'Brexit or no Brexit, the dairy sector will expand'
Lakeland Dairies' CEO Michael Hanley isn't fazed by the prospect of the UK's exit from Europe
The dairy sector will continue to grow over the next decade and has the most positive long-term prospects of all the Irish farming enterprises, Lakeland Dairies chief executive officer Michael Hanley believes. And he doesn't envisage Brexit putting a brake on the current expansion in the sector.
And Lakeland, which has 2,400 farming members on both sides of the border, will adopt a policy of "mixing and matching" its production capacity in both the Republic and Northern Ireland to meet any commercial scenario which a British exit from the EU might present when the negotiating process is completed, he added.
"Brexit or no Brexit, the Irish dairy sector will expand. The dairy sector is the best farming enterprise in Ireland and that will remain the case whether we have a soft, hard, or dropping off a cliff outcome to the Brexit negotiations," Mr Hanley said at the official opening of the co-op's new €40m advanced milk drying plant in Bailieboro, Co Cavan.
The plant, which is one of the biggest of its kind in Europe, will produce 160,000 tonnes of milk powders and 50,000 tonnes of butter annually
Lakeland, which employs over 800 people, is constantly reviewing its business options in the light of Brexit, said Mr Hanley.
But he emphasised that while the UK was an important and valued market for the co-op, they have customers in a further 79 countries globally.
These alternative markets in Asia, the Middle East, China and Europe were both profitable and expanding and the company will continue to grow its non-UK business.
Mr Hanley said a "lot of baloney" has been spoken about Brexit and he preferred to await the final outcome before making a judgment on how it might affect Lakeland.
His worst-case scenario would see the UK government adopting a "cheap food" policy which would turn the country into a "dumping ground" for inferior agricultural produce.
That would affect all Irish agricultural sectors from beef to sheep to milk and ingredients. But if the British government pursued such a policy, it was likely to be met with market place resistance from its own consumers.
In a generally upbeat take on the current health of the Irish dairy sector, Mr Hanley said: "If I was a farmer wanting to make a profit and educate a family, I would be in the dairy sector"
The expansion at the Lakeland facility showed that the Irish dairy industry would continue to expand over the next decade.
The "heavy lifting" in terms of investing in new "stainless steel" to meet the company's expansion plans was now in place with the completion of the new facility. The co-op now has one of the biggest milk drying facilities in Europe.
The capacity of the plant to manufacture ingredients has effectively doubled.
Lakeland now has the capacity to process over 1.2 billion litres of milk annually and convert this product into some 240 value-added dairy food service and food ingredients for the export market.
"Our strategy is to create long-term competitiveness and sustainability for our milk producers to meet the long term needs of our customers in the global food industry," added the Lakesland CEO.
"In particular we are addressing opportunities in the areas of infant formulas, dairy protein foods and health related nutritional products."
Mr Hanley added that he expects milk and ingredient prices to remain firm over the next few years.
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