Donal Tierney doesn’t think it was a case of the right deal at the wrong time. “It was the right deal. It is the right deal,” he says, about a month after Aurivo, the Sligo-headquartered co-operative that he helms, shelved plans to merge with Northern Ireland’s Dale Farm.
The proposal would have created a group with a total milk pool of 1.5 billion litres. The new entity would have been more comparable in size to the big four Irish co-ops that process about 80 per cent of the Republic’s milk: Lakeland Dairies, Kerry Co-Op, Tirlán and Dairygold.
Combining Aurivo’s powder and cream business with Dale Farm’s cheese and whey, it would have been a large, profitable organisation that the boards of both companies believed capable of paying higher prices to farmers.
A coming together between the two organisations would also have been relatively unique in the Irish dairy industry: a marriage of two financially healthy co-ops looking to tie up and find new avenues for growth, rather than a shotgun wedding forced by the coercive laws of competition.
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“The proposal was and still is of huge merit to both co-ops,” says Tierney, who will retire next month.
But it wasn’t to be. Yet, industry insiders and sources believe consolidation within the sector is inevitable over the coming years as a defensive action against stagnating milk supply, rising costs and a declining number of farms.
Others believe there are opportunities for larger, combined Irish dairy outfits to go on the attack in international markets, potentially even repeating the successes of the 1980s when Irish agricultural co-ops stepped on to the global stage.
Deal making within the sector is, however, a tricky business, and the shelving of the Aurivo-Dale Farm proposal underscores how difficult it is to get something like it over the line.
Mixed
Aurivo began holding shareholder meetings about the proposal earlier this year, but the reaction was mixed, to say the least.
In a letter published in the Irish Farmers Journal, a group of members expressed concern that the deal could lead to a “permanent loss of regional control” inside the newer, larger entity. The Sligo-headquartered organisation, which began life as the North Connacht Farmers’ Co-operative Society in 1972, is also a member of Kerrygold-maker Ornua.
Dale Farm, meanwhile, is not, and the complexities arising from this discrepancy are understood to have been seen by some as a sticking point. Members were also anxious about potential job cuts in the region, as well as the future of Aurivo’s livestock marts business within the new structure.
Independent Ireland’s Michael Fitzmaurice was among those who gave public voice to some of these concerns.
“I’m not against mergers per se,” the Roscommon-Galway TD, who also runs an agricultural and turf-cutting contracting business, tells The Irish Times. “But you have to take the locals, the local areas that are involved, into account [as well as] employment in those areas, because 100 jobs in Sligo is the same as 3,000 in Dublin. You need certain guarantees before things go ahead. No one can guarantee something for life, but you need at least a 10-year plan.”
Under the rules governing Irish co-operatives, the deal would have required 75 per cent of the members of both organisations to vote in favour of the merger.
It never got to that stage but Tierney believes the board could have achieved that after a “prolonged campaign” over several months. However, he says the board wanted to get more than 75 per cent of members to support the deal in a vote, given that the most recent mergers in the sector have achieved approval ratings of 90 per cent.
“We didn’t want a large cohort of guys kicking and screaming, who would never accept it, or weren’t going to accept it,” Tierney says.
Ultimately, there was a small but concerted “no” camp on the Aurivo side of the deal, Tierney says. “We knew that from the outset, but it wasn’t as big as people were making out. They were making an awful lot of noise, and as usual in these things, the naysayers are very vocal, and the silent majority just sit back and want to listen.”
Aurivo and Dale Farm will, instead, form a “strategic partnership”, the groups said last month, focused on certain projects around byproduct utilisation and “added value protein”.
Combinations and mergers are nothing new for the Irish co-op movement.
“We have records showing there were over 1,000 co-ops here before the first World War,” says TJ Flanagan, chief executive of the Irish Co-Operative Society Organisation Society (Icos). The representative body has 130 members today, around 10 of whom are milk processors.
Consolidation
There have been several waves of consolidation throughout the movement’s history.
In the 1980s, various groupings of Irish agricultural co-ops were behind the creation of Kerry Group, Glanbia, and Aryzta – three publicly listed companies (PLCs) that, at one time or another, enjoyed multinational success. More often than not, however, it’s been financial and market pressures that have forced organisations to merge, as was the case with the combination of Tipperary Co-Op and Arrabawn in 2024.
The abandoned combination of Aurivo and Dale Farm was relatively unique in that it involved two financially healthy co-ops attempting to come together.
But Flanagan says the rate of consolidation has been relatively steady across the generations, with occasional moments of acceleration. The difference now is the eye-catching sums of money and the size of the entities involved.
Ireland’s main dairy co-ops have grown substantially over the past decade since the abolition of the European Union’s milk quotas. According to the Central Statistics Office, Irish co-ops and dairy processors took in a record 8.5 billion litres of milk in 2025, up 56 per cent from 2014, the year before the quota system was abolished.
Processor output, meanwhile, has essentially doubled over that period. Teagasc told the Irish Independent last year that output per farm had increased from an annual 300,000 litres in 2014 to 585,000 in 2024.
In a 2023 report commissioned by Dairy Industry Ireland, analysts from EY Ireland said the total output of the dairy sector here was a whopping €17.6 billion. That includes output of €7 billion through the direct activities of the milk processors and indirect output of an estimated €9 billion through the entirety of their supply chain.
As milk production and the national dairy herd ballooned, processors were charged with finding routes to market for their members’ products. That meant investing heavily in new processing technologies and state-of-the-art facilities, with many co-ops taking on debt to do so.
The surge meant that the value of Irish dairy exports exploded from about €1.8 billion in 2014 to €7.3 billion in 2025, according to Bord Bia.
It is becoming clear, however, that the post-quota era of rapid volume growth is coming to an end. Across Europe, milk supply is plateauing, a trend that is forecast to continue over the next decade as yield growth falls back and the number of farms and farmers reduces.
At the start of 2026, costs are rising throughout the agricultural supply chain as a consequence of the conflict in the Middle East. From fertiliser to feeds, not to mention energy prices, Irish farmers are staring down the barrel of another difficult trading year.
Speaking to The Irish Times earlier this month, Lakeland Dairies chief executive Colin Kelly said soaring energy costs and falling milk prices were causing “significant pain” for the Irish dairy industry in the early part of the year.
“It’s been negative for us as a processor, because our processing costs have gone up,” he said. “And it’s been negative for our customers and consumers, because ultimately, consumer sentiment and confidence are impacted. Everybody’s disposable income is impacted negatively. So, there is no good news story from what’s happening in the world today.”
Will the war and its impact on farm costs concentrate minds within the Irish dairy industry? “I think if the war were to persist for a long time,” Kelly said, “it would accelerate [the drive towards consolidation] because the cost imposition at a farm and a processor level would be significant. But I think if the war were to ultimately come to an end over the next couple of weeks, or even the next couple of months, I don’t think it would have a massive impact.”
Against the wider backdrop of rising costs and falling milk production, further consolidation within the Irish industry is “inevitable”, says DII director Conor Mulvihill. “We would have a preference that it doesn’t occur under financial duress or environmental distress.”
No one is expecting global conditions to activate a flurry of deals over the coming months. The process is too convoluted for that.
`So hard’
“It’s so hard to carry off a takeover of a co-op”, says one industry source, “because of this voting structure that exists, and the one person, one vote. It can become almost like a general election […] It can get very parochial, and very local, very quickly.”
Aside from members, regulators also have to be won over. Kelly said there needs to be “a different approach from a regulation perspective” to the issue of co-op mergers.
Speaking to Agriland, he said: “If there’s to be consolidation, that means that some bigger co-operatives are going to merge with each other and the way things are at the moment, some of those will probably be prohibited from a competition perspective.”
“It comes back to the role of the Competition and Consumer Protection Commission,” says a source.
“We seem to have gone way too far in terms of regulatory oversight of mergers and businesses, with minute investigations into market shares, and we’re missing the big picture, which is that the Chinese, the Americans and the Indians are all developing global businesses on a huge scale. We’re here trying to look at it through the lens of, well, if you put two big processors together, they’ll have a big share of the Irish milk pool, and that’ll be very bad for competition. And it’s bulls**t.”
Many within the sector argue that Irish agricultural co-ops are poised to seed a new generation of Kerry Group- and Glanbia-style businesses if they can build to scale. That will require consolidation as they look to build more diverse businesses, “outside the mainstream of dairy processing”, the source says.
For Aurivo’s Tierney, there is one main reason for Irish dairy co-ops to go down the merger route.
“The main factor is to pay a better price to farmers,” he says. “That’s what’s driving it ...the point of coming together and extracting synergies is so that you can pay the farmer, both sets of farmers, a higher milk price.”
That’s particularly important because, Tierney says, “milk prices today are probably at or below farmer cost price” amid fluctuations in international supply and exposure to global markets. “The only way you can get [higher milk prices] is through marriages like that, and that’s what attracted us to Dale Farm and maybe them to us as well.”
On the Continent, the drumbeat of consolidation is also growing louder. Last year, Danish-Swedish Arla Foods, the world’s fifth biggest dairy group, and Germany’s DMK Group announced a merger proposal that would create by far the largest European dairy co-op, comprising more than 12,000 farmer-members supplying a milk pool of 19 billion litres. That’s more than twice the size of the Republic’s total milk supply, dwarfing the 1.5 billion litres at issue in the Aurivo-Dale Farm proposal.
“So, I think mergers and combinations are inevitable”, Tierney says, “if Irish farmers are to receive what they need to receive to remain sustainable. But they are kind of wedded to their local co-op, and we experienced that in the ‘no’ camp. It was all about ‘we want to retain control’ and ‘we don’t want to lose control’. That’s short-sighted in my view because ultimately, I think, if they carry on that way, the likelihood is that the prices they receive will be lower.”
