Lakeland to benefit from EU milk-quota abolition

Major cross border dairy co-op Lakeland is poised to take advantage of the opportunities arising from the abolition of EU milk quotas.

The group is in the process of increasing its processing capacity and has positioned itself for a planned growth in milk supplies to over one billion litres a year by 2020.

Enhanced innovation, new product developments and intensive business development activity will underpin the increased capacity of the co-op which has about 2,000 milk suppliers and around 670 employees.

It has processing plants north and south, which processes 800 million litres of milk annually. It is spread across 15 counties and offers 170 high-quality dairy products to over 70 countries worldwide. The group yesterday announced a 15% rise in revenues to €625.8m for 2014, yielding an operating profit of €12.9m, up 10% on the previous year. Profit before tax rose 5% to €10.9m.

Chief executive Michael Hanley said these are very robust results set against difficult market conditions in 2014, during which the group also paid a competitive milk price. A new €36m milk powder dryer being constructed in Baileboro, Co Cavan, is due for completion next year.

The group produces 90,000 tonnes of milk powders a year. This will rise to 130,000 tonnes on completion of the new plant. That will result in Lakeland having the largest milk powder drying site in the country. Some 24,000 tonnes of butter and butter products are also produced on the site.

Mr Hanley said this major dual factory presence on a single site provides flexibility in milk throughput, for maximum value-added returns, and contributes to overall economies of scale for the group’s food ingredients business.

Lakeland is confident of increasing milk intake by at least 30% over the next four or five years. It is already up 10% week-on-week from this time last year. Dairying will continue to be the best enterprise any farmer can have but there will be volatility, he said, adding the group is optimistic about the medium to long term prospects.

Lakeland chairman Alo Duffy said the group’s mainly pasture-based production system gives it many advantages in serving world markets.