Farm Ireland

Tuesday 21 August 2018

Domestic, overseas suitors eyeing up LacPatrick deal

LacPatrick chief executive Gabriel D’Arcy
LacPatrick chief executive Gabriel D’Arcy
Nigel Renaghan

Louise Hogan and Martin Ryan

Concerned farmers have urged that LacPatrick Dairies must be given the "space and time" to decide the best option for the Border region co-op.

It comes as at least one overseas investor, alongside domestic co-operatives, have expressed an interest in a possible tie-up with the dairy processor.

Any merger would need backing from 75pc of members and Lakeland Dairies is understood to be the most likely partner.

However, industry sources have also indicated Aurivo is now looking at LacPatrick.

Glanbia Ireland's Jim Bergin refused to say if they may be interested in the co-op. "We have a number of arrangements in place and we've good relations with them and that will be down to the board to decide at some point," he said.

A spokesman for Lakeland Dairies said they noted LacPatrick's statement but declined to comment. "LacPatrick is a substantial business with strong heritage in co-operative dairy farming," he said.

However, Northern Ireland's Dale Farms, which is owned by over 1,300 dairy farmers across the UK, stated it was "interested". LacPatrick, which has a cross-Border milk pool, confirmed that it is looking at possible deals including partnerships, joint ventures, mergers and other opportunities to consolidate the dairy industry. It follows a number of approaches in recent months.

The business is profitable and has made significant investment to Brexit-proof its operations, but many suppliers were left disgruntled after its most recent milk price announcement.

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ICMSA president Pat McCormack said that the co-op needed the "space and time" to ascertain the "best option" for the co-op and their farmer-suppliers.

After meeting with LacPatrick yesterday, IFA Ulster North Leinster chair Nigel Renaghan said farmers were concerned as to what this move might mean for them. He said the "livelihoods" of milk producers must not be negatively affected.

Meanwhile, Mr Bergin, who was among those addressing an IFA-EU Commission Citizens' Dialogue event on CAP in Kilkenny, said the milk market was currently returning around 27c/l.

Mr Bergin said the "pain" that farmers feel when price reductions occur are unnecessary if the "right volatility" schemes were in place. He said around 2,000 Glanbia suppliers were signed up to fixed milk price schemes.

Mr Bergin said there was still a significant volume of SMP in storage. He said butter prices had improved, while cheddar was slightly up. "The problem is the skim is so low. The intervention price of skim is €1,700/t and it is selling out at €1,050/t," he said.

European Agriculture Commissioner Phil Hogan said the market would continue to be managed in relation to the disposal of the stocks of skimmed milk powder (SMP).

"There is a lot more interest now because markets are hardening again, we have $74 a barrel for oil again in the purchasing countries for much of our SMP which is the highest in four years. So I hope that continues." He said 17pc more SMP was sold in 2017.

IFA dairy chairman Tom Phelan told farmers at Croom, Co Limerick that "the honeymoon is well and truly over" for the sector and a "more sustainable model" was needed in the future.

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