent per litre, Table 3.3). This higher estimate compared with the weighted national average of 5.15 cent per gallon (Table 3.1) probably reflects the belief among individual transport managers that they are doing a good job generally relative to the national situation. Views on the national average vary widely, ranging at the extremes from 4.2 cent per gallon (0.92 cent per litre) to 10 cent per gallon (2.2 cent per litre), Table 3.3. Table 3.3: National milk transport levels based on the opinions of respondents Cent per gallon National average 6.32 Distribution of responses, cent per gallon Total respondents providing estimate 12 not known 4 Total Milk Transport Costs- Changes over Time As mentioned previously a similar survey on milk transport was completed in 1996 (Shanahan, 1996). This survey represented about 80% of the industry in milk intake terms at that time. Comparing the two survey results it is estimated that weighted average milk transport costs have increased by 0.35 cent per gallon (0.08cent per litre) or just 7% over 8 years (Table 3.4). This modest increase is much less than inflation rates generally, with inflationary pressures being counteracted by improved efficiency in many aspects of the milk transport activity over the years. This is discussed later. Table 3.4: Milk transport costs based on surveys of dairies 1996 Cent per gallon 2004 Cent per gallon Simple average Weighted average

10 The component costs of milk transport Twelve responses were received to a question which sought information on a specific breakdown of costs into its main components, labour, overheads and running costs. Labour includes overtime and allowances, overheads include tanker depreciation, tax and insurance while running costs include fuel, maintenance and repair. In general, using simple averages, about 52% of costs are accounted for by labour, 29% by running costs and 19% by overheads (Figure 3.1). There was no specific relationship between the detailed cost breakdown and the size of dairy in terms of milk intake. Fig 3.1: Breakdown of Transport Costs %. 29% 52% Labour Overheads Running Cost 19% Some changes in the cost breakdown were identified when compared with the earlier survey in In that survey labour accounted for about 45% of the costs, overheads 17.5%, running costs 32% and other costs 5.5%. The major change in the present survey is an increase of 7% in the proportion of costs accounted for by labour, presumably reflecting the proportionately greater increase in wages during the period of the two surveys. 3.3 Factors influencing milk transport costs The following are some of the main factors affecting milk transport costs in Ireland: a) Milk suppliers: Number, size and location b) Milk Processing sector: Number, size and location of plants c) Milk transport efficiency factors i. Seasonality ii. iii. iv. Milk tanker fleet Frequency of collection Pumping rates 10

11 Questions were asked about all of the above. a) Milk Suppliers: Numbers, Size and Location There has been a continual decline in the number of farmers involved in milk production in Ireland. The numbers fell by about 42% between 1996/7 and 2003/4 (Table 3.5). Given that the Irish milk quota as agreed at EU level has remained more or less unchanged for many years, average milk deliveries per supplier have correspondingly increased by about 75% in this period (Table 3.5). From a milk transport cost viewpoint, the reduction in numbers and increase in size of milk suppliers leads to lower costs and a more efficient transport operation. Table 3.5: Changes in structure of milk production Number of active milk producers Milk deliveries per annum (million litres) Average milk delivery per producer (million litres) Milk Quota Year 1996/ , , / , , / , , / , , / , , / , , / , , / , , Average milk delivery per producer (index) Note: The milk quota year runs from 1 st April to 31 st March. Source: Department of Agriculture and Food, 2003/4 The location of dairying in Ireland was discussed in detail by Lafferty (1999) who presented some very detailed maps at county and rural district levels. In summary there are two main dairying regions in the State, the south-west and the north-east (which extends into parts of Northern Ireland). The south-west dairying region includes north and east Kerry, almost all of Cork and Limerick and substantial parts of Tipperary, Waterford and Kilkenny, as well as south-east Clare. Almost 70% of the dairy herd is located in the South-West, Mid-West and South-East regions. The northeast region includes the Cavan-Monaghan area. While both the main dairying regions are important, there are substantial differences between them in terms of scale and 11

12 intensity of production with dairy farms in the south-west being the larger and more intensive producers (Lafferty et al, 1999). Impact of structural changes in milk production on milk transport costs The breakdown of the total transport activity into its six components as outlined in Fig. 1.2 earlier provides some valuable insights into how the structural changes at producer level as discussed above can affect milk transport costs. As supplier size increases and supplier numbers are reduced, milk transport costs are correspondingly reduced. The saving arises primarily in relation to assembly driving and on-farm routine activities. As discussed in a previous study (Keane, 1986), a doubling in supplier sizes would result in an approximate halving in on-farm routine activities, and could also result at an extreme in an approximate halving in assembly driving, depending on surviving supplier locations (see fig 3.2, 3.3). 12

13 Figure 3.2: Transport driving and assembly driving Assembly driving 2nd 4th 5th 7th 9th 1st 3rd 6th 8 th 10th Transport Driving Plant Figure 3.3: Transport driving and assembly driving: Farm supply doubled Assembly driving 2nd 4th 7th 3rd 6th Transport Driving Plant In order to estimate the likely effect of increasing supplier size on transport costs it is necessary to estimate the proportion of total costs accounted for by the six cost 13

14 components of transport. Following a procedure adopted by Keane (1986) it has been estimated that assembly driving and on-farm routine activities account for about 50% of total costs under current conditions, i.e cost components b) and c) in Table 3.5 and Fig 3.4. On this basis, the approximately 75% approx. increase in supplier sizes between 1996 and 2004, with corresponding reduction in supplier numbers of 42% (Table3.5), could have the effect of reducing milk transport costs at the extreme by about 20% or 1.0 cent per gallon (0.22 cent per litre). This should be taken as a maximum estimate as it is dependant on ideal locations of surviving suppliers leading to substantial reductions in assembly driving as depicted in Fig Table 3.6: Breakdown of Transport Costs % Capital Labour Running Weighted Average a) Transport Driving b) Assembly Driving c) On-Farm Routine d) Farm Pumping e) Plant Non-Pumping f) Plant Pumping Total Figure 3. 4: Breakdown of the six components of milk transport 42% 35% 10% 7% 5% 1% Transport Driving Assembly Driving On-Farm Routine Farm Pumping Plant Non-Pumping Plant Pumping 14

15 b) Structure of Milk Processing Sector There was a major wave of dairy cooperative amalgamations in Ireland in the 1970 s associated with EU membership. The fragmented nature of these amalgamations between dairies lead to irrational catchment area patterns in many cases (Shanahan, 1998). In both milk intake and geographic terms, the Irish dairy industry is dominated by three large processors (Glanbia, Dairygold and Kerry Group) located adjacent to each other in a band running through mid-munster and south Leinster which is the heartland of dairy farming in Ireland. Many of the larger processors have more than one processing site in this region, with liquid milk plants also located close to, or in, the main urban centres. Of the other dairying regions, the North-East is also an area of intensive dairy farming with milk supply mainly going to Lakelands Cooperative, a dairy of roughly similar size to Dairygold and Kerry Group in milk intake terms if its Northern Ireland intake is included. Connacht Gold Cooperative collects milk from a very wide geographic area (mostly the province of Connacht) but milk density in Connacht is low leading to higher transport costs. There are about twenty further medium size and smaller dairies collecting milk from farmers. Impact on milk transport costs Given the present location of processing plants, a number of issues arise in relation to milk transport efficiency. One area of inefficiency arises where distances between farms and processing plants are unnecessarily long, due to competing dairies assembling milk from areas closer to their neighbours processing plants. Taking the six components of transport, the effect of increasing the distances between farms and processing plant is to increase the transport driving component, with all other components remaining unchanged. This is precisely the case when tankers are collecting all the milk from an area or pocket of supply which is closer to the processing plant of a neighbouring dairy where spare capacity is available (Figure 3.5). A simple solution to this type of problem with a corresponding reduction in transport driving is shown in Fig 3.6. Figure 3.5 Inefficient transport (distance from processing centre) Supply X 15 Plant B

16 Supply Y Figure 3.6: Efficient transport (distance from processing centre) Plant B P 15mls Supply X Plant B Plant A Supply Y Another area of locational inefficiency arises where two or more dairies collect from neighbouring farms in an interlocking pattern. In this case the extra cost arises through increased assembly driving (farm-to-farm) (Fig 3.7). Assuming that a fully interlocking collection pattern exists, then assembly driving costs at the limit could be doubled relative to a fully rationalised pattern as illustrated in Fig 3.8. The incidence of these two sources of inefficiency was considerable in an Irish dairying context in the past, at least in some areas of the country as discussed by Keane (1986). However these inefficiencies have been substantially reduced due to the series of major dairy industry mergers and takeovers that have occurred, including in particular the merger of Mitchelstown and Ballyclough Cooperatives to form Dairygold, the merger of Avonmore and Waterford Foods to form Glanbia and the takeover of Golden Vale by Kerry Group PLC. Furthermore cooperation agreements 16

17 between dairies, such as the recently announced agreement between Dairygold and Glanbia on factory sharing (DIN, 2005), should serve to further reduce these forms of milk transport inefficiencies. Figure 3.7: Inefficient transport in an interlocking pattern Plant A Route A

18 Route B Plant B Figure 3.8: Efficient transport with no interlocking pattern Plant A Plant B The survey of milk transport costs facilitated a comparison of size of dairy in terms of milk intake and milk transport costs. As a scatter diagram would reveal confidential information, the dairies are grouped into large, medium and small for results presentation purposes. Three dairies were considered large; combined they process 67% of the milk accounted for in this survey. They also each have an average of 4,972 suppliers. Three dairies were considered medium size, processing 19% of the milk. Each of these has an average of 1,853 suppliers. Finally the remaining 10 dairies were considered small; processing just 14% of the milk. They have an average of 329 suppliers (Table 3.7). Table 3.7: Classification of Dairies Size of Processor No. of processors % of milk Average no. of Average cost 18

19 in this category processed suppliers (weighted average) Large , Medium , Small Total The size of dairy seems to make little difference in terms of milk transport costs (Table 3.7). A correlation coefficient of was estimated between milk intake per dairy and milk transport cost per gallon, indicating no relationship between volume of intake per dairy and cost. While one might expect that larger dairies might have higher transport costs due to tankers travelling longer distances to source milk (as illustrated in Fig 1.1), other factors may counteract this. In some cases large dairies in terms of milk intake have multiple processing plants. Also the current trend among the larger dairies of outsourcing the milk transport activity to private hauliers may also lead to lower transport costs as discussed later. c) Milk Transport Efficiency factors i) Seasonality Milk production in Ireland varies widely on a seasonal basis throughout the year. Supplies of milk are highest during the months of mid-april to August and lowest during the months of December and January (Fig 3.9). The seasonal pattern has consequences for milk transport operations because a sufficient number of milk tankers must be provided to accommodate summer supplies, with consequent spare capacity during the periods of low milk volumes. 19

20 Figure 3.9: Domestic milk intake in Ireland Million Litres Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec The responses received on peak to trough month ratio in terms of milk intake were very diverse. The simple average for all transport companies is 13:1, with responses ranging from a high of 27:1 to a low of 4:1. For large companies (67% of milk) the simple average is 18:1 and for the remaining companies the simple average is 11:1(Table 3.8). Table 3.8: Seasonality Ratios (peak: trough month) Seasonality Ratio Simple average 13:1 Range of responses 27:1 to 4:1 Big companies (67% intake) 18:1 Remaining companies 11:1 Simple Average in :1 The correlation coefficient was also estimated between the seasonality ratio and transport cost per gallon, the hypothesis being that a higher seasonality ratio would lead to higher transport costs. However, no relationship was found. 20

21 When compared with the previous survey in 1996 it was found that the seasonality ratio (simple average) has disimproved. In 1996 it was found to be 11:1. Peak to trough costs Some companies did not supply this information as it was not readily available. There were a total of ten respondents, with peak cost averaging 4.83 cent per gallon and trough costs 8.58 cent per gallon (Table 3.9). Overall the results clearly indicate that there is wide variation in milk transport costs between peak and trough months. Table 3.9: Peak to Trough costs 10 respondents (simple average) cent per gallon cent per litre Peak Trough Average Best and Worst Route Respondents were asked about the costs of their best and worst route. Eleven responses were received. The results show great variation in costs between routes, with cost for worst routes being up to four times that for best routes. On average worst routes have higher stops per trip, longer distances for the trip, lower volumes per stop and longer travel times than standard routes. Table 3.10: Milk transport cost for best and worst route, cent per gallon Large Companies, simple average Remaining Companies, simple average Best Route Worst Route Best Route Worst Route Route planning To cope with seasonality, companies vary the route patterns of the collection tankers during the year. Respondents were asked to supply the number of route patterns adopted throughout the year. All respondents with one exception practised three route 21

22 patterns throughout the year, i.e. peak, off-peak and trough. The remaining dairy operated two route variations, peak and off-peak. Milk tanker fleet Factors to consider in improving efficiency in milk transport include changing the tanker capacity and increasing the throughput of the vehicles. A great deal of information was provided by the transport managers in relation to the milk tanker fleet and this is summarised in terms of tanker ownership, tanker type and tanker capacity. For large dairies, (67% of milk intake), about 19% of the tanker fleet is owned by the dairy itself with about 81% owned by a haulage company or private owner (Fig. 3.10). One dairy operated with completely privately-owned tankers at the time of the survey. Large dairies have an average of about 70 vehicles involved in milk transport. For the smaller dairies, about 67% of the vehicles are owned by the dairy itself, with about 33% owned by a haulage company or private owner. However, within these averages there are wide variations. One smaller dairy operates with completely privately-owned tankers, two are 100% operated by an independent haulier and six have 100% tanker ownership by the dairy itself (Fig.3.11). The smaller dairies have on average about 10 vehicles. Figure 3.10: Tanker ownership for large dairies 51% 19% 30% Your dairy an independent haulier private individual 22

23 Figure 3.11: Tanker ownership for remaining dairies 24% Your dairy 9% 67% an independent haulier private individual One of the main differences between the current survey and that of 1996 is the change in status of the ownership of vehicles The recent trend of outsourcing the transport function, particularly among the larger dairies is evident (Table 3.11). Table 3.11: Changes in ownership of vehicles Survey Year Large dairies Owned by dairy Other Small dairies Owned by dairy Other % 31% 62% 38% % 81% 67% 33% Type of vechicle In all dairies in the peak month about 88% of vehicles were articulated while about 12% were rigid. In trough months 86% were articulated and 14% were rigid, Fig The average tanker capacity was 5,500 gallons for an articulated vehicle and 4,000 gallons for a rigid. There was considerable variation in tanker capacity which ranged from 4,500 to 6,000 gallons for articulated vehicles and from 3,800 to 5,000 gallons for rigid ones. 23

24 Figure 3.12: Type of Vehicle, % Peak Trough Articulated Rigid iii) Frequency of collection Frequency of collection can have a significant impact on milk collection costs. Less frequent collection from farms would lower milk transport costs but would raise farm costs through the need for increased farm bulk storage capacity and higher operating costs at farm level due to the extra costs of milk cooling. To establish the current practice in Ireland, respondents were asked to supply information on frequency of collection at present. The survey results showed that all companies practiced alternate day collection at peak. During the off-peak period (roughly spring and autumn), most companies collected milk 2 to 3 times a week, but three smaller dairies collected on an alternate day basis also during the off-peak period. Finally all dairies collected milk twice a week in trough months, Table 3.12 Table 3.12: Frequency of collection Peak Off-Peak Trough Alternate day 2 to 3 times a week. Three exceptions collecting alternate day only. Twice a week iv) Pumping rates Faster pumping rates both on the farm and at the processing plant lead to savings in transport costs. Respondents were asked for the milk-pumping rate on their suppliers 24

25 farms and at their plants. The average pumping rate on the farms was 85 gallons per minute, with responses ranging from 70 to 90 gallons per minute. The average pumping rate at the processing plant was 364 gallons per minute (Table 3.13). Responses varied widely and there was no apparent relationship between pumping rate and size of dairy. Table 3.13: Average Pumping Rates On the farm Range At the Plant 85 gallons per minute gallons per minute 364 gallons per minute 25

26 Section IV: Conclusion Based on the results of the survey of milk transport managers, the weighted average milk transport cost in the Republic of Ireland was estimated in 2004 to be 5.15 cent per gallon (1.15 cent per litre). There was no apparent correlation between size of dairy in terms of milk intake and milk transport cost. When compared with an earlier survey it was found that milk transport costs have increased by 7% since Milk transport costs in Ireland vary due to many factors, including milk supplier size and location, processing plant size and location, tanker capacity and seasonality. The effect of these various factors on milk transport costs was determined in the survey. The survey provided an overview of the cost and status of milk transport in Ireland in 2004 and should inform discussion on structural change in the Irish dairy industry. The small estimated increase in costs since 1996 suggests that a high level of efficiency is being achieved but there is scope for further savings in transport costs which will benefit milk suppliers and processors. 26

27 References Dept. of Agriculture and Food (2004) Annual Review and Outlook, Dublin DIN (2005) Glanbia + Dairygold: The New Way Forward. Vol. 16 No. 21, Norfolk, UK Henchy, J. (2003). A vision for the dairy processing industry. National Dairy Conference, Teagasc, Dublin Jansen J., Krijger A. (2004). International investment in dairy processing: A summary. Rabobank International, Netherlands Keane M. (1986). The Economics of Milk Transport, Agribusiness Discussion Paper No. 5. University College Cork. Lafferty, S., Commins, P., Walsh, J. (1999). Irish Agriculture in Transition. Teagasc, Dublin. Prospectus (2003). Strategic Development Plan for the Irish Dairy Processing Sector, Dept. of Agriculture and Food. Dublin. Shanahan, E. (1998). An Economic Analysis of Milk Transport Costs and Efficiency Factors in the Irish Dairy Industry, Masters Thesis. UCC. 27

28 Department of Food Business and Development Agribusiness Discussion Papers The Agribusiness Discussion Papers series is an externally refereed series of papers which report on research conducted by staff of The Department of Food Business and Development, University College Cork or associates. The following is a listing of the papers published to date: No. 1. Keane, M and Lucey, D.I.F. (1984): Positive M.C.A. s and EEC Dairy Budget. 2. Keane, M. and Lucey, D.I.F. (1984) and Denis I.F. Lucey: The U.K. Liquid Milk Sector and the Common Agricultural Policy. 3. Keane, M. and Gleeson, P. (1985): Optimising Herd Calving Patterns Under Milk Quota Constraints". 4. Cahillane, C. (1986): Land Reform in Ireland The Objectives, The Process and Some Issues. 5. Keane, M. (1986): Economies of Milk Transport Co-op Charges, Key Efficiency Factors. 6. Keane, M. (1986): Milk Seasonality, Pricing and Cheese Development. 7. Keane, M. (1987): A Comparison of Winter Milk Incentive Schemes. 8. Keane, M. (1989): Component Pricing of Milk Principles and Practice. 9. Keane, M. (1990): Producer Prices for Milk Trends and Future Prospects. 10. Keane, M. and Lucey D.I.F. (1991): Irish Dairying Modelling the Spatial Dimension. 11. Keane, M. and Byrne, P. (1992): Dairying in Hungary. 12. Keane, M. and Byrne, P. (1992): Dairying in Czechoslovakia. 13. Keane, M. and Byrne, P. (1992): Dairying in Poland. 14. Keane, M. and Collins, A. (1995): A Study of Dairy Policy Alternatives. 15. Collins, A. and Oustapassidis, K. (1997): Below Cost Legislation and Retail Performance. 16. Enright, P.G. (1997): National Regulation and the Changing Geography of the Irish Dairy Processing Industry. 17. Keane, M. (1997): Economies of Scale and Irish Cheese Manufacture. 18. Enright, P.G. (1998): Agri-processing Industries as a Vehicle for Rural Development: Case Studies of Two Rural Communities in the Canadian Prairies. 19. Collins, A. (1998): The Irish Food Manufacturing Sector: Current Customer Portfolios in the Irish and UK Grocery Markets. 20. O Reilly, S. and Shine, A. (1998): Consumer attitudes to and use of Nutrition Labelling. 21. McCarthy, M. and Barton, J. (1998): Beef Consumption, Risk Perception and Consumer Demand for Traceability along the Beef Chain. 28

29 22. McCarthy, M., O Reilly, S. and O Sullivan, C. (1998): An Investigation of the Effectiveness of the Domain Specific Innovativeness Scale in the pre-identification of First Buyers. 23. Bogue, J. and Delahunty, C. (1999): Market-Oriented New Product Development: Cheddar-type Cheese. 24. Bogue, J., Delahunty, C. and Kelleher, C. (1999): Market-Oriented New Product Development: Consumers Perceptions of Diet and Health and their Consumption of Reduced-fat and Reducedcalorie Foods. 25. McCarthy, M., and O Reilly, S. (1999): Beef Purchase Behaviour: Consumer Use of Quality Cues & Risk Reduction Strategies findings from Focus Group Discussions. 26. McCarthy, M. (1999): An Investigation of Consumer Perceptions towards Meat Hazards. 27. Bogue, J. and Ryan, M. (1999): Market-oriented New Product Development: Functional Foods and the Irish Consumer. 28. McCarthy M., O Reilly S. & Cronin M. (2000): A Profile of Irish Farmhouse and Continental Cheese Customers. 29. Cronin M, McCarthy M. & O Reilly S. (2000): An Examination of Consumer Involvement in the Purchase of Cheese Products 30. Bogue, J. (2000): New Product Development and the Irish Food Sector: A Qualitative Study of Activities and Processes. 31. Bogue, J. & Ritson, C. (2000): Health Issues, Diet and Lighter Foods : An Exploratory Consumer Study 32. O Keeffe L.A. & McCarthy M. (2001): An Investigation of Consumers Attitudes towards Food Safety Information 33. Vilei S. & McCarthy M. (2001): Consumer Acceptance and Understanding of Genetically Modified Food Products 34. Collins, A. (2001): An Investigation into Retailers Margin Related Bargaining Power. 35. Mangan, E. & Collins, A. (2001): An Investigation into service Quality Variation within a Tourist Brand: The Case of the Shamrock. 36. Bogue, J. & Sorenson, D. (2001): An Exploratory Study of Consumers Attitudes Towards Health- Enhancing Foods. 37. Bogue, J., Sorenson, D. & Delahunty, C. (2002): Determination of Consumers Sensory Preferences for Full-fat and Reduced-fat Dairy Products. 38. Howlett, B., McCarthy, M and O Reilly, S. (2002): An Examination of Consumers Perceptions of Organic Yoghurt. 39. Bogue, J., Coleman, T. and Sorenson, D. (2003): Health-enhancing Foods: Relationships between Attitudes, Beliefs and Dietary Behaviour. 29

30 40. Sorenson, D. and Bogue, J. (2003): Consumer-driven Product Development of Functional Orange Juice Beverages. 41. Synnott, K. and Bogue, J. (2004): An Exploratory Study of the Attitudes of German, Italian, Scottish, Spanish and Swedish Parents of Young Infants to Infant Diet, Health and Allergies. 42. McCarthy M., Morris D. and O'Reilly S. (2004): "Customer Perceptions of Calcium Enriched Orange Juice". 43. Keane M. and O'Connor D. (2004): "Evaluation of the Effect on Irish Dairy Industry Revenue of Asymmetric Reductions in Intervention prices for Butter and Skim Milk Powder". 44. Gu, H. and Bogue, J. (2005): An Exploratory Study of Food Culture Issues in China and Ireland in an International Marketing Context. 45. Bogue, J., Hofler, A. and Sorenson, D. (2005): Conjoint analysis as a market-oriented new product design tool: the case of functional meal replacement beverages. 46. Quinlan, C., Keane, M., Enright, P. and O Connor, D. (2005): The Cost and Efficiency of Milk Transport in Ireland. AVAILABLE from: Department of Food Business and Development University College Cork Tel: / Fax: FoodEconomics@ucc.ie 30