Intervention casting a 'shadow' on dairy warns Lakelands boss
Lakeland Dairies co-op boss has warned that a "big shadow" continues to hang over dairy sector prices due to intervention stockpiles of skimmed milk powder.
The northwest-based dairy chief executive Michael Hanley warned supply and demand remained closely matched after a volatile year for the sector.
"There is a big risk, a big shadow from the intervention stocks of skim. There are 350-370,000t of skim which is casting a shadow across the skim market. It is having an impact on the whole dairy portfolio," said Mr Hanley which supplies 240 products to 80 countries worldwide.
"It takes very little extra supply to flood the market.
"Providing there is reasonably constraint in supply you'll see some stability in prices for 2017. That is providing Brussels handles the stock of intervention skim shrewdly."
The ICMSA's Ger Quain said he felt there was still a "workable balance" with reduced SMP going into intervention.
Lakeland supported milk prices by 1.5c/l last year as their 2016 results showed operating profit had halved to €7.2m, while revenues recorded a slight rise to €601m.
Mr Hanley described Brexit as a "tremendous challenge" for the sector. Yet he stressed they were well-positioned for the impending Brexit after they struck a deal last year to buy Northern Ireland-based Fane Valley ahead of the UK's decision to depart the EU.