Efficient farms well placed to deal with challenges, co-op states

HIGH quality milk from Ireland’s hugely efficient dairy farms will be well placed to cope with future open market challenges, says Lakeland Dairies chief executive, Michael Hanley.

Speaking at the co-op’s upbeat AGM in Cavan, the leader of Ireland’s second largest milk processor says milk producers have little to fear from the increased competition that will follow the end of the quota era in 2015. He also notes that market projections on price are also favourable.

“We should look forward with self belief towards the future. Our high quality milk pool, our enhanced processing capability, the skills of our people and our capacity to deliver world class dairy products have placed us in a good position to weather the economic crisis and to take advantage of future growth opportunities.

“Prospects for world dairy markets look reasonably good for the current year and we as an exporter will benefit from this. European markets have recovered and there is strong demand for dairy products in developing markets and particularly Asia. These factors will tend to support dairy market prices for the medium term.”

The positive mood at the AGM was bolstered by the recent release of its annual report, with operating profits of €4.5 million on turnover of €401m for the year to the end of December, 2010.

Lakeland, which has inputs from 15 counties in the northern half of the island, exports to more than 70 countries offering 170 branded products.

In 2010, Lakeland processed over 700 million litres of milk into a range of foodservice products and food ingredients. The co-operative finished the year with shareholders funds of €76.7m.

In terms of future projections, Lakeland also urges some caution due to the likely pressure on input costs from rising oil prices. The co-op urges continued efficient management of production costs.

“There continues to be a risk of milk price swings such as those experienced in recent years. Markets have tightened in the past month and market returns have come under some pressure. Currently increasing oil prices may well push up our operating costs in terms of transport and energy.

“The further release of intervention powder stocks in Europe may have a softening effect on world dairy product prices and sterling and dollar currency exchange rates will also influence our returns from the markets.

“Europe continues to work towards CAP reform, quota abolition, and a reduction in subsidies. Current international trade negotiations are also geared towards the further removal of barriers to trade and this will ultimately create more competition for Irish dairy exporters in the years ahead. This is why we need to focus relentlessly on competitiveness across all our operations and business activities.”

* Blight Warning: Met Éireann is warning farmers that weather conducive to the spread of potato blight will occur over south Munster and parts of south and east Leinster from Thursday onwards and will continue at times over the following few days.

The weather authority notes that opportunities for spraying will be limited.


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